As filed with the Securities and Exchange Commission on June 23, 2011
Registration No. ___________
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
PROPANC HEALTH GROUP CORPORATION
 (Exact name of registrant as specified in its charter)
  
Delaware
 
2834
 
33-0662986
(State or other jurisdiction of
 
(Primary Standard Industrial
 
(I.R.S. Employer
incorporation or organization)
 
Classification Code Number)
 
Identification No.)

576 Swan Street
Richmond, VIC, 3121, Australia
+61 (0)3 9208 4182
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Mr. James Nathanielsz
576 Swan Street
Richmond, VIC, 3121, Australia
 +61 (0)3 9208 4182
 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
Peter J. Gennuso, Esq.
Cheryll June Calaguio, Esq.
Gersten Savage LLP
600 Lexington Avenue, 10th Floor
New York, NY  10022
(212) 752-9700

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: þ
  
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
þ
 

 


 
 

 
 
CALCULATION OF REGISTRATION FEE
 
Title of Each Class of Securities to be Registered
 
Amount to be
Registered
   
Proposed
Maximum
Offering Price
Per Share  (2)
   
Proposed
Maximum
Aggregate
Offering Price (2)
   
Amount of 
Registration Fee
 
Common stock, $0.001 par value per share(1)
   
14,383,174
   
$
1.50
   
$
21,574,761
   
$
2,504.83
 
Common stock, $0.001 par value per share(3)
   
5,000,000
   
$
1.50
   
$
7,500,000
     
870.75
 
Total
   
19,383,174
           
$
29,074,761
   
$
3,375.58
 

(1) 
The shares of our common stock being registered hereunder are being registered for sale by the selling shareholders named in the prospectus.  Under Rule 416 of the Securities Act of 1933, the shares being registered include such indeterminate number of shares of common stock as may be issuable with respect to the shares being registered in this registration statement as a result of any stock splits, stock dividends or other similar event.
 
 (2) 
The proposed maximum offering price per share and the proposed maximum aggregate offering price have been estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933 on the basis of the last sales price of the Company’s common stock.
 
(3)
Represents shares of common stock being offered on a “best efforts” basis for the Company’s benefit.
 
The registrant hereby amends this registration statement on such date or date(s) as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.
 
The information in this prospectus is not complete and may be changed.  These securities may not be sold until the registration statement filed with the Securities and Exchange Commission of which this prospectus is a part becomes effective.  This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
 
 

 
 
The information in this prospectus is not complete and may be changed.  These securities may not be sold until the registration statement filed with the Securities and Exchange Commission of which this prospectus is a part becomes effective.  This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
Subject to Completion, Dated June 23, 2011
 
PROPANC HEALTH GROUP CORPORATION
 
PROSPECTUS
 
19,383,174 Shares of Common Stock
 
This prospectus relates to the sale of up to 14,383,174 shares of our common stock which may be offered by the selling shareholders identified in this prospectus on page 27 at a price of $1.50 per share until a market for our common stock develops. All such shares being sold by the selling shareholders are presently issued and outstanding.  This prospectus also relates to the sale of up to 5,000,000 shares of our common stock that we are offering on a best efforts basis for up to ninety (90) days following the date of this prospectus at a fixed price of $1.50, which may be extended by the company for up to an additional ninety (90) day period. If all shares being offered by the company are sold, we will receive an aggregate of $7,500,000, less approximately $50,000 in expenses.  No public market currently exists for the shares being offered. The shares being offered by the selling shareholders will be sold at $1.50 per share until such time as the company’s shares of common stock are quoted on the OTC Bulletin Board and thereafter at prevailing market prices. The selling shareholders will not bear any of the costs associated with the registration or offering of their shares.
 
We will not receive any proceeds from sales of shares of our common stock by the selling shareholders.


 
 
public offering
price
   
Underwriting
discount and
commissions
   
Proceeds to us*
 
Per share of common stock
 
$
1.50
   
$
0.00
   
$
1.495
 
Total amount of common stock
 
$
7,500,000
   
$
0.00
   
$
7,450,000
 
*reflects offering expenses of an aggregate of $50,000

Our common stock is presently not listed on any national securities exchange or the Nasdaq Stock Market. Subsequent to the initial filing date of this registration statement on Form S-1, in which this Prospectus is included, we intend to have an application filed on our behalf by a market maker for approval of our common stock for quotation on the Over-the-Counter Bulletin Board (“OTC-BB”) quotation system.  No assurance can be made, however, that we will be able to locate a market maker to submit such application or that such application will be approved.

The company is currently in the development stage and has no operations or revenues to date and there can be no assurance that the company will be successful in furthering its operations.  Persons should not invest unless they can afford to lose their entire investment.   Before purchasing any of the shares covered by this Prospectus, carefully read and consider the risk factors included in the section entitled “Risk Factors” beginning on Page 4.   These securities involve a high degree of risk, and prospective purchasers should be prepared to sustain the loss of their entire investment.  There is currently no public trading market for the securities.  

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.
 
The date of this prospectus is June ____, 2011

 
 

 

TABLE OF CONTENTS

   
Page
 
       
PROSPECTUS SUMMARY
  1  
RISK FACTORS
  4  
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
  10  
TAX CONSIDERATIONS
  11  
USE OF PROCEEDS
  11  
CAPITALIZATION
  11  
DETERMINATION OF OFFERING PRICE
  11  
DILUTION
  12  
MARKET FOR COMMON STOCK
  12  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  12  
BUSINESS
  16  
MANAGEMENT
  22  
EXECUTIVE COMPENSATION
  25  
PRINCIPAL SHAREHOLDERS
  26  
RELATED PARTY TRANSACTIONS
  26  
SELLING SHAREHOLDERS
  27  
DESCRIPTION OF SECURITIES
  29  
PLAN OF DISTRIBUTION
  29  
LEGAL MATTERS
  30  
EXPERTS
  30  
ADDITIONAL INFORMATION
  30  
INDEX TO FINANCIAL STATEMENTS
  F-1  

You should rely only on information contained in this prospectus.  We have not authorized anyone to provide you with information that is different from that contained in this prospectus.  No selling shareholder is offering to sell or seeking offers to buy shares of common stock in jurisdictions where offers and sales are not permitted.  The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.  We are responsible for updating this prospectus to ensure that all material information is included and will update this prospectus to the extent required by law.

 

 

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.  You should read the entire prospectus carefully including the section entitled “Risk Factors” before making an investment decision.  Propanc Health Group Corporation, is referred to throughout this prospectus as “Propanc,” “we,” “our” or “us.”

Our Company

We are a research and development company whose primary activity is to develop and market new treatments for chronic diseases, such as cancer.  We have generated very limited revenue, have no cancer treatment products available to market and have no products which have reached the clinical trial stage.  We require substantial additional financing to develop our products.
 
In January 29, 2011, we completed an exchange offer with the shareholders of Propanc Pty Ltd. an Australian entity, which is now our operating subsidiary.  Pursuant to the exchange offer, each shareholder of Propanc Pty Ltd. received one share of our common stock, and as a result thereof, we issued an aggregate of 64,700,525 shares of our common stock the shareholders of Propanc Pty Ltd.  We had nominal assets and liabilities as of the time of the exchange offer.  All historical references in this prospectus are to Propanc Australia.  All references in this prospectus are to U.S. dollars.
 
Corporate Information

We are a Delaware corporation formed on November 23, 2010.  Our principal executive offices are located at 576 Swan Street, Richmond, VIC, 3121, Australia.  Our phone number is +61(0)39208-4182 and our website can be found at www.propanc.com.  The information on our website does not form a part of this prospectus.
 
 
1

 

THE OFFERING

Common stock outstanding prior to the offering:
71,915,889
   
Common stock offered by the selling shareholders:
14,383,174(1)
   
Common stock outstanding immediately following the offering:
71,915,889
   
Offering Period
The shares are being offered for a period of up to ninety (90) days following the date of this prospectus at a fixed price of $1.50, which may be extended by the company for up to an additional ninety (90) day period.
   
Use of proceeds:
We will not receive any proceeds from the sale of the shares of common stock.  The selling shareholders named herein will receive all proceeds from the sale of the shares of our common stock in this offering. Please see “Selling Shareholders” beginning on page 27.
 
We are offering the 5,000,000 shares of common stock on a best efforts basis at a fixed price of $1.50 per share, and accordingly we would receive gross proceeds of up to $7,500,000 assuming that all 5,000,000 shares are sold. We intend to use the net proceeds received from the sale of the 5,000,000 shares of common stock pursuant to the best efforts offering for the purpose of clinical trials, continued research and development, the expansion of our business and for general working capital.  There can be no assurance that we will sell any of such shares and accordingly may receive no proceeds from the offering.
   
