Propanc Biopharma Inc

Previous wording

The following discussion and analysis of the results of operations and financial condition of Propanc Biopharma, Inc., and its wholly-owned Australian subsidiary, Propanc PTY LTD (collectively, “Propanc” or the “Company”) as of December 31, 2023 and for the six months ended December 31, 2023 and 2022 should be read in conjunction with our unaudited financial statements and the notes to those unaudited financial statements that are included elsewhere in this Quarterly Report on Form 10-Q for the period ended December 31, 2023 (this “Quarterly Report”). References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “us”, “we”, “our” and similar terms refer to Propanc. This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “feel”, “forecast”, “intend”, “may,”, “outlook”, “plan”, “potential”, “predict”, “project,”, “seek”, “should”, “will”, “would” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.

Current wording

The following discussion and analysis of the results of operations and financial condition of Propanc Biopharma, Inc., and its wholly-owned Australian subsidiary, Propanc PTY LTD (collectively, “Propanc” or the “Company”) as of March 31, 2024 and for the nine months ended March 31, 2024 and 2023 should be read in conjunction with our unaudited financial statements and the notes to those unaudited financial statements that are included elsewhere in this Quarterly Report on Form 10-Q for the period ended March 31, 2024 (this “Quarterly Report”). References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “us”, “we”, “our” and similar terms refer to Propanc. This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “feel”, “forecast”, “intend”, “may,”, “outlook”, “plan”, “potential”, “predict”, “project,”, “seek”, “should”, “will”, “would” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.

Previous wording

For the three and six months ended December 31, 2023 and 2022, we generated no revenue because we are currently undertaking research and development activities for market approval and no sales were generated in this period.

Current wording

For the three and nine months ended March 31, 2024 and 2023, we generated no revenue because we are currently undertaking research and development activities for market approval and no sales were generated in this period.

Previous wording

Administration expense decreased to $318,185 for the three months ended December 31, 2023 as compared to $525,620 for the three months ended December 31, 2022. This decrease of approximately $207,000 is primarily attributable to a decrease of approximately $83,000 in general consulting, legal and investor relation fees and decrease in stock-based expenses of approximately $51,000, decrease in accounting fees of approximately $13,000, decrease of approximately $91,000 in employee remuneration expense offset by increase in marketing expenses of approximately $26,000, and increase in other general and administrative expenses of approximately $5,000.

Current wording

Administration expense increased to $348,841 for the three months ended March 31, 2024 as compared to $311,824 for the three months ended March 31, 2023. This increase of approximately $37,000 is primarily attributable to an increase in marketing expenses of approximately $34,000, increase in accounting fees of approximately $9,000, increase of approximately $6,000 in employee remuneration expense offset by decrease of approximately $9,000 in general consulting, legal and investor relation fees and decrease in other general and administrative expenses of approximately $3,000.

Previous wording

Administration expense decreased to $712,013 for the six months ended December 31, 2023 as compared to $990,752 for the six months ended December 31, 2022. This decrease of approximately $279,000 is primarily attributable to a decrease of approximately $186,000 in general consulting, legal and investor relation fees and decrease in stock-based expenses of approximately $54,000, decrease in accounting fees of approximately $4,000, decrease of approximately $67,000 in employee remuneration expense offset by increase in marketing expenses of approximately $26,000, and increase in other general and administrative expenses of approximately $6,000.

Current wording

Administration expense decreased to $1,060,854 for the nine months ended March 31, 2024 as compared to $1,302,576 for the nine months ended March 31, 2023. This decrease of approximately $242,000 is primarily attributable to a decrease of approximately $197,000 in general consulting, legal and investor relation fees and decrease in stock-based expenses of approximately $54,000, decrease of approximately $61,000 in employee remuneration expense offset by increase in marketing expenses of approximately $61,000, increase in accounting fees of approximately $5,000, and increase in other general and administrative expenses of approximately $4,000.

Previous wording

Occupancy expenses decreased to $5,857 for the three months ended December 31, 2023 as compared to $7,506 for the three months ended December 31, 2022. This decrease of approximately $1,600 is primarily attributable to exchange rate movements over the period when compared to the same period in 2022.

