Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward-Looking Information

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, 2025 and for the six months ended December 31, 2025 and 2024 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, 2025 (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.

Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

U.S. Dollars are denoted herein by "USD," "$" and "dollars".

Overview

The Company was originally formed in Melbourne, Victoria, Australia on October 15, 2007, as Propanc PTY LTD. On November 23, 2010, Propanc Health Group Corporation was incorporated in the State of Delaware and in January 2011; to reorganize our Company, we acquired all the outstanding shares of Propanc PTY LTD on a one-for-one basis, whereby Propanc PTY LTD became our wholly owned subsidiary. Effective April 20, 2017, we changed our name to "Propanc Biopharma, Inc." to better reflect our current stage of operations and development.

We are a development-stage healthcare company that is currently focused on developing new cancer treatments for patients suffering from pancreatic, ovarian and colorectal cancer. Utilizing our scientific and oncology consultants, we have developed a rational, composite formulation of anti-cancer compounds, which together exert several effects designed to control or prevent tumors from recurring and spreading through the body. Our lead product candidate, PRP, is a variation upon our novel formulation and involves pro-enzymes, the inactive precursors of enzymes.

Recent Developments

On November 4, 2025 (the "Closing Date"), the Company completed a private placement pursuant to a Securities Purchase Agreement with Hexstone Capital LLC ("Hexstone"). At closing, Hexstone purchased 100 shares of Series C Preferred Stock, par value $0.001, with a stated value of $10,000 per share, for total gross proceeds of $1,000,099. In connection with the transaction, the Company also issued warrants to purchase up to 9,900 additional shares of Series C Preferred Stock.

On December 1, 2025, two provisional patents were filed detailing new methods to treat resistant cancer and fibrosis. These discoveries stem from our Joint Research and Drug Discovery program with the Universities of Jaén and Granada in Spain and are expected to be filed subsequently in key global jurisdictions. The first provisional patent covers methods for treating cancers that have developed resistance to chemotherapy and/or radiotherapy. Despite advancements in cancer therapies, global mortality rates remain high, and strategies to prevent recurrence are urgently needed. Treatment failure frequently occurs due to the emergence of multiple malignancies and resistance to standard therapies, underscoring the need for novel approaches. The second provisional patent relates to compositions, methods, uses, and kits for the treatment of fibrosis, particularly organ fibrosis. Fibrosis is characterized by the excessive accumulation of scar tissue due to over-deposition of extracellular matrix (ECM) components, leading to stiffening, loss of function, and structural disruption of affected tissues. This maladaptive response can result from chronic injury or persistent inflammation and can impact nearly any organ system, including the lungs, liver, kidneys, and heart-contributing significantly to morbidity and mortality. Causes may include chronic inflammation, autoimmune and allergic responses, chemical insults, radiation, and tissue damage. For example, life expectancy following myocardial infarction-related scarring ranges from 3 to 8 years (ages 65-74), and for lung fibrosis patients is typically 3 to 5 years.

On December 22, 2025, the Company and its joint research partners at the Universities of Jaén and Granada published key findings in a peer reviewed journal, Scientific Reports, regarding the impact of proenzymes on pancreatic ductal adenocarcinoma (PDAC) fibroblasts. From the publishers of Nature, Scientific Reports is an online, open access journal, which publishes primary research from all areas of the natural and clinical sciences. The article is entitled, "Impact of pancreatic proenzymes on pancreatic ductal adenocarcinoma associated fibroblasts," and available online. The tumor microenvironment (TME) plays a pivotal role in tumor initiation, progression, and the form of pre-metastatic niches. PDAC is characterized by a dense fibrotic stroma containing a significant enriched population of cancer-associated fibroblasts (CAFs). The interplay between CAFs and tumor cells is crucial in driving tumor advancement and metastasis, underscoring the potential benefits of novel therapeutic strategies targeting stromal cells to improve patient survival. PRP, consisting of two bovine derived pancreatic proenzymes, trypsinogen and chymotrypsinogen, have shown efficacy in cancer treatment. The findings demonstrate PRP exerts multifaceted effects. Results underscore the candidacy of PRP as a potential disruptor of the TME.