Market for Common Stock
There is no public market for our common stock. After the effective date of the registration statement of which this prospectus is a part, we intend to try to identify a market maker to file an application on our behalf to have our common stock quoted on the Over-the-Counter Bulletin Board. In order for such applicable to be accepted, we will have to satisfy certain criteria in order for our common stock to be quoted on the Over-the-Counter Bulletin Board. We currently have no market maker that is willing to list quotations for our stock. There is no assurance that a market maker will be willing to quote our stock, that the Financial Industry Regulatory Authority or FINRA will approve such application, that a trading market will develop, or, if developed, that it will be sustained.
   
Dividend Policy
We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.
   
Risk Factors:
See “Risk Factors” beginning on page 4 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
 
(1)
Currently issued and outstanding.
 
 There are no outstanding options, warrants or other rights to obtain securities of Propanc.

 
2

 

SUMMARY FINANCIAL DATA
 
The following summary of our financial data should be read in conjunction with, and is qualified in its entirety by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements, appearing elsewhere in this prospectus.  

Statements of Operations Data

   
Year Ended
June 30,
2010
   
Year Ended
June 30,
2009
 
Revenue
 
$
0
   
$
2,657
 
                 
Loss from operations
 
$
(726,202)
   
$
(392,013)
 
                 
Net loss
 
$
(842,487)
   
$
(443,849)
 
                 
Net loss per share – basic and diluted
 
$
(0.02)
   
$
(0.01)
 
                 
Weighted average number of shares of common stock (basic and diluted)
   
51,952,264
     
41,829,231
 
  
               
For the period from
 
               
October 15,
 
   
For the Nine Months Ended
   
2007 (Inception)
 
   
March 31,
   
to March 31,
 
   
2011
   
2010
   
2011
 
   
unaudited
   
unaudited
   
unaudited
 
Revenue
                 
     Royalty revenue - related party
  $ -     $ -     $ 30,974  
                         
Net Loss
    (1,498,293 )     (293,874 )     (3,192,656 )
                         
                         
Basic And Diluted Net Loss Per Share
  $ (0.02 )   $ (0.01 )   $ (0.08 )
                         
Basic And Diluted Weighted
                       
     Average Shares Outstanding
    62,238,581       51,300,000       41,374,601  

Balance Sheet Data

   
March 31,
2011
(unaudited)
   
June 30,
2010
 
Cash
 
$
54
   
$
528
 
  
               
Total assets
 
$
404,614
   
$
43,862
 
  
               
Total current liabilities
 
$
283,102
   
$
230,765
 
  
               
Deficit accumulated during development stage
 
$
(3,192,656
)
 
$
(1,694,363
)
  
               
Total stockholders’ equity (deficit)
 
$
121,512
   
$
(186,903
)
  
 
3

 

RISK FACTORS
 
Investing in our common stock involves a high degree of risk.  You should carefully consider the following risk factors before deciding whether to invest in Propanc. If any of the events discussed in the risk factors below occur, our business, financial condition, results of operations or prospects could be materially and adversely affected.  In such case, the value and marketability of the common stock could decline.

Risks Relating to our Business

Our ability to continue as a going concern is in substantial doubt absent obtaining adequate new debt or equity financings.

Our continued existence is dependent upon us obtaining adequate working capital to fund all of our operations.  Working capital limitations continue to impinge on our day-to-day operations, thus contributing to continued operating losses.  Thus, if we are unable to raise funds to fund the research and development of our products, we may not be able to continue as a going concern and you will lose your investment.

Because we are an early stage drug development company with no product near commercialization, we expect to incur significant additional operating losses.

Our Australian subsidiary was organized in 2007. We expect to incur substantial additional operating expenses over the next several years as our research, development, pre-clinical testing, and clinical trial activities increase. The amount of future losses and when, if ever, we will achieve profitability are uncertain. We have no products that have generated any commercial revenue, do not expect to generate revenues from the commercial sale of our products in the near future, if at all. Our ability to generate revenue and achieve profitability will depend on, among other things, the following:

  
successful completion of the preclinical and clinical development of our products;
  
obtaining necessary regulatory approvals from the European Medicines Agency for the Evaluation of Medicinal Products or EMEA, the U.S. Food and Drug Administration, or the FDA, or other regulatory authority;
  
establishing manufacturing, sales, and marketing arrangements, either alone or with third parties; and
  
raising sufficient funds to finance our activities.

We might not succeed at any of these undertakings. If we are unsuccessful at some or all of these undertakings, our business, prospects, and results of operations may be materially adversely affected.

Because we will need to finance our future cash needs through securities offerings, any additional funds that we obtain may not be on terms favorable to us or our shareholders and may be very dilutive.

To date, we have no approved product on the market and have generated no product revenues.  The minimal revenue generated to date relate to a small non-commercial supply of an original three component formulation rather than a commercial sale of our products.  Unless and until we receive approval from the EMEA, the FDA or other regulatory authorities for our products, we cannot sell our products and will not have product revenues. Therefore, for the foreseeable future, we will have to fund all of our operations and capital expenditures from cash on hand, private or public equity offerings and debt financings.

We believe that the net proceeds from our prior private equity offerings and existing cash will be sufficient to enable us to fund our projected operating requirements for the next twelve (12) months, depending on the accuracy of our estimates.  However, we may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate, and we may decide to raise additional funds even before we need them if the conditions for raising capital are favorable.  We may seek to sell additional equity or debt securities, obtain a bank credit facility, or enter into a corporate collaboration or licensing arrangement. The sale of additional equity or debt securities, (if convertible,) will result in dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could also result in covenants that would restrict our operations. Raising additional funds through collaboration or licensing arrangements with third parties may require us to relinquish valuable rights to our products, future revenue streams, research programs or products, or to grant licenses on terms that may not be favorable to us or our shareholders.
 
 
4

 
 
If we need additional capital to fund our growing operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.

The severe recession, freezing of the global credit markets may adversely affect our ability to raise capital in the future. If adequate additional financing is not available on reasonable terms or at all, we may not be able to undertake expansion, we may have to modify our business plans accordingly.
 
Even if we do find a source of additional capital, we may not be able to negotiate favorably terms and conditions for receiving the additional capital. Any future capital investments will dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

Because our product candidates are in the early stages of development and may never lead to commercially viable drugs, you may lose your investment.

We are an oncology research and development company focused on the development of new cancer treatments which prevent cancer from returning or spreading, all of which are at an early stage of development. Our drug development methods may not lead to commercially viable drugs for any of several reasons. For example, we may fail to identify appropriate compounds, our drug candidates may fail to be safe and effective in clinical or additional preclinical trials, or we may have inadequate financial or other resources to pursue discovery and development efforts for new drug candidates. Our product candidates will require significant additional development, clinical trials, regulatory clearances and additional investment by us before they can be commercialized. If, for any of these reasons, we are unsuccessful at commercializing our drug candidates, you may lose your investment.
 
Because successful development of our products is uncertain, our results of operations may be materially harmed.

Our development of current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical products and products based on new technologies, including but not limited to the following:

  
delays in product development, clinical testing, or manufacturing;
  
unplanned expenditures in product development, clinical testing, or manufacturing;
  
failure to receive regulatory approvals;
  
emergence of superior or equivalent products;
  
inability to manufacture our product candidates on a commercial scale on our own, or in collaboration with third parties; and
  
failure to achieve market acceptance.

Because of these risks, our development efforts may not result in any commercially viable products. If a significant portion of these development efforts are not successfully completed, required regulatory approvals are not obtained, or any approved products are not commercialized successfully, our business, financial condition, and results of operations may be materially harmed.

Because pre-clinical and clinical trials required for our product candidates are expensive and time-consuming and their outcome is uncertain, we may incur significant additional operating expenses which would adversely affect our results of operations.