Current wording

Occupancy expenses decreased to $6,578 for the three months ended March 31, 2024 as compared to $8,365 for the three months ended March 31, 2023. This decrease of approximately $1,800 is primarily attributable to exchange rate movements over the period when compared to the same period in 2023.

Previous wording

Occupancy expenses decreased to $13,006 for the six months ended December 31, 2023 as compared to $13,879 for the six months ended December 31, 2022. This decrease of approximately $900 is primarily attributable to exchange rate movements over the period when compared to the same period in 2022.

Current wording

Occupancy expenses decreased to $19,584 for the nine months ended March 31, 2024 as compared to $22,244 for the nine months ended March 31, 2023. This decrease of approximately $2,700 is primarily attributable to exchange rate movements over the period when compared to the same period in 2023.

Previous wording

Research and development expenses were increased to $114,022 for the three months ended December 31, 2023 as compared to $74,878 for the three months ended December 31, 2022. Research and development expenses were decreased to $130,624 for the six months ended December 31, 2023 as compared to $176,203 for the six months ended December 31, 2022. The decrease in research and development expenses of approximately $46,000 is primarily due to budgetary constraints as the Company prepares to advance PRP to a First-In-Human study in advanced cancer patients in 2024.

Current wording

Research and development expenses were decreased to $65,448 for the three months ended March 31, 2024 as compared to $66,020 for the three months ended March 31, 2023. Research and development expenses were decreased to $195,712 for the nine months ended March 31, 2024 as compared to $242,223 for the nine months ended March 31, 2023. The decrease in research and development expenses of approximately $47,000 is primarily due to budgetary constraints as the Company prepares to advance PRP to a First-In-Human study in advanced cancer patients in 2024.

Previous wording

Interest expense increased to $264,462 for the three months ended December 31, 2023, as compared to $98,619 for the three months ended December 31, 2022. Interest expense is primarily comprised of approximately $225,000 of debt discount amortization and accretion of put premium and $34,000 of interest expense from accrual of interest expense and other financing fees for the three months ended December 31, 2023. This increase in interest expense of $165,843 is primarily attributable to the increase in amortization of debt discount of approximately $43,000 and increase of approximately $117,000 in accretion of put premium.

Current wording

Interest expense decreased to $133,141 for the three months ended March 31, 2024, as compared to $157,208 for the three months ended March 31, 2023. Interest expense is primarily comprised of approximately $108,000 of debt discount amortization and accretion of put premium and $21,000 of interest expense from accrual of interest expense and other financing fees for the three months ended March 31, 2024. This decrease in interest expense of $24,067 is primarily attributable to the decrease of approximately $88,000 in accretion of put premium offset by increase in amortization of debt discount of approximately $66,000.

Previous wording

Interest expense increased to $442,696 for the six months ended December 31, 2023, as compared to $261,371 for the six months ended December 31, 2022. Interest expense is primarily comprised of approximately $400,000 of debt discount amortization and accretion of put premium and $37,000 of interest expense from accrual of interest expense and other financing fees for the six months ended December 31, 2023. This increase in interest expense of $181,325 is primarily attributable to the increase in amortization of debt discount of approximately $81,000 and increase of approximately $90,000 in accretion of put premium.

Current wording

Interest expense increased to $575,837 for the nine months ended March 31, 2024, as compared to $418,579 for the nine months ended March 31, 2023. Interest expense is primarily comprised of approximately $508,000 of debt discount amortization and accretion of put premium and $58,000 of interest expense from accrual of interest expense and other financing fees for the nine months ended March 31, 2024. This increase in interest expense of $157,258 is primarily attributable to the increase in amortization of debt discount of approximately $109,000, increase of approximately $29,000 in accretion of put premium and increase in accrual on interest expense of approximately $11,000.

Previous wording

Derivative expense were increased to $123,379 for the six months ended December 31, 2023 as compared to a loss of $0 for the six months ended December 31, 2022. This increase is primarily attributable to the issuance of convertible notes in August 2023 and October 2023 to GS Capital which initial value was bifurcated from the embedded conversion option and was recorded as derivative expense.