On January 20, 2026, a new provisional patent application was filed for methods of producing trypinsogen and chymotrypsinogen with IP Australia. The patent application describes an optimized expression system to produce a world-first fully synthetic recombinant version of PRP, a long-term therapy for the treatment and prevention of metastatic cancer from solid tumors. A fully synthetic version of trypsinogen and chymotrypsinogen, called Rec-PRP, could have additional benefits to a global healthcare system that further capitalizes on a new therapeutic approach to treating cancer. For example, both proenzymes are synthesized by an in vivo (living organism) expression system, such as yeast cells, to produce proteins that could be maintained for long periods of time without suffering degradation in the absence of refrigeration. This is useful for a longer self-life as well as global distribution, particularly in warmer climates and developing regions where refrigeration is not available. Further, the program could produce large quantities of trypsinogen and chymotrypsinogen for commercial use that exhibits minimal variation between lots and without sourcing from animals. Therefore, management believes a fully synthetic recombinant version of PRP would have tremendous implications from a regulatory perspective, but also a practical, commercial benefit for global distribution.

On January 27, 2026, the Company filed a new provisional patent application focusing on innovative formulations of the pancreatic proenzymes, trypsinogen and chymotrypsinogen- the active components in our lead asset, PRP - addressing critical challenges in stability, storage, freeze/thaw cycling, and global transport. These advancements overcome longstanding barriers in developing viable pharmaceutical compositions of these proenzymes for biomedical applications, including cancer and other chronic diseases.

Results of Operations

The following discussion should be read in conjunction with the Company's unaudited consolidated financial statements and notes thereto included elsewhere in this Report. The results discussed below are of the Company and its wholly-owned Australian subsidiary, Propanc PTY LTD.

For the Three and Six months ended December 31, 2025, as compared to the Three and Six months ended December 31, 2024.

Revenue

For the three and six months ended December 31, 2025 and 2024, we generated no revenue because we are currently undertaking research and development activities for market approval and no sales were generated in this period.

Administration Expense

Administration expense increased to $3,628,173 for the three months ended December 31, 2025 as compared to $153,593 for the three months ended December 31, 2024. This increase of approximately $3,475,000 is primarily attributable to the increase in stock-based consulting expenses of approximately $2,472,000 to various consultants, general consulting, legal, director fees and investor relation fees of approximately $807,000, increase in accounting fees of approximately $17,000, increase of approximately $79,000 in employee remuneration expense, and increase in other general and administrative expenses of approximately $85,000 related to increase public company expenses and increase in marketing expense of approximately $14,000.

Administration expense increased to $8,226,747 for the six months ended December 31, 2025 as compared to $374,352 for the six months ended December 31, 2024. This increase of approximately $7,852,000 is primarily attributable to the increase in stock-based consulting expenses of approximately $6,215,000 to various consultants, general consulting, legal, director fees and investor relation fees of approximately $1,293,000, increase in accounting fees of approximately $48,000, increase of approximately $88,000 in employee remuneration expense, and increase in other general and administrative expenses of approximately $177,000 related to increase public company expenses and increase in marketing expense of approximately $31,000.

Occupancy Expense - Relates Party

Occupancy expenses increased to $6,600 for the three months ended December 31, 2025 as compared to $5,401 for the three months ended December 31, 2024. Occupancy expenses increased to $21,389 for the six months ended December 31, 2025 as compared to $13,718 for the six months ended December 31, 2024. This increase in both periods are primarily attributable to the increase of monthly rental fees as a result of the lease renewal with the related party lessor in May 2025.

Research and Development Expenses

Research and development expenses were decreased to $19,961 for the three months ended December 31, 2025 as compared to $54,388 for the three months ended December 31, 2024, a decrease in research and development expenses of approximately $34,000 Research and development expenses were decreased to $80,162 for the six months ended December 31, 2025 as compared to $116,102 for the six months ended December 31, 2024, a decrease in research and development expenses of approximately $36,000.