Before we can obtain regulatory approval for the commercial sale of any product candidate currently under development, we are required to complete extensive clinical trials to demonstrate its safety and efficacy.  We will only receive approval to commercialize a product candidate if we can demonstrate to the EMEA, the FDA or other applicable regulatory authority that the product candidate is safe and effective and otherwise meets the appropriate standards required for approval.  Clinical trials are very expensive and difficult to design and implement. The clinical trial process is also time-consuming. To meet these requirements, we must conduct extensive preclinical testing and “adequate and well-controlled” clinical trials. Conducting clinical trials is a lengthy, time consuming, and expensive process. The length of time may vary substantially according to the type, complexity, novelty, and intended use of the product candidate, and often can be several years or more per trial. Delays associated with products for which we are directly conducting pre-clinical or clinical trials may cause us to incur additional operating expenses. The commencement and rate of completion of clinical trials may be delayed by many factors, including, for example:
 
 
5

 

  
inability to manufacture sufficient quantities of qualified materials under the EMEA, FDA or other regulatory authorities requirements for use in clinical trials;
  
failure to recruit a sufficient number of patients or slower than expected rates of recruitment;
  
modification of clinical trial protocols;
  
changes in regulatory requirements for clinical trials;
  
lack of effectiveness during clinical trials;
  
emergence of unforeseen safety issues in preclinical or clinical trials;
  
delays, suspension, or termination of clinical trials by the institutional review board responsible for overseeing the study at a particular study site; and
  
government or institutional review board or other regulatory delays or “clinical holds” requiring suspension or termination of the trials.

The results from pre-clinical testing and early clinical trials are not necessarily predictive of results to be obtained in later clinical trials. Accordingly, even if we obtain positive results from pre-clinical or early clinical trials, we may not achieve the same success in later clinical trials.

Clinical trials may not demonstrate statistically significant safety and effectiveness required to obtain the requisite regulatory approvals for product candidates. The failure of clinical trials to demonstrate safety and effectiveness for the desired indications could harm the development of our products. This failure could cause us to abandon a product and could delay development of other products. Any delay in, or termination of, our clinical trials may result in increased development costs for our products which would cause the market price of our shares to decline and limit our ability to obtain additional financing and, ultimately, our ability to commercialize our products and generate product revenues. Any change in, or termination of, our clinical trials could materially harm our business, financial condition and results of operations.

If we do not obtain the requisite regulatory approvals we need to market our products, we will not be able to commercialize our products.

We have not applied for nor received the regulatory approvals required for the commercial sale of any of our products in the United States or in any foreign jurisdiction. None of our product candidates has been determined to be safe and effective, and we have not submitted an application to the EMEA, FDA or other regulatory authority for any of our products.

It is possible that none of our products will be approved for commercialization. Failure to obtain regulatory approvals, or delays in obtaining regulatory approvals, may adversely affect the successful commercialization of any of the products that we develop, impose additional costs on us, diminish any competitive advantages that we may have, and/or adversely affect our receipt of revenues or royalties.

If we are unable to obtain sufficient and adequate supplies necessary to the manufacturing of our product, our ability to obtain approval to commercialize our products will be harmed.
 
Regulatory agencies may require us to identify any supplier of materials used in our products and may also require us to obtain approval of such supplier. We intend to use Good Manufacturing Practice1 approved suppliers which can then provide a certificate of suitability and/or drug master file to support our submission. Such regulatory authority may require testing and prior review and approval before they permit us to use an intended supplier. The loss of a supplier, or any significant decrease or interruption in supply could interrupt the development and/or testing of our products. Furthermore, the regulatory authority could extend these delays in situations where it requires approval of an alternative supplier. The loss of one of these sole suppliers could have a material adverse effect on our business.

Even if regulatory approval is obtained, our products will be subject to extensive post-approval regulation.

Once a product is approved, numerous post-approval requirements apply, including but not limited to requirements relating to manufacturing, labeling, packaging, advertising and record keeping.  Even if regulatory approval of a product is obtained, the approval may be subject to limitations on the uses for which the product may be marketed, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Any such post-approval requirement could reduce our revenues, increase our expenses and render the approved product candidate not commercially viable. In addition, as clinical experience with a drug expands after approval because it is typically used by a greater number and more diverse group of patients after approval than during clinical trials, side effects and other problems may be observed after approval that were not seen or anticipated during pre-approval clinical trials or other studies. Any adverse effects observed after the approval and marketing of a product candidate could result in limitations on the use of such approved product or its withdrawal from the marketplace. Absence of long-term safety data may also limit the approved uses of our products. If we fail to comply with the regulatory requirements of the applicable regulatory authorities, or if previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks, including:
 
______________________
1 The standards used by pharmaceutical and biotech firms to ensure that products meet specific requirements for identity, strength, quality and purity.
 
 
6

 
 
  
restrictions on the products, manufacturers or manufacturing processes;
  
warning letters and untitled letters;
  
civil penalties and criminal prosecutions and penalties;
  
fines;
  
injunctions;
  
product seizures or detentions;
  
import or export bans or restrictions;
  
voluntary or mandatory product recalls and related publicity requirements;
  
suspension or withdrawal of regulatory approvals;
  
total or partial suspension of production; and
  
refusal to approve pending applications for marketing approval of new products or of supplements to approved applications.

If we are slow or unable to adapt to changes in existing regulatory requirements or the promulgation of new regulatory requirements or policies, we or our licensees may lose marketing approval for our products which will impact our ability to conduct business in the future.

The successful commercialization of our products will depend on obtaining coverage and reimbursement for use of these products from third-party payors.

Sales of pharmaceutical products largely depend on the reimbursement of patients’ medical expenses by government health care programs and private health insurers. Without the financial support of the government or third-party payors, the market for our products could be limited. These third-party payors are increasingly challenging the price of and examining the cost effectiveness of medical products and services. Significant uncertainty exists as to the reimbursement status of newly approved health care products. Third-party payors may not reimburse sales of our products or enable our collaborators to sell them at profitable prices, which would adversely affect our business.

If physicians and patients do not accept and use our products, our results of operations will be adversely affected.

Even if the EMEA, the FDA or another regulatory authority approves one or more of our product candidates, physicians and patients may not accept and use it. Acceptance and use of our products will depend upon a number of factors including, but not limited to the following:

  
perceptions by members of the health care community, including physicians, about the safety and effectiveness of our products;
  
cost-effectiveness of our products relative to competing products;
  
availability of reimbursement for our products from government or other healthcare payors; and
  
effective marketing and distribution efforts by us and our licensees and distributors, if any.

If our current product candidates are approved, we expect sales to generate substantially all of our product revenues for the foreseeable future, and as such, the failure of these products to find market acceptance would harm our business and could require us to seek additional financing.
 
 
7

 

Because we plan on operating in multiple countries, we are exposed to political, economic and other risks that may adversely affect our business.
 
Currently our headquarters are in Australia, but we intend to penetrate other markets in the future. At such time, we will therefore be exposed to risks inherent in international operations. These risks include, but are not limited to:

  
changes in general economic, social and political conditions;
  
adverse tax consequences;
  
the difficulty of enforcing agreements and collecting receivables through certain legal systems;
  
inadequate protection of intellectual property;
  
required compliance with a variety of laws and regulations of jurisdictions outside of Australia, including labor and tax laws;
  
customers outside of the United States may have longer payment cycles;
  
changes in laws and regulations of jurisdictions outside of Australia; and
  
terrorist acts and natural disasters.
 
Our business success depends in part on our ability to anticipate and effectively manage these and other regulatory, economic, social and political risks inherent in a multinational business. We cannot assure you that we will be able to effectively manage these risks or that they will not have a material adverse effect on our multinational business or on our business as a whole.

If we lose key management or scientific personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.

We are highly dependent on our management team, specifically Dr. Julian Kenyon, Mr. James Nathanielsz and Dr. Douglas Mitchell.  Furthermore, our future success will also depend in part on the continued service of our key scientific and management personnel and our ability to identify, hire, and retain additional personnel. We do not carry “key-man” life insurance on the lives of any of our employees or advisors.  We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business.  Because of this competition, our compensation costs may increase significantly.  If we lose key employees, our business may suffer.

If we fail to establish a method to sell, market or distribute our products, our results of operations would be adversely affected.

We have no experience in the sales, marketing and distribution of pharmaceutical products.  If we fail to enter into arrangements with third parties relative to the provisioning sales and marketing services for any of our future potential product candidates, we would need to develop an internal sales and marketing organization with supporting distribution capability in order to directly market our products. Significant additional expenditures would be required for us to develop such an in-house sales and marketing organization, which would increase our operating cost and may adversely affect our results of operations.

If we do not obtain protection for our intellectual property rights, our competitors may be able to take advantage of our research and development efforts to develop competing drugs.

Our success will depend, in part, on our ability to maintain the confidentiality of our trade secrets and know how, operate and prevent others from infringing our proprietary rights.  We have filed two national patent applications in Australia as well as an international application under the Patent Cooperation Treaty, or PCT. (See Page 20 of this prospectus for a further description.)  The PCT will provide priority for any foreign applications that we may file for these inventions. The applications include claims intended to provide market exclusivity for certain commercial aspects of the product, including the formulation, the methods of making, the methods of using and the commercial packaging of the product.