Current wording

Derivative expense were increased to $123,379 for the nine months ended March 31, 2024 as compared to a loss of $0 for the nine months ended March 31, 2023. This increase is primarily attributable to the issuance of convertible notes in August 2023 and October 2023 to GS Capital which initial value was bifurcated from the embedded conversion option and was recorded as derivative expense.

Previous wording

Change in fair value of derivative liabilities were decreased to a (loss) of $1,771 for the three months ended December 31, 2023 as compared to a gain of $62,335 for the three months ended December 31, 2022. This increase in loss of approximately $64,000 is primarily attributable to the increase in fair value of the principal amount of convertible notes with bifurcated embedded conversion option derivatives as a result of the issuance of a convertible note in October 2023 during the three months ended December 31, 2023.

Current wording

Change in fair value of derivative liabilities were increased to a gain (loss) of $70,213 for the three months ended March 31, 2024 as compared to a loss of $(238,367) for the three months ended March 31, 2023. This increase in gain of approximately $309,000 is primarily attributable to the decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion option derivatives as a result of the decrease in stock prices during the three months ended March 31, 2024.

Previous wording

Change in fair value of derivative liabilities were decreased to a gain of $302,158 for the six months ended December 31, 2023 as compared to a gain of $127,508 for the six months ended December 31, 2022. This increase in gain of approximately $175,000 is primarily attributable to the decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion option derivatives as a result of the decrease in stock prices during the six months ended December 31, 2023

Current wording

Change in fair value of derivative liabilities were decreased to a gain of $372,371 for the nine months ended March 31, 2024 as compared to a (loss) of $(110,859) for the nine months ended March 31, 2023. This increase in gain of approximately $483,000 is primarily attributable to the decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion option derivatives as a result of the decrease in stock prices during the nine months ended March 31, 2024.

Previous wording

Gain from settlement of accounts payable was $0 for the six months ended December 31, 2023 as compared to $17,499 for the six months ended December 31, 2022. On August 16, 2022, the Company and a third-party investor relations consultant agreed to settle an outstanding payable of $23,050 in exchange for 2,305,000 warrants to purchase the Company’s common stock at $0.01 per share with an expiry date of August 16, 2025 and fair market value of $5,551. Accordingly, the Company recognized gain from settlement of accounts payable of $17,499 during the six months ended December 31, 2022.

Current wording

Gain from settlement of accounts payable was $0 for the nine months ended March 31, 2024 as compared to $17,499 for the nine months ended March 31, 2023. On August 16, 2022, the Company and a third-party investor relations consultant agreed to settle an outstanding payable of $23,050 in exchange for 2,305,000 warrants to purchase the Company’s common stock at $0.01 per share with an expiry date of August 16, 2025 and fair market value of $5,551. Accordingly, the Company recognized gain from settlement of accounts payable of $17,499 during the nine months ended March 31, 2023.

Previous wording

During the six months ended December 31, 2023 there were principal aggregate amount of convertible notes of $75,300, accrued interest of $5,570 and conversion fees of $1,597 containing bifurcated embedded conversion option derivatives were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $198,753, resulting in a loss on extinguishment at the time of conversion of $116,285 and $150,384 of derivative liability fair value was recorded as a gain on extinguishment at the time of conversion, resulting in a net gain of $34,099 during the six months ended December 31, 2023.

Current wording

During the nine months ended March 31, 2024, convertible notes with principal aggregate amount of $91,300, accrued interest of $11,080 and conversion fees of $2,236 containing bifurcated embedded conversion option derivatives were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $243,286, resulting in a loss on extinguishment at the time of conversion of $143,467 and $170,785 of derivative liability fair value was recorded as a gain on extinguishment at the time of conversion, resulting in a net gain of $27,318 which is included in gain (loss) on extinguishment of debt in the accompanying condensed consolidated statements of operations during the nine months ended March 31, 2024.