Such research and development expenses are related to the two-year collaboration agreement with University of Jaén, which was executed in October 2020 to provide certain research services to the Company ending on October 2022, relating to the investigation of a fully synthetic recombinant version of PRP. Additionally, on July 27, 2022, the Company entered into another two-year research agreement with the University of Jaén to provide certain research and experiment services to the Company relating to the investigation of the effects of pancreatic proenzymes against the tumor microenvironment. Additionally, we also allocate a portion of the management's salary to research and development expenses. The overall decrease in research and development expenses is primarily related to our cost-cutting measures due to insufficient working capital funding. Further research and development collaborations are currently under negotiation with the University of Jaén and other contract research organizations in preparation for upcoming available working capital for future research and development expenses.

Interest Expense

Interest expense decreased to $58,955 for the three months ended December 31, 2025, as compared to $118,943 for the three months ended December 31, 2024. Interest expense increased to $364,604 for the six months ended December 31, 2025, as compared to $205,173 for the six months ended December 31, 2024. Interest expense is primarily comprised of approximately $187,000 of debt discount amortization, accretion of put premium of approximately $37,000, default and prepayment penalty fees of approximately $53,000 and interest expense from accrual of interest expense and other financing fees for a total of approximately $87,000 for the for the six months ended December 31, 2025.

This decrease in interest expense during the three months ended December 31, 2025 of approximately $59,000 is primarily attributable to the decrease in amortization of debt discount of approximately $41,000, and decrease of approximately $18,000 in interest expense from accrual of interest expense and other financing fee.

This increase in interest expense during the six months ended December 31, 2025 of approximately $159,000 is primarily attributable to the increase in amortization of debt discount of approximately $53,000, increase in accretion of put premium of approximately $37,000, increase in default and prepayment penalty fees of approximately $53,000 and increase of approximately $16,000 in interest expense from accrual of interest expense and other financing fee.

Derivative Expense

Derivative expense decreased to $0 for the three months ended December 31, 2025 as compared to $8,559 for the three months ended December 31, 2024. Derivative expense decreased to $0 for the six months ended December 31, 2025 as compared to $35,741 for the six months ended December 31, 2024. This decrease is primarily attributable to the decrease in issuance of convertible notes which initial value was bifurcated from the embedded conversion option and was recorded as derivative expense.

Change in Fair Value of Derivative Liabilities

Change in fair value of derivative liabilities increased to a gain of $87,728 for the three months ended December 31, 2025 as compared to $13,581 for the three months ended December 31, 2024. Change in fair value of derivative liabilities was increased to a gain of $68,022 for the six months ended December 31, 2025 as compared to $66,368 for the six months ended December 31, 2024. The increase in gain for the three and six months period of approximately $74,000 and $1,700,respectively, 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 number of convertible notes which value was bifurcated from the embedded conversion option during the six months ended December 31, 2025 as compared to the prior six month period.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability increased to a gain of $593,710 for the three and six months ended December 31, 2025 as compared to $0 for both prior periods. The increase in gain of approximately $594,000 is primarily attributable to the decrease in fair value of the warrant liability as a result of the decrease in our stock price during the six months ended December 31, 2025.

Gain (Loss) on Extinguishment of Debt, net

During the six months ended December 31, 2025, were principal aggregate amount of convertible notes of $145,650, accrued interest of $14,960 and conversion fees of $2,343 containing bifurcated embedded conversion option derivatives were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $293,968, resulting in a loss on extinguishment at the time of conversion of $131,015 and $303,743 of derivative liability fair value was recorded as a gain on extinguishment at the time of conversion, resulting in a net gain of $172,728 which is included in gain (loss) on extinguishment of debt in the accompanying condensed consolidated statements of operations.

During the six months ended December 31, 2024, notes with principal amounts totaling $49,100, accrued interest of $3,769 and conversion fees of $2,833 containing bifurcated embedded conversion option derivatives which were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $137,454, resulting in a loss on extinguishment at the time of conversion of $81,752 and $51,674 of derivative liability fair value and was recorded as a gain on extinguishment at the time of conversion, resulting in a net loss of $30,078 which is included in gain (loss) on extinguishment of debt in the accompanying condensed consolidated statements of operations.