Because the patent position of biopharmaceutical companies involves complex legal and factual questions, we cannot predict the validity and enforceability of patents with certainty. Our pending patent applications, those we may file in the future or those we may license from third parties may not result in patents being issued. If these patents are issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology. The degree of future protection to be afforded by our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.
 
Competitors may successfully challenge our patent applications, produce similar drugs or products that do not infringe our patents, or produce drugs in countries where we have not applied for patent protection or that do not respect our patents.
 
 
8

 

 
If any of these events occurs, or we otherwise lose protection for our trade secrets or proprietary know-how, the value of this information may be greatly reduced.  Patent protection and other intellectual property protection are important to the success of our business and prospects, and there is a substantial risk that such protections will prove inadequate.

Legal proceedings or third-party claims of intellectual property infringement may require us to spend substantial time and money and could prevent us from developing or commercializing products.

The biotechnology and pharmaceutical industries have been characterized by extensive litigation regarding patents and other intellectual property rights, and companies have employed intellectual property litigation to gain a competitive advantage. We may become subject to infringement claims or litigation arising out of patents and pending applications of our competitors.  The manufacture, use, offer for sale, sale or importation of our product candidates might infringe on the claims of third-party patents. A party might file an infringement action against us. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation or defense of a patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time. Consequently, we are unable to guarantee that we will be able to manufacture, use, offer for sale, sell or import our product candidates in the event of an infringement action. At present, we are not aware of pending or threatened patent infringement actions against us.
 
As a result of patent infringement claims, or to avoid potential claims, we may choose or be required to seek a license from a third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be non-exclusive, which could potentially limit our competitive advantage. Ultimately, we could be prevented from commercializing a product or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. This inability to enter into licenses could harm our business significantly.

In addition to infringement claims against us, we may in the future become a party to other patent litigation or proceedings, including interference or re-examination proceedings filed with the United States Patent and Trademark Office or opposition proceedings in the European Patent Office regarding intellectual property rights with respect to our products and technology, as well as other disputes regarding intellectual property rights with licensees, licensors or others with whom we have contractual or other business relationships.

Risks Related to Our Common Stock

Currently there is no public market for our common stock, and we cannot predict the future prices or the amount of liquidity of our common stock.

Currently, there is no public market for our common stock and a public market may never develop.  We are in the process of applying to list our common stock on the Over-the-Counter Bulletin Board. However, the Bulletin Board is not a liquid market in contrast to the major stock exchanges. We cannot assure you as to the liquidity or the future market prices of our common stock if a market does develop. If an active market for our common stock does not develop, the fair market value of our common stock could be materially adversely affected. Any public market will follow effectiveness of the registration statement for which this prospectus forms a part of and we cannot predict the price at which we will begin trading or the future prices of our common stock.

If we do not comply with the state regulations in regard to the sale of our common stock or find an exemption therefrom there may be potential limitations on the resale of your stock.

With few exceptions, every offer or sale of a security must, before it is offered or sold in a state, be registered or exempt from registration under the securities, or blue sky laws, of the state(s) in which the security is offered and sold.  Blue sky statutes vary widely and there is very little uniformity in the blue sky filing requirements among state securities laws. As of the date hereof, we intend to offer our common stock upon effectiveness of the registration statement of which this prospectus forms a part to potential purchasers in the states of New York, Florida, Massachusetts, Connecticut and Illinois.  While we intend to review the relevant blue sky laws of these states before the distribution of the common stock therein, should we fail to properly register the common stock as required by the respective states or find an exemption from registration,  you may not be able to resell your stock once purchased. 
 
 
9

 
 
We will be subject to the “penny stock” rules which will adversely affect the liquidity of our common stock.

The Securities and Exchange Commission, or the SEC, has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. We expect the market price of our common stock will be less than $5.00 per share and therefore we will be considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares should one develop.

Because directors and officers currently and for the foreseeable future will continue to control Propanc, it is not likely that you will be able to elect directors or have any say in the policies of Propanc.

Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The directors and officers of Propanc beneficially own approximately 74.8% of our outstanding common stock.  Due to such significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management.

In addition, sales of significant amounts of shares held by our officer and directors, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

In the future we may issue preferred stock without the approval of our shareholders, which could make it more difficult for a third party to acquire us and could depress our stock price.

Our board of directors may issue, without a vote of our shareholders, one or more series of preferred stock with such rights and preferences.  This could permit our board of directors to issue preferred stock to investors who support us and our management and permit our management to retain control of our business. Additionally, issuance of preferred stock could block an acquisition which could result in both a drop in our stock price and a decline in interest of our common stock.

Since we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends for the foreseeable future.

We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

A significant number of our shares will be eligible for sale and their sale or potential sale may depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. This prospectus covers 14,383,174 shares of our common stock, which represents approximately 20% of our current issued and outstanding shares of our common stock. As additional shares of our common stock become available for resale in the public market pursuant to this offering, and otherwise, the supply of our common stock will increase, which could decrease its price.  In addition some or all of the shares of common stock may be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect on the market for our shares of common stock. Subject to certain restrictions beginning on July 29, 2011, a person who has held restricted shares for a period of six months may sell common stock into the market.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus includes forward-looking statements including statements regarding our liquidity and capital requirements, our beliefs regarding our cancer treatments, expected intellectual property protection and expected clinical trials.

All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements.  The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements.  We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.  These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” elsewhere in this prospectus.
 
 
10

 
 
Other sections of this prospectus may include additional factors which could adversely affect our business and financial performance.  New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements.

TAX CONSIDERATIONS

We are not providing any tax advice as to the acquisition, holding or disposition of the securities offered herein. In making an investment decision, investors are strongly encouraged to consult their own tax advisor to determine the U.S. federal, state and any applicable foreign tax consequences relating to their investment in our securities.

USE OF PROCEEDS
 
We will not receive any proceeds from the sale of the common stock by the selling shareholders pursuant to this prospectus. The selling shareholders named herein will receive all proceeds from the sale of the shares of our common stock in this offering. Please see “Selling Shareholders” beginning at page 27.  We will pay all expenses (other than transfer taxes) of the selling shareholders in connection with this offering.

We are also offering the 5,000,000, shares of common stock on a best efforts basis at a fixed price of $1.50 per share, and accordingly we would receive gross proceeds of up to $7,500,000, assuming the sale of all 5,000,000 shares. We intend to use the net proceeds received from the sale of the 5,000,000 shares of common stock pursuant to the best efforts offering for clinical trials, continued research and development, the expansion of our business and for general working capital.  The remaining funds will be used for working capital. There can be no assurance that we will sell any of such shares and accordingly may receive no proceeds from the offering.
 
CAPITALIZATION
 
The following table sets forth our capitalization as of March 31, 2011.  The table should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus:
 
   
As of
March 31, 2011
(unaudited)
 
Stockholders’ equity:
     
    Common stock, $0.001 par value;
 
$
64,700
 
Additional paid-in capital
   
3,286,851
 
Accumulated other comprehensive income (loss)
   
(37,383)
 
Deficit accumulated during development stage
   
(3,192,656)
 
Total stockholders’ equity (deficit)
 
$
121,512
 

DETERMINATION OF THE OFFERING PRICE

There is no established public market for our shares of common stock. The offering price for the sale of common stock held by the selling shareholders of $1.50 per share was determined by us arbitrarily. This price bears no relationship whatsoever to our business plan, the price paid for our shares by our founder, our assets, earnings, book value or any other criteria of value. The offering price should not be regarded as an indicator of the market price, if any, of the common stock that may develop in a trading market after this offering, which is likely to fluctuate.

The $1.50 price of the shares that are being offered on a best efforts basis was arbitrarily determined in order for us to raise up to a total of $7,500,000 in this offering.
 
There are no warrants, rights or convertible securities associated with this offering.
 
 
11

 
 
DILUTION

Our net tangible book value as of March 31, 2011 was approximately $95,000, or $0.00 per share of common stock based on 64,700,525 shares of common stock outstanding as of such date. Net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of March 31, 2011. Dilution in net tangible book value per share to new investors represents the difference between the amount per share paid by purchasers of shares in this offering and the net tangible book value per share of common stock immediately after completion of this offering.

After giving effect to the sale of all the shares being sold pursuant to this offering at the offering price of $1.50 per share, and after deducting estimated offering expenses payable by us in the amount of $50,000, our net tangible book value would be approximately 7,545,000, or $0.11 per share of common stock. This represents an immediate increase in net tangible book value of $0.11 per share of common stock to existing stockholders and an immediate dilution in net tangible book value of $1.39 per share, or 92.7% per share, to new investors purchasing the shares in this offering.