Previous wording

During the six months ended December 31, 2022, notes with principal amounts totaling $79,000 and accrued interest of $9,543 contained bifurcated embedded conversion option derivatives. Accordingly, the fair market value of the shares issued was $195,952, resulting in a loss on extinguishment at the time of conversion of $107,409 and $106,799 of derivative fair value liability was recorded as a gain on extinguishment at the time of conversion, resulting in a net loss of $610. Additionally, during the six months ended December 31, 2022, the Company recognized the remaining put premium of $43,520 related to a convertible note into gain on extinguishment of debt during the six months ended December 31, 2022. The lender of such convertible note agreed to surrender all conversion rights in its currently held convertible notes due to violation of Section 15(a)(1) of the Securities Exchange Act of 1934.

Current wording

During the nine months ended March 31, 2023, the principal aggregate amount of convertible notes of $122,000 and accrued interest of $12,488 which contained bifurcated embedded conversion option derivatives were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $369,110, resulting in a loss on extinguishment at the time of conversion of $234,622 and $223,288 of derivative fair value was recorded as a gain on extinguishment at the time of conversion, resulting in a net loss of $11,334. Additionally, during the nine months ended March 31, 2023, the Company recognized the remaining put premium of $43,520 related to a convertible note into gain on extinguishment of debt. The holder of such convertible note agreed to surrender all conversion rights in its currently held convertible notes due to violation of Section 15(a)(1) of the Exchange Act, which resulted in a net gain on extinguishment of debt of $32,186 for the nine months ended March 31, 2023.

Previous wording

Foreign currency transaction gain (loss) increased to a gain of $37,146 for the three months ended December 31, 2023 as compared to a loss of ($13,988) for the three months ended December 31, 2022. This increase of approximately $51,000 is partially attributable to the increase in exchange rates during the three months ended December 31, 2023.

Current wording

Foreign currency transaction gain (loss) increased to a loss of $(36,426) for the three months ended March 31, 2024 as compared to a loss of ($19,025) for the three months ended March 31, 2023. This increase of approximately $17,000 is partially attributable to the decrease in exchange rates during the three months ended March 31, 2024.

Previous wording

Foreign currency transaction gain (loss) decreased to a gain of $21,198 for the six months ended December 31, 2023 as compared to a gain of $22,235 for the six months ended December 31, 2022. This decrease of approximately $1,000 is partially attributable to the decrease in exchange rates during the six months ended December 31, 2023.

Current wording

Foreign currency transaction gain (loss) decreased to a loss of $(15,228) for the nine months ended March 31, 2024 as compared to a gain of $3,210 for the nine months ended March 31, 2023. This decrease of approximately $18,000 is partially attributable to the decrease in exchange rates during the nine months ended March 31, 2024.

Previous wording

Net loss increased to $584,384 for the three months ended December 31, 2023 as compared to a net loss of $485,418 for the three months ended December 31, 2022. The change relates to the factors discussed above. Net loss decreased to $935,250 for the six months ended December 31, 2023 as compared to a net loss of $1,102,713 for the six months ended December 31, 2022. The change relates to the factors discussed above.

Current wording

Net loss decreased to $526,700 for the three months ended March 31, 2024 as compared to a net loss of $809,809 for the three months ended March 31, 2023. The change relates to the factors discussed above. Net loss decreased to $1,461,950 for the nine months ended March 31, 2024 as compared to a net loss of $1,912,522 for the nine months ended March 31, 2023. The change relates to the factors discussed above.

Previous wording

The Company recognized the value of the effect of a down round feature related to our Series A warrants when triggered. Upon the occurrence of the triggering event that resulted in a reduction of the strike price, the Company measured the value of the effect of the feature as the difference between the fair value of the warrants without the down round feature or before the strike price reduction and the fair value of the warrants with a strike price corresponding to the reduced strike price upon the down round feature being triggered. Accordingly, the Company recognized deemed dividend of $34,585 and $19,322 during the three months ended December 31, 2023 and 2022, respectively, and deemed dividend of $177,160 and $408,557 during the six months ended December 31, 2023 and 2022, respectively, with a corresponding reduction of income available to common stockholders upon the alternate cashless exercise of these warrants during the three and six months ended December 31, 2023 and 2022, respectively.