Foreign Currency Transaction Gain (Loss)

Foreign currency transaction gain (loss) decreased to a loss of $19,497 for the three months ended December 31, 2025 as compared to $84,121 for the three months ended December 31, 2024. Foreign currency transaction gain (loss) decreased to a loss of $54,196 for the six months ended December 31, 2025 as compared to $75,698 for the six months ended December 31, 2024. This decreases is partially attributable to the increase in exchange rates during the six months ended December 31, 2025.

Net loss

Net loss increased to $3,091,394 for the three months ended December 31, 2025 as compared to a net loss of $430,183 for the three months ended December 31, 2024. Net loss increased to $7,929,132 for the six months ended December 31, 2025 as compared to a net loss of $784,493 for the six months ended December 31, 2024. The change relates to the factors discussed above.

Deemed dividend

The Company paid legal fees related to the sale of our Series C preferred stock of $50,000 and accreted $882,246 up to the redemption value of the Series C Preferred stock. Accordingly, the Company recognized total deemed dividend of $932,246 and $0 during the three and six months ended December 31, 2025 and 2024, respectively, and a corresponding reduction of income available to common stockholders during the three and six months ended December 31, 2025 and 2024.

Net loss available to common stockholders

Net loss available to common stockholders increased to $4,023,640 for the three months ended December 31, 2025 as compared to a net loss available to common stockholders of $430,183 for the three months ended December 31, 2024. Net loss available to common stockholders increased to $8,861,378 for the six months ended December 31, 2025 as compared to a net loss available to common stockholders of $784,493 for the six months ended December 31, 2024. The change relates to the factors discussed above.

Liquidity and Capital Resources

Current Financial Condition

As of December 31, 2025, we had total assets of $15,111,532, comprised primarily of cash of $561,237 GST tax receivable of $16,994, prepaid expenses - current portion of $7,127,293, other current assets of $1,400, security deposit of $2,000, operating lease ROU asset, net of $50,901, prepaid expenses - long-term of $7,347,310 and fixed assets of $4,397. As compared to June 30, 2025, we had total assets of $19,631,808, comprised primarily of cash of $12,088, GST tax receivable of $5,302, prepaid expenses - current portion of $8,334,046, other current assets of $1,380, security deposit of $1,971, deferred offering cost of $291,773, operating lease ROU asset, net of $59,413 and prepaid expenses - long-term of $10,925,835.

We had current liabilities of $3,624,018, primarily comprised of net convertible debt of $55,000, accounts payable, accrued expenses and accrued interest of $1,986,098, employee benefit liability of $703,190, loans payable of $65,280, loans payable - related party of $472,083, embedded conversion option liabilities of $32,128, warrant liability of $288,635 and operating lease liability of $21,604 as of December 31, 2025. As compared to June 30, 2025, $5,578,240, primarily comprised of net convertible debt of $537,921, accounts payable, accrued expenses and accrued interest of $2,926,941, employee benefit liability of $667,901, loans payable of $65,280, loans payable - related party of $415,329, note payable, net of $543,312, embedded conversion option liabilities of $403,892 and operating lease liability of $17,664.

We have funded our operations primarily through the issuance of equity and/or convertible securities for cash. The cash was used primarily for repayment of debt and payments for research and development, administration expenses, occupancy expenses, professional and consulting fees, and travel.

During the six months ended December 31, 2025 we received proceeds from the sale of our common stock for approximately $3.3 million, sale of our Series C preferred stock for approximately $950,000 and proceeds from issuance of notes of $175,000 and proceeds from issuance of loan payable from related parties of $78,249.

We have substantial capital resource requirements and have incurred significant losses since inception. As of December 31, 2025, we had $561,237 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.