The following table illustrates this per share dilution:

Offering ($1.50)
           
Public offering price per share of common stock
       
$
1.50
 
Net tangible book value per common share as of March 31, 2011
 
$
0.00
         
Increase in net tangible book value per share attributable to existing stockholders
 
$
0.11
         
Net tangible book value per share as adjusted after this offering
         
$
0.11
 
Dilution per share to new investors
         
$
1.39
 

MARKET FOR COMMON STOCK

There is no public market for our common stock.  After the effective date of the registration statement of which this prospectus forms a part, we intend to try to identify a market maker to file an application with the Financial Industry Regulatory Authority, Inc., or FINRA, to have our common stock quoted on the Over-the-Counter Bulletin Board. We will have to satisfy certain criteria in order for our application to be accepted. We do not currently have a market maker that is willing to participate in this application process, and even if we identify a market maker, there can be no assurance as to whether we will meet the requisite criteria or that our application will be accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin Board, or, even if quoted, a liquid or viable market may not materialize. There can be no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained.

As of the date of this prospectus, there were 16 shareholders of record.

Beginning July 29, 2011, 18,110,950 shares may be sold under Rule 144 of the Securities Act by non-affiliates.  The remaining shares may be sold by affiliates subject to the restrictions of Rule 144.

Dividend Policy

We have not paid cash dividends on our common stock and do not plan to pay such dividends in the foreseeable future.  Our Board of Directors, will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business conditions. Dividends, under Delaware General Corporation Law, may only be paid from our net profits or surplus. To date, we have not had a fiscal year with net profits and do not have surplus.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a research and development company whose primary activity is to develop and market new treatments for chronic diseases, such as cancer.  We have generated very limited revenue, have no cancer treatment products available to market and have no products which have reached the clinical trial stage.  We require substantial additional financing to develop our products.
 
 
12

 


Results of Operations

The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this prospectus.  The results discussed below are of Propanc Pty Ltd, our Australian subsidiary.

For the nine months ended March 31, 2011 compared to the nine months ended March 31, 2010

Revenue

We did not generate any revenue for the nine months ended March 31, 2011 nor any for the nine months ended March 31, 2010.  We sustained net losses of $1,498,293 and $293,874, respectively, primarily due to recording of consulting fees paid and stock-based compensation expense in connection with the issuance of shares for services.

Administration Expense

Administration expense increased by $1,051,442 to $1,208,412 for the nine months ended March 31, 2011 as compared with $156,970 for the nine months ended March 31, 2010.  This increase is primarily attributable to $816,365 of consulting fees paid to Churchill and Associates for financial consulting work, $113,474 of stock based compensation expense recorded in connection with the shares issued to Churchill and Associates and $100,550 of accounting and audit expense.

Occupancy Expense

Occupancy expense decreased by $447 for the nine month period ended March 31, 2011 due to relocation of office space to a location with a lower rental rate.

Research and Development Expenses

Research and Development expense increased by $338,201 to $362,585 for the nine months ended March 31, 2011 as compared with $24,384 for the nine months ended March 31, 2010.  This is principally attributable to expenses incurred as a continuation of the initial work undertaken at University of Bath and University of Granada.  This work is centered around additional cell cultures and animal studies, investigation of new combinations of ingredients selected, which were designed to enhance the effects of the proenzymes and create new patentable opportunities.

Interest Expense/Income

For the nine months ended March 31, 2011 interest expense decreased to $0 from $103,722 for the nine month period ended March 31, 2010.  This is primarily attributable to conversion of interest bearing loans into common stock held by two directors and the CEO during fiscal 2010.

For the Year Ended June 30, 2010 compared to the Year ended June 30, 2009

Revenue

For the fiscal year 2010, we generated no revenue as compared to $2,657 of revenue in fiscal year 2009.  The revenue of $2,657 in 2009 is related to the sale to European Nutripharm ENP or for a supply of an unlicensed medicine (pancreatic proenzyme formulation) for the treatment of metastatic cancer patients at the Dove Clinic.  A Limited Distributor Deed between Propanc and ENP Limited recognises the intellectual property rights in respect of the unlicensed medicine supplied by ENP to Dove Clinic, where ENP paid to Propanc 25% of the wholesale purchase price payable for the unlicensed medicine.
 
 
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We sustained net losses of $842,487 and $443,849 in fiscal 2010 and fiscal 2009, respectively, primarily due to recording of stock-based compensation expense in connection with issuance of shares for services.  

Administration Expense

Administration expense increased by $421,275 to $680,110 for the year ended June 30, 2010 as compared with $258,835 for the year ended June 30, 2009.  This increase is primarily attributable to the recording of stock based compensation expense during 2010 in connection with the issuance of shares for services of approximately $476,000.

Occupancy Expense

Occupancy expense decreased by $2,405 or 17% for the year ended June 30, 2010 due to the relocation of our office to a location with a lower rental rate.  

Research and Development Expenses

Research and Development expense decreased by $87,338 or 72% for the year ended June 30, 2010 as compared with $121,369 for the year ended June 30, 2009.  This is primarily attributable to reduced funding being made available for further research and development work.

Interest Expense/Income

Interest expense increased by $62,152 to $116,674 for the year ended June 30, 2010 as compared with $54,522 for the year ended June 30, 2009.  This is primarily attributable to additional shareholder loans offered to the company from two of the directors for year ended June 30, 2010 as compared to June 30, 2009.

Liquidity and Capital Resources

   
For the Nine Months Ended
March 31,
(unaudited)
 
   
2011
   
2010
 
Net cash used in operating activities
 
$
(1,316,761)
   
$
(146,786)
 
Net cash used in investing activities
 
$
(28,528)
   
$
0
 
Net cash provided by financing activities
 
$
1,268,780
   
$
135,659
 

   
For the Fiscal Year Ended
June 30,
 
   
2010
   
2009
 
Net cash used in operating activities
 
$
(191,509
)
 
$
(408,350
)
Net cash used in investing activities
 
$
0
   
$
0
 
Net cash provided by financing activities
 
$
180,810
   
$
280,178
 

Net cash used in operations was $191,509 for the fiscal year ended June 30, 2010 compared to $408,350 for the same period in 2009.   This decrease was primarily attributable to our net loss in 2010 of $(842,487), offset by stock-based compensation expense of $176,705 and $299,737 and changes in operating assets and liabilities of $172,708.  In 2009 net cash used in operations of $(408,350) was primarily attributable to net loss of $(443,849) offset by changes in operating assets and liabilities of $33,267.

There were no cash transactions from investing activities in fiscal year 2010 and 2009.

Cash flows provided by financing activities for the fiscal year ended June 30, 2010 were $180,810 compared to $280,178 for the fiscal year ended June 30, 2009.  During the fiscal year ended June 30, 2010 and 2009, we received $91,810 and $0, respectively, from the sale of common stock.  During the fiscal year ended June 30, 2010 and 2009, we received $89,000 and $280,174, respectively, in loan proceeds.

We have substantial capital resource requirements and have incurred significant losses since inception.  As of March 31, 2011, we had $54 in cash.  Based upon our current business plans, we will need considerable cash investments to be successful.  Such capital requirements are in excess of what we have in available cash and what we currently have commitment for.  Therefore, we do not have enough available cash to meet our obligations over the next 12 months.
 
On August 3, 2010 we entered into an Investment Banking & Listing Agreement with Churchill and Associates, LLC (“C&A”), a financial services consulting firm located in Atlanta, GA, to provide certain business consulting services involving: (i) assisting with causing our common stock to trade on the Over-The-Counter markets in the U.S., (ii) assisting in negotiating any proposed equity and/or debt financings; and (iii) interfacing with investor and public relations firms and presenting us to the investment community.  On September 16, 2010, we entered into an additional Investment Banking & Listing Agreement with C&A which provided for services involving assisting us in locating certain targets to acquire and analyzing and negotiating any proposed agreements to acquire those targets.   As compensation for services in connection with the August 3, 2010 agreement, C&A received $300,000 in consulting fees.  As compensation for the September 16, 2010 agreement, C&A received $467,000, which consisted of $67,000 in consulting fees and $400,000 as a down payment toward prospective acquisitions. On June 6, 2011, we terminated both agreements. The Company is currently evaluating its position with respect to C&A.
 
 
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Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board, or FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”.  This update provides amendments to Topic 820 to provide more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3.  The adoption of ASU 2010-06 did not have a material impact on our results of operations or financial condition.

In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements”.  This update addresses both the interaction of the requirements of Topic 855, “Subsequent Events”, with the SEC’s reporting requirements and the intended breadth of the reissuance disclosures provision related to subsequent events (paragraph 855-10-50-4).  The amendments in this update have the potential to change reporting by both private and public entities, however, the nature of the change may vary depending on facts and circumstances.  The adoption of ASU 2010-09 did not have a material impact on our results of operations or financial condition.