Current wording

The Company recognized the value of the effect of a down round feature related to our Series A warrants when triggered. Upon the occurrence of the triggering event that resulted in a reduction of the strike price, the Company measured the value of the effect of the feature as the difference between the fair value of the warrants without the down round feature or before the strike price reduction and the fair value of the warrants with a strike price corresponding to the reduced strike price upon the down round feature being triggered. Accordingly, the Company recognized deemed dividend of $15,800 and $0 during the three months ended March 31, 2024 and 2023, respectively, and deemed dividend of $192,960 and $408,557 during the nine months ended March 31, 2024 and 2023, respectively, with a corresponding reduction of income available to common stockholders upon the alternate cashless exercise of these warrants during the three and nine months ended March 31, 2024 and 2023, respectively.

Previous wording

Net loss available to common stockholders increased to $618,969 for the three months ended December 31, 2023 as compared to a net loss available to common stockholders of $504,740 for the three months ended December 31, 2022. This increase of approximately $114,000 is primarily attributable to the change relates to the factors discussed above. Net loss available to common stockholder decreased to $1,112,410 for the six months ended December 31, 2023 as compared to a net loss available to common stockholders of $1,511,270 for the six months ended December 31, 2022. This decrease of approximately $399,000 is primarily attributable to the change relates to the factors discussed above.

Current wording

Net loss available to common stockholders decreased to $542,500 for the three months ended March 31, 2024 as compared to a net loss available to common stockholders of $809,809 for the three months ended March 31, 2023. This decrease of approximately $267,000 is primarily attributable to the change relates to the factors discussed above. Net loss available to common stockholder decreased to $1,654,910 for the nine months ended March 31, 2024 as compared to a net loss available to common stockholders of $2,321,079 for the nine months ended March 31, 2023. This decrease of approximately $666,000 is primarily attributable to the change relates to the factors discussed above.

Previous wording

As of December 31, 2023, we had total assets of $241,907, comprised primarily of cash of $71,650, GST tax receivable of $3,908, prepaid expenses and other current assets of $12,139, refundable advance deposit of $123,127, security deposit of $2,044, operating lease ROU asset, net of $28,989, and property and equipment, net of $50. As compared to June 30, 2023, we had total assets of $60,328, comprised primarily of cash of $10,047, GST tax receivable of $2,867, prepaid expenses and other current assets of $6,125, property and equipment, net, of $302, operating lease ROU asset, net of $38,988, and security deposit of $1,999.

Current wording

As of March 31, 2024, we had total assets of $37,337, comprised primarily of cash of $6,222, GST tax receivable of $5,265, prepaid expenses and other current assets of $1,368, security deposit of $1,955, and operating lease ROU asset, net of $22,527. As compared to June 30, 2023, we had total assets of $60,328, comprised primarily of cash of $10,047, GST tax receivable of $2,867, prepaid expenses and other current assets of $6,125, property and equipment, net, of $302, operating lease ROU asset, net of $38,988, and security deposit of $1,999.

Previous wording

We had current liabilities of $3,762,251, primarily comprised of net convertible debt of $687,650, accounts payable and accrued expenses of $1,913,604, employee benefit liability of $624,654, loan payable of $65,280, loan payable – related party of $16,429, note payable, net of $132,000 and embedded conversion option liabilities of $219,045 as of December 31, 2023. As compared to June 30, 2022, we had current liabilities of $3,158,229, primarily comprised of net convertible debt of $390,539, loan payable of $65,280, accounts payable and accrued expenses of $1,546,425, employee benefit liability of $587,618, and embedded conversion option liabilities of $423,209.

Current wording

We had current liabilities of $3,687,984, primarily comprised of net convertible debt of $582,951, accounts payable and accrued expenses of $1,953,541, employee benefit liability of $610,340, loan payable of $65,280, loan payable – related party of $32,616, note payable, net of $132,000 and embedded conversion option liabilities of $128,432 as of March 31, 2024. As compared to June 30, 2022, we had current liabilities of $3,158,229, primarily comprised of net convertible debt of $390,539, loan payable of $65,280, accounts payable and accrued expenses of $1,546,425, employee benefit liability of $587,618, and embedded conversion option liabilities of $423,209.