Sources and Uses of Cash

		For the Six months ended December 31,
		2025				2024
Net cash used in operating activities		$	(2,938,207	)		$	(216,786	)
Net cash used in investing activities		$	(4,758	)		$	-
Net cash provided by financing activities		$	3,491,871			$	270,515
Effect of exchange rate changes on cash		$	243			$	(60,181	)

Net Cash Flow from Operating Activities

Net cash used in operating activities was $2,938,207 for the six months ended December 31, 2025, due to our net loss of $7,929,132 offset primarily non-cash charges of amortization of debt discount of $186,777, accretion of put premium of $37,450, non-cash interest expense of $5,843, total stock-based expenses of $5,496,367, foreign currency transaction loss of $54,196, and change in fair value of derivatives of $68,022 and warrant liability of $593,710, addback gain from extinguishment of debt of $210,178. Net changes in operating assets and liabilities totaled $661,280, which is primarily attributable to an increase in prepaid expenses of $28,590, decrease in accounts payable of $310,368, and decrease in accrued expenses and other payables of $351,663.

Net cash used in operating activities was $216,786 for the six months ended December 31, 2024, due to our net loss of $784,493 offset primarily by non-cash charges of amortization of debt discount of $133,644, non-cash interest expense of $4,582, derivative expense of $35,741, foreign currency transaction loss of $75,698, and gain from extinguishment of debt of $30,078 addback change in fair value of derivatives of $66,368. Net changes in operating assets and liabilities totaled $329,466, which is primarily attributable to an increase in accrued interest of $49,350, increase in accounts payable of $102,374 and increase in accrued expenses and other payables of $166,993.

Net Cash Flow from Investing Activities

Net cash used in investing activities was $4,758 for the six months ended December 31, 2025, related to purchase of equipment, as compared to $0 for the six months ended December 31, 2024.

Net Cash Flow from Financing Activities

Net cash provided by financing activities for the six months ended December 31, 2025 was $3,491,871. During the six months ended December 31, 2025 we received net proceeds from sales of our common stock for $3,314,458 and Series C preferred stock for $950,099, proceeds from issuance of notes of $175,000 and proceeds from issuance of loan from related parties of $78,249 offset by repayment of notes of $875,127 and loans payable - related party of $150,808.

Net cash provided by financing activities for the six months ended December 31, 2024 was $270,515. During the six months ended December 31, 2024 we received net proceeds from issuance of convertible notes of $80,000, proceeds from a note of $35,000 and proceeds from issuance of loan from related parties of $278,915 offset by repayment of notes of $98,400 and deferred offering cost of $25,000.

Effect of Exchange Rate

The effect of the exchange rate on cash resulted in a $243 positive adjustment to cash flows in the six months ended December 31, 2025 as compared to a $60,181 negative adjustment to cash flows in the six months ended December 31, 2024. 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.

Critical Accounting Estimates

Below is a discussion of our more subjective accounting estimation processes for purposes of explaining (i) the methodology used in calculating the estimates, (ii) the inherent uncertainties pertaining to such estimates, and (iii) the possible effects of a significant variance in actual experience, from that of the estimate, on our financial condition. Estimates involve numerous assumptions that, if incorrect, could create a material adverse impact on the Company's results of operations and financial condition.

Reference is frequently made herein to the Financial Accounting Standards Board (the "FASB") Accounting Standards Codification ("ASC"). This is the source of authoritative US GAAP recognized by the FASB to be applied to non-governmental entities. Each ASC reference in this filing is presented with a three-digit number, which represents its Topic. As necessary for explanation and as applicable, an ASC topic may be followed with a two-digit subtopic, a two-digit section or a two-or-three-digit paragraph.

Derivative Instruments: ASC 815, "Derivatives and Hedging," establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings. On the date of conversion, or payoff, of debt, we record the fair value of the conversion shares, remove the fair value of the related derivative liability, remove any discounts and record a net gain or loss on debt extinguishment.

Prepaid expenses - current portion and long-term portion consist primarily of costs paid for future services which will occur between 1 month to three years. Prepaid expenses principally include prepayments in fully vested, non-forfeitable equity instruments for general consulting, investor relations, and business advisory services, which are being amortized over the terms of their respective agreements.

Recent Accounting Pronouncements

Please see section captioned "Recent Accounting Pronouncements" in Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a discussion of recently issued and adopted accounting pronouncements.

Going Concern Qualification

We did not generate any revenue for the six months ended December 31, 2025 and 2024 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, 2025 and 2024. 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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.