In April 2010, the FASB issued ASU No. 2010-13, “Compensation – Stock Compensation”.  This update clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This update will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.  We do not expect the provisions of ASU 2010-13 to have a material effect on our results of operations or financial condition.

Critical Accounting Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  The following items in our financial statements require significant estimates and judgments:

Accounting for Income Taxes.  We are governed by the income tax laws of the Australian Taxing Authority. We follow FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes.  Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

We have adopted provisions of ASC 740, Sections 25 through 60, “Accounting for Uncertainty in Income Taxes."  These sections provide detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of ASC 740 and in subsequent periods. Upon the adoption of ASC 740, the Company had no unrecognized tax benefits. During the years ended June 30, 2010 no adjustments were recognized for uncertain tax benefits. All years from 2008 through 2010 are still subject to audit.  Any change in the income tax laws of Australian Taxing Authority or significant change in the tax basis of our assets and liability could result in a significant change in our estimate of tax position.

Related Party Transactions
 
From inception through June 30, 2010, we borrowed approximately $370,000 from three directors, one of whom is also an officer of the company such loans had no specific repayment terms and bore interest at a rate of 30% per annum. The loans were to be convertible into shares of common stock at a conversion rate equal to the initial price we sold our stock, which is $0.16.   On May 13, 2010, the entire outstanding amount on the loans and accrued interest due to the directors was converted into 3,305,615 shares of common stock.

During fiscal year 2011, we borrowed additional sums from a director.  These advances are non-interest bearing.  The total amount owed the director at June 8, 2011 is approximately $75,000.  
 
 
15

 
 
BUSINESS

Overview

Propanc Health Group Corporation is a development stage healthcare company whose current focus is the development and marketing of new cancer treatments targeting high risk patients who need a follow up, non-toxic, long term therapy to prevent cancer from returning and spreading.

We have engaged leading scientific experts in the field and have developed a rational, composite formulation which exerts a number of anti-cancer actions.  It is a novel combination of anti-cancer agents working with proenzymes.  We believe that this treatment delivers a potent, multi-pronged attack on cancerous cells.

In early 2007, Dr. Julian Kenyon, the Medical Director of the Dove Clinic in the United Kingdom and now a director of our company, and Dr. Douglas Mitchell, also a director, received permission to perform clinical trials on a non-commercial supply of proenzyme suppositories with 46 late stage cancer patients in the United Kingdom, (or UK,) and Australia.  After a successful trial, Dr. Kenyon, Dr. Mitchell and Mr. James Nathanielsz, our Chief Executive Officer, prepared a strategy to commercialize the newly developed proenzyme formulation.  In connection with this strategy, Propanc Pty Ltd, our subsidiary, or Propanc Australia, was formed to refine, develop and commercialize new proenzyme treatments which prevent the cancer from returning and spreading, with no significant adverse effects.

Our primary product, Propanc™, is a unique formulation, once daily dose, which has proven to not encounter resistance. In very limited human testing, Propanc™ has demonstrated that it:

  
Increases survival rates and quality of life;
  
Has minimal side effects;
  
Targets a broad spectrum of cancer types;
  
Is easily self-administered;
  
Has low toxicity; and
  
Is proven to be effective against common solid tumors.

A potential implication of these findings is that the Propanc™ treatment can be taken over an extended period of time without losing its effect, as opposed to the majority of long term therapies currently in the market.

Based on extensive research, the limited clinical data and supportive literature, it is the expert medical opinion of our research and development team that the proenzyme formulation could be applied in several distinct applications for a number of different cancer indications such as:

As a long term, standalone treatment for chronic dosing, self-administered as a suppository or entero-coated capsule;
As a specific de-bulking agent administered via intra-tumoral injection in the hospital, where surgery or chemotherapy is not possible;
  
As a preventive measure for high risk patient populations post-surgery or chemotherapy, self-administered; and
As a long term, preventative therapy for high risk patient populations.

When surgery is successful, the patient often has excellent long term prospects. However, patients need follow up therapy. Current follow up therapy is helpful for some cancer types, however, it is usually only moderately effective and often too toxic for long term use, or encounters tumor resistance rendering the treatment ineffective.

While no assurance can be given, we believe our treatment for cancer overcomes the limitation of current therapies and that our treatment will work with a number of different cancer types over a prolonged period. Based on limited trials conducted on 46 patients with advanced states of disease, 17 responders, or 37% of patients, lived significantly longer than initially expected and 6 responders, or 13%, reached the expected survival time.

Our directors have worked extensively with scientific researchers over the last 15 years and we have significantly improved the understanding of the methodology of action of our formulation and most importantly, enhanced the potency of the treatment to maximize its anti-cancer effects while continuing to exhibit no serious side effects.
 
 
16

 

In summary, the key highlights of this opportunity are:

  
A new treatment in Oncology:  Cancer is the leading cause of death worldwide.  Global demand for effective, safe and easy to administer cancer treatments is increasing rapidly.  We believe our treatment will uniquely target many aggressive tumor types for which little or few treatment options exist.  We are ready to capitalize on the significant market opportunity created by the limitation of other therapies.
  
Superior Mode of Action:  Our treatment exerts multiple effects on cancerous cells which prevents tumor growth and stops it from spreading throughout the body. There are virtually no treatments available which prevent cancers from returning and spreading without any serious side effects.  Our treatment offers genuine 'quality of life' hope for an incurable disease.
  
Successful Pilot Trials Conducted:  Scientific research undertaken over the last 15 years and our limited human clinical trial has demonstrated Propanc™ as an effective treatment against cancer.
  
Unique Intellectual Property:  We are focusing on building an important and significant portfolio of intellectual property around our scientific understanding of the technology, identifying new formulations and synthesizing recombinant versions of its key ingredients to maximize anti-cancer effects.  To date, we have filed one patent application covering our Propanc™.

Current Operations

We are at a pre-revenue stage.  We do not know when, if ever, we will be able to commercialize Propanc™.  Presently, we are focusing our efforts on organizing, coordinating and financing the various aspects of our drug development program and their distribution. In order to commercialize Propanc™, we must complete Phases 1, 2 and 3 clinical trials in Germany, the UK, Australia, or elsewhere and satisfy the applicable regulator that Propanc™ is safe and effective.  We estimate that this will take approximately seven years.   As we progress our lead cancer treatment through the various development milestones, we will seek a suitable licensing partner who will arrange for the manufacture and sale of Propanc™.
 
Strategy

Our goal is to offer a cancer treatment which will significantly improve life expectancy for people with metastatic cancer, at no cost in terms of quality of life.  Our objective is to deliver this is by producing effective cancer treatments which offers:

  
Long term survival benefits;
  
Minimal side effects;
  
Simplified administration; and
  
Affordability

The key elements of the development strategy to achieve this objective are:

  
Safety:  To confirm the Propanc™ formulation is safe and effective, unmatched by competitors for the treatment of patients with solid tumors.
  
Effectiveness:  Developing the only oncology formulation in the world made of recombinant DNA which further enhances the effects observed from the formulation, creating a potent therapeutic tool in the fight against cancer
  
Continued Research and Development to build our Intellectual Property portfolio. Our goal is to expand our portfolio to:
 
o  
Target multiple cancer types using an enhanced formulation;
o  
Develop further modes of delivery other than rectal administration (e.g. Injectable and oral administration);
o  
Target various cancer types earlier in the disease process for use with known high risk populations.  For example, use immediately after surgery for cancer with a high risk of recurrence; and
o  
Target different indications, focusing mainly on prescription products for treating chronic diseases (i.e. long lasting, or recurrent diseases)
 
  
Clinical Trials:  We intend to proceed with the enhanced formulation into clinical trials to be conducted in Europe.  Therefore, a scientific advice meeting will be requested with the German Health Authorities or BfArM, to discuss the proposed path into the clinical trials.
  
Government Approval:  Seek government approval for product launch in key markets including the U.S., Europe, the UK and Japan.
  
Patent Protection:  Continue building our intellectual property  portfolio in order to effectively reach the international cancer market and protect our products.
  
Licensing:  Assuming we successfully complete the various development milestones, we intend to negotiate and enter into licensing deals across global territories to produce sales revenue from our lead cancer treatment.
  
Joint venture Agreements with Major Pharma:  Establish joint ventures with major pharmaceutical companies for marketing our cancer treatments in key markets.  However, this assumes that we reach the commercialization stage.
  