Previous wording

During the six months ended December 31, 2023 we received proceeds from issuance of note of $120,000, proceeds from issuance of convertible notes of $477,500, and total proceeds from issuance of loans payable from a related party of $169,685.

Current wording

During the nine months ended March 31, 2024 we received proceeds from issuance of note of $120,000, proceeds from issuance of convertible notes of $516,875, and total proceeds from issuance of loans payable from a related party of $185,872.

Previous wording

We have substantial capital resource requirements and have incurred significant losses since inception. As of December 31, 2023, we had $71,650 in cash. We depend upon debt and/or equity financing to fund our ongoing operations and to execute our current business plan. Such capital requirements are in excess of what we have in available cash and for which we currently have commitments. Therefore, we presently do not have enough available cash to meet our obligations over the next 12 months. If continued funding and capital resources are unavailable at reasonable terms, we may curtail our plan of operations. We will be required to obtain alternative or additional financing from financial institutions, investors or otherwise, in order to maintain and expand our existing operations. The failure by us to obtain such financing would have a material adverse effect upon our business, financial condition and results of operations, and adversely affecting our ability to complete ongoing activities in connection with our research and development programs.

Current wording

We have substantial capital resource requirements and have incurred significant losses since inception. As of March 31, 2024, we had $6,222 in cash. We depend upon debt and/or equity financing to fund our ongoing operations and to execute our current business plan. Such capital requirements are in excess of what we have in available cash and for which we currently have commitments. Therefore, we presently do not have enough available cash to meet our obligations over the next 12 months. If continued funding and capital resources are unavailable at reasonable terms, we may curtail our plan of operations. We will be required to obtain alternative or additional financing from financial institutions, investors or otherwise, in order to maintain and expand our existing operations. The failure by us to obtain such financing would have a material adverse effect upon our business, financial condition and results of operations, and adversely affecting our ability to complete ongoing activities in connection with our research and development programs.

Previous wording

Net cash used in operating activities was $572,342 for the six months ended December 31, 2023, due to our net loss of $935,250 offset primarily by non-cash charges of amortization of debt discount of $164,904, non-cash interest expense of $1,597, accretion of put premium of $234,615, derivative expense of $123,379, foreign currency transaction gain of $21,198, addback change in fair value of derivatives of $302,158 and gain from extinguishment of debt of $34,099. Net changes in operating assets and liabilities totaled $184,749, which is primarily attributable to increase in prepaid expense of $5,877, increase in refundable advance deposit of $123,127, increase accrued interest of $35,323, increase in accounts payable of $169,359, and increase in accrued expenses and other payables of $96,924.

Current wording

Net cash used in operating activities was $675,152 for the nine months ended March 31, 2024, due to our net loss of $1,461,950 offset primarily by non-cash charges of amortization of debt discount of $246,612, non-cash interest expense of $2,236, accretion of put premium of $261,538, derivative expense of $123,379, foreign currency transaction loss of $15,228, addback change in fair value of derivatives of $372,371 and gain from extinguishment of debt of $27,318. Net changes in operating assets and liabilities totaled $521,602, which is primarily attributable to increase accrued interest of $57,823, increase in accounts payable of $242,466, and increase in accrued expenses and other payables of $198,995.

Previous wording

Net cash used in operating activities was $734,542 for the six months ended December 31, 2022, due to our net loss of $1,102,713, offset primarily by non-cash charges of amortization of debt discount of $83,903, stock-based compensation of $59,219, accretion of put premium of $144,711, change in fair value of derivatives of $127,508, gain on extinguishment of debt of $42,910 and gain from settlement of accounts payable of $17,499. Net changes in operating assets and liabilities totaled $278,737, which are primarily attributable to increase in prepaid expenses and other assets $16,724, employee benefit liability of $169,268, increase accrued interest of $31,433, increase in accrued expenses and other payables of $97,414, and increase in accounts payable of $9,520.