Acquire New Targets:  We will investigate opportunities to acquire new targets which complement our future goals and expand our products and services within related healthcare fields.  Examples of potential acquisitions include research and development facilities, intellectual property to expand our pipeline, radiology clinics and pharmaceutical manufacturers.
 
 
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Current Therapies/Drugs Available

Current drugs in the market offer, at most, a few months of extra life or tumor stabilization.  Studies are revealing the genetic changes in cells that cause cancer and spur its growth, which is providing scientific researchers with dozens of molecules, or “targets” that drugs could block.  Tumor cells, however, can develop resistance to drugs.  Some experts believe that drugs that kill most tumor cells do not affect cancer stem cells which can regenerate the tumor (e.g. chemotherapy).

We are developing a therapeutic solution for the treatment of patients with advanced stages of cancer targeting solid tumors, which is cancer that originates in organ or tissue other than bone marrow or the lymph system.  Common cancer types classified as solid tumors include lung, colorectal, ovarian cancer, pancreatic cancer and liver cancers.  In each of these applications, there is a large market opportunity to capitalize on the limitations of current therapies.

Limitations of Current Therapies

Propanc™ was developed because of the limitation of current therapies.  While surgery is often safe and effective for early stage cancer, many standard therapies for late stage cancer urgently need improvement; often inflicting too much trauma and providing too little benefit for patients.  Our focus is to provide oncologists and their patients with therapies for metastatic cancer which are more effective than current therapies and safe.

According to an article by Catherine Arnst in Business Week magazine issued on May 21, 2008, while progress has been made within the oncology sector in developing new treatments, the overall cancer death rate has only improved 7% over the last 30 years.  Most of these new treatments, particularly chemotherapy and immunotherapy:

  
Have significant toxic effects
  
Are highly expensive
  
Often have limited survival benefits

We believe that our treatment will provide a competitive advantage over the following treatments:

  
Chemotherapeutics:  Side effects from chemotherapy can include pain, diarrhea, constipation, mouth sores, hair loss, nausea and vomiting, as well as blood-related side effects, which may include low number of infection fighting white blood cell count (neutropenia), low red blood cell count (anemia), and low platelet count (thrombocytopenia). Our goal is to demonstrate that our treatment will be more effective than chemotherapeutics and hormonals with fewer side effects.
 
  
Targeted therapies:  Most common type includes multi-targeted kinase inhibitors.  Common side effects include fatigue, rash, hand–foot reaction, diarrhea, hypertension and dyspnoea.  Furthermore, oncogenic tyrosine kinases appear to develop resistance to these inhibitors.  On the basis of our scientific evidence, we believe that our formulation does not encounter resistance to these pathways.
 
  
Monoclonal antibodies:  Development of monoclonal antibodies is often difficult due to safety concerns.  Side effects which are most common include skin and gastro-intestinal toxicities.  For example, several serious side effects from Avastin, a leading cancer drug include gastrointestinal perforation and dehiscence (e.g. rupture of the bowel), severe hypertension (often requiring emergency treatment) and nephrotic syndrome.  Application of antibody therapy can be applied to a various cancer types in some cases, but can also be limited to certain genetic sub populations in many instances.
 
 
18

 
 
Market Opportunity

Oncology drug sales are experiencing rapid growth and reached US$55 billion in 2009. This will make oncology the single biggest segment in the global drug market.  Several factors contribute to this such as:

  
Cancer currently affects 1 in 3 people: The most commonly occurring cancers are those of the lung, breast and colon and it is these tumors that we seek to control.
  
Growth in cancer comparative to other medical segments:  Cancer is one of the largest and fastest growing markets in the pharmaceutical industry.
  
Limited pharmaceutical competition: 10 major pharmaceutical companies currently account for approximately 75% of global oncology sales.  However, as many other companies are about to enter the market with exciting new compounds, it is very unlikely that the cancer market will remain as concentrated.

A combination of a rapidly aging population in western countries and changing environmental factors are resulting in rising incidence rates. According to the World Health Organisation, cancer is expected to increase from 7.6 million annual deaths in 2005 to 9 million annual deaths by 2015, exceeding 11 million annual deaths by 2030.

As such, global demand for an effective, safe and easy to administer cancer treatment is rapidly increasing.  Our treatment will target many aggressive tumor types for which little or few treatment options exist.

Our cancer treatment is intended to be positioned among the five types of cancer drug classes currently contributing to the significant growth in the oncology market.  The five main drug classes are chemotherapeutics, hormonals, immunotherapy and vaccines, targeted therapies and monoclonal antibodies.

Competitive Strength Comparison Between Product Types
 
   
Chemotherapy
   
Hormonals
   
Immunotherapy & Vaccines
 
Targeted Therapies
 
Monoclonal Antibodies
   
PropancTM
 
Efficacy
   
3
     
2
     
1
 
1
   
1
     
1
 
Reduced side effects
   
3
     
2
     
2
 
2
   
2
     
1
 
Application across different cancers
   
2
     
3
     
2
 
2
   
2
     
1
 
Affordability
   
2
     
3
     
3
 
3
   
3
     
1
 
                                           
Legend To Table
           
Low
         
Medium
           
High
 
             
         
 2
           
1
 

The Propanc™ Methodology of Action

Molecular Target

Tumor cell death occurs when the proenzymes are activated at the tumor site and attach to Protease Activated Receptors Type 2, which causes tightening up of the cell architecture known as the microtrabecular network made of actin.  In a cancer cell, proenzymes have the effect of converting globular actin into tight filamentous actin, which causes the cancer cell structure to collapse and induce cell death.  This reduces tumor volume and is often noticed in clinical practice.

Propanc™ Mechanism

Our formulation centers on a peptide mixture containing amylase and proenzymes for rectal application as suppositories.  It has been demonstrated that pancreatic proenzymes exert anti-tumor activities and that orally administered pancreatic extracts improved the clinical situation of patients with cancer, in particular reducing the potential for metastases. Until now, a commercially viable, once daily dose has not been achievable using these ingredients. Furthermore, it has become clear that there are several distinct opportunities to enhance the performance of the drug, which will be difficult for competitors to match or imitate. Our scientific researchers have identified additional ingredients designed to enhance the anti-cancer effects of the proenzymes.

The Propanc™ Formulation

We are developing a rectally administered proenzyme mixture. By administering a proenzyme mixture rectally, digestion of the proenzymes in the duodenum is avoided and the active drug absorbed is intact.  Recent scientific evidence shows the development of a rectally administered proenzyme formulation leads to improved efficacy and reduces the necessary dose quantities used for these therapies.
 
 
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The Enhanced Formulation

We are seeking to maximize the potential of Propanc™’s long term maintenance therapy by:

  
Enhancing the effects of the proenzyme formulation by selecting additional ingredients at non-toxic dose levels to ensure a patient can stay in remission, and/or is clinically improved.
  
Create additional patent opportunities to protect the proenzyme combination based on confidential intellectual property relating to the mode of action of the proenzymes in treating cancer.

Our scientific researchers are developing a novel combination of anti-cancer agents working in combination with proenzymes which enhance its anti-cancer effects.  The enhanced proenzyme based formulations comprise trypsinogen, which is provided in combination with at least one of two types of identified compounds considered on the basis of trypsinogen's mechanism of action effective for providing synergistic enhancement of the proenzyme based formulations.

The two active compounds identified are expected to up-regulate (i.e. synergistically enhance) the tumor cell differentiation process (turn cancerous cells back towards normal cells, known as redifferentiation) and deliver extensive apoptosis.  Further research is being conducted to identify additional target compounds within a broader class of compounds around the two active compounds identified.  The additional ingredients will further enhance the anti-cancer effects of the proenzymes with minimal toxicity.

In late 2010, we identified a novel formula comprising of specific anti-cancer agents in combination with pancreatic proenzymes which may deliver a potent attack on cancerous cells with minimal side effects to healthy cells.  Experimental results conducted by PHG’s local contract research partner, show the novel formulation “JBp-1vP/DCM” inhibits neovascularisation (angiogenesis).  Furthermore, the newly combined formula JBp-1-vP/DCM performed as well as Nexavar (Sorafenib), a clinically proven drug inhibiting angiogenesis and tumor growth. However, small molecule inhibitors like Nexavar tend to encounter resistance and often have serious side effects.  This demonstrates the clinical potential of JBp-1-vP/DCM to inhibit tumor growth additionally by shutting down blood vessels from malignant tumors.

License Agreements

We currently have an exclusive license with the University of Bath (UK), where we and the University co-own the intellectual property relating our proenzyme formulations.  This exclusive license will convert into an assignment of the intellectual property to us once certain development milestones are met.  An opportunity to purchase the commercial rights is available to us at any stage of development.

We have a joint commercialization agreement with the University of Bath and will continue to work together to patent and commercialize these discoveries, while continuing to elucidate the properties of proenzymes with the long term aim of screening new compounds for development.  At present, we are engaged in discussions with several technology companies who are developing new developments in the oncology field as potential additions to our product line.  Initially targeting the oncology sector, we plan to develop treatments which are highly effective and highly targeted therapies, with few side effects to healthy cells.

Intellectual Property

Our intellectual property portfolio has recently been expanded by the filing of an international patent application directed to enhanced proenzyme patent formulations and combination therapies comprising trypsinogen and chymotrypsin.  The international patent application has been based on previous provisional patent applications capturing our ongoing research and development in this area.

The international patent application was filed on October 22, 2010, which claims priority from Australian provisional patent application nos. 2009905147 (filed October 22, 2010) and 2010902655 (filed June 17, 2010).

Further provisional patent filings are also expected to be filed to capture and protect additional patentable subject matter that is identified, namely further enhanced formulations, combination treatments, use of recombinant products, modes of action and molecular targets.

Our intellectual property portfolio also includes an extensive amount of confidential information, know-how and expertise in relation to the development and formulation of proenzyme based combination therapies.
 
 
20

 
 
The basis of intellectual property protection will be built around the following portfolio:

  
Method of use:  Understanding the mechanism of action of the Propanc™ pro-enzyme formulations, enables identification of new target compounds and identification of new formulations that are adapted to enhance activity.
 
  
Formulation:   We have developed an enhanced formulation containing the pro-enzyme trypsinogen in combination with at least one of two types of identified compounds considered effective for providing synergistic enhancement of the pro-enzyme based formulations.  A patentability assessment, based on an international prior art search, has indicated that strong potential exists for successfully obtaining patent claims covering a broad class of compounds based on the compounds identified.
 
  
Composition of Matter:  Synthetic recombinant proenzymes designed to improve the quality, safety and performance of proenzymes used in the proposed formulations form part of the research and development program.

Government Approvals

Dr. Julian Kenyon, as Medical Director of Dove Clinic, received approval via a UK Specials License to source a non-commercial supply of an original three component formulation developed by third parties.  This led to the investigator trial sponsored by Dove Clinic and also led to the supply of the treatment to Opal Clinic in Australia, via a similar scheme called the Special Access Scheme.

Based on the favorable results achieved from this trial by the Dove Clinic and the Opal Clinic, as well as some initial experimental animal studies, the results were provided to the Medicinal Products and Healthcare Regulatory Agency, or the MHRA, in the UK, to determine whether we could initiate patient trials.

In 2008, the MHRA approved clinical development on patients with advanced carcinoma. This meeting helped to formalize the development programs established by us, with the objective of seeking worldwide regulatory approval for Propanc™ to establish broader commercial acceptance for this type of treatment and thus enable us to generate global sales.

Since that meeting, we re-evaluated the path we will enter into the clinical trial, since we are now developing an enhanced Propanc™ formulation which contains additional ingredients.  Therefore, we intend to follow a more classical drug development program which includes a scientifically based Phase I study.

The current goals for our lead development program are:

  
Target specific cancer types for trials where there is a clearly defined unmet medical need based on the data generated from the Dove Clinic Investigator trial.
 
  
Conduct trials in Central Europe, possibly through the German Health Authorities who have experience with oral enzyme therapy and its use in oncology to facilitate a clear path to approval in Europe through the European Medicines Agency and eventually Food and Drug Administration approval.

We intend to meet German Regulators to discuss the newly proposed development program in the second half of 2011.

Clinical Trials

We intend to run the Phase I clinical trials in Central Europe within the next 12 – 18 months.  The trials will be managed and supervised by Professor Klaus Kutz, our Chief Medical Officer, and assisted by Dr. Julian Kenyon and Professor John Smyth, a Scientific Advisory Board Member.

Employees

As of June 21, 2011, we had one employee who was a full time employee.

Our Corporate Information

Our principal executive offices are located at 576 Swan Street, Richmond, VIC, 3121, Australia and our phone number is +61 (0)3 9208 4182.  We were founded in 2010.  Our Australian subsidiary, Propanc Pty Ltd shares offices with us.  It was organized on October 15, 2007.
 
 
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Corporate History

We were incorporated in the state of Delaware on November 23, 2010.  We were formed for the specific purpose of having shareholders of Propanc Pty Ltd, our Australian subsidiary, directly owning an interest in a U.S. company.  On January 29, 2011, we issued 64,700,525 shares of our common stock in exchange for 64,700,525 shares of Propanc Pty Ltd common stock.
 
Available Information
 
Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents that we will file with or furnish to the SEC will be available free of charge by sending a written request to our Corporate Secretary at our corporate headquarters.  Additionally, the documents we file with the SEC is or will be available free of charge at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549. Other information on the operation of the Public Reference Room is or will be available by calling the SEC at (800) SEC-0330.

Property

Our corporate offices are located in Australia.   The lease costs $849 per month and expires on one months notice by either Propanc or the leasing company.  

Research and Development

During the last two fiscal years, we have spent $34,031 and $121,369 on research and development expenses.

MANAGEMENT
 
The following is a list of our directors and executive officers.  All directors serve one-year terms or until each of their successors are duly qualified and elected.  The officers are elected by our Board.

Name
 
Age
 
Position
Dr. Douglas Mitchell
  72  
President and Chairman of the Board
James Nathanielsz
  37  
Chief Executive Officer, Secretary, Treasurer and Director
Dr. Julian Kenyon
  64  
Director

Dr. Douglas G. Mitchell, PhD has served as our Chairman of the Board since inception. Dr. Mitchell has served as Chairman of the Board of our Australian company since February 12, 2008.  Dr. Mitchell has previously worked in New York State Department of Health as a research scientist.  Dr. Mitchell later founded CCA Capital Management Inc., a financial investment management company in Albany, New York.  From 2002 to 2005, Dr. Mitchell was also Chancellor of Swinburne University of technology, Melbourne, Australia.  Dr. Mitchell was selected as a director because of his expertise in business and financial management and his knowledge of the scientific field. Dr. Mitchell graduated from the University of Melbourne with a Bachelor of Science degree.  He obtained his Masters of Science and Doctor of Philosophy from the University of London.

James Nathanielsz has served as a director since inception.  Mr. Nathanielsz has served as a director and Chief Executive Officer of our Australian company since October 2007.  From July 2006 until October 2007, Mr. Nathanielsz served as the New Products Manager of Biota Holdings Limited, an anti-infective drug development company in Australia.    Mr. Nathanielsz was selected as a director because he is the Co-Founder of our Australian company and for his experience in R&D and manufacturing and distribution.  Mr. Nathanielsz graduated with a Bachelor of Applied Science, majoring in Biochemistry/Applied Chemistry and subsequently with a Master of Entrepreneurship & Innovation from Swinburne University of Technology in Melbourne, Australia.

Dr. Julian Kenyon has served as a director since inception. Dr. Kenyon founded our Australian company and was appointed as a director of our Australian company on February 12, 2008.  Since 2000, Dr. Kenyon has served as an integrated medical physician and Medical Director of the Dove Clinic for Integrated Medicine in Winchester and London.  Dr. Kenyon is the Founder-Chairman of the British Medical Acupuncture Society in 1980 and Co-Founder of the Centre for the Study of Complementary Medicine in Southampton and London.  Dr. Kenyon was selected as a director because he is the Co-Founder of the Australian subsidiary and the business is based on his initial work at the Dove Clinic.  Dr. Kenyo graduated from the University of Liverpool with a Bachelor of Medicine and Surgery and subsequently with a research degree, Doctor of Medicine.  Since 1972, he was appointed a Primary Fellow of the Royal College of Surgeons, Edinburgh.
 
 
22

 
 
Committees of the Board of Directors

We presently do not have an audit committee, compensation committee, or other committee or committees performing similar functions, as our management believes that until this point it has been premature at the early stage of our management and business development to form an audit, compensation or other committees.

Scientific Advisory Board

We have a Scientific Advisory Board that provides independent advice relating to the following:

The identification, assessment, evaluation, selection, conduct and management of research projects, both those which are under review and are in progress;
Intellectual property;
Commercialisation;

The Scientific Advisory Board may also address issues related to improving project selection, formal review processes and management procedures within Propanc Health Group.  The board will generally be composed of an advisory panel of clinicians with expertise in translational research.

As of June 21, 2011, the members of the Scientific Advisory Board are:

Professor John Smyth
Professor Klaus Kutz (Acting Chief