Current wording

Net cash used in operating activities was $927,278 for the nine months ended March 31, 2023, due to our net loss of $1,912,522, offset primarily by non-cash charges of amortization of debt discount of $138,014, stock-based compensation of $59,219, accretion of put premium of $232,674, change in fair value of derivatives of $110,859, gain on extinguishment of debt of $32,186 and gain from settlement of accounts payable of $17,499. Net changes in operating assets and liabilities totaled $479,999, which are primarily attributable to a decrease in prepaid expenses and other assets $8,348, an increase in employee benefit liabilities of $177,198, an increase in accrued interest of $46,347, an increase in accrued expenses and other payables of $236,034, and an increase in accounts payable of $27,953.

Previous wording

Net cash provided by financing activities for the six months ended December 31, 2023 were $624,276 as compared to $744,219 for the six months ended December 31, 2022. During the six months ended December 31, 2023 we received net proceeds from issuance of convertible notes of $477,500, proceeds from issuance of note of $120,000, proceeds from issuance of loans from a related party of $169,685 offset by repayment of convertible note of $142,909.

Current wording

Net cash provided by financing activities for the nine months ended March 31, 2024 were $690,920 as compared to $1,013,719 for the nine months ended March 31, 2023. During the nine months ended March 31, 2024 we received net proceeds from issuance of convertible notes of $516,875, proceeds from issuance of note of $120,000, proceeds from issuance of loans from a related party of $185,872, proceeds from the sale of shares of our common stock of $11,082 offset by repayment of convertible note of $142,909.

Previous wording

Net cash provided by financing activities for the six months ended December 31, 2022 was $744,219. During the six months ended December 31, 2022, we received proceeds from the exercise of warrants of $200,000, proceeds from sale of shares of our Common Stock of $24,711, collections of subscription receivable of $23,758, and net proceeds from issuance of convertible notes and a note payable of $495,750.

Current wording

Net cash provided by financing activities for the nine months ended March 31, 2023 was $1,013,719. During the nine months ended March 31, 2023, we received proceeds from the exercise of warrants of $375,000, proceeds from the sale of shares of our common stock of $24,711, collections of subscription receivables of $23,758, and net proceeds from the issuance of convertible notes and a note payable of $590,250.

Previous wording

The effect of the exchange rate on cash resulted in a $9,669 negative adjustment to cash flows in the six months ended December 31, 2023 as compared to a $10,732 positive adjustment to cash flows in the six months ended December 31, 2022. The reason for the fluctuation is due to the application of currency translation rates throughout the cash flow statement, the volume of transactions within each period and the daily fluctuation in exchange rates.

Current wording

The effect of the exchange rate on cash resulted in a $19,593 negative adjustment to cash flows in the nine months ended March 31, 2024 as compared to a $2,733 positive adjustment to cash flows in the nine months ended March 31, 2023. The reason for the fluctuation is due to the application of currency translation rates throughout the cash flow statement, the volume of transactions within each period and the daily fluctuation in exchange rates.

Previous wording

We did not generate any revenue for the six months ended December 31, 2023 and 2022 and have incurred significant losses and cash used in operations, and such losses and use of cash are expected to continue. Our independent registered public accounting firm has included a “Going Concern Qualification” in their audit report for each of the fiscal years ended June 30, 2023 and 2022. In addition, we have negative working capital and convertible debt that is past maturity that we are currently negotiating with lenders in order to amend the maturity dates. The foregoing raises substantial doubt about our ability to continue as a going concern for a period of 12 months from the issue date of this report. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds and/or to consummate a public offering. Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity and/or convertible debt financing. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The “Going Concern Qualification” might make it substantially more difficult to raise capital.

Current wording

We did not generate any revenue for the nine months ended March 31, 2024 and 2023 and have incurred significant losses and cash used in operations, and such losses and use of cash are expected to continue. Our independent registered public accounting firm has included a “Going Concern Qualification” in their audit report for each of the fiscal years ended June 30, 2023 and 2022. In addition, we have negative working capital and convertible debt that is past maturity that we are currently negotiating with lenders in order to amend the maturity dates. The foregoing raises substantial doubt about our ability to continue as a going concern for a period of 12 months from the issue date of this report. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds and/or to consummate a public offering. Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity and/or convertible debt financing. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The “Going Concern Qualification” might make it substantially more difficult to raise capital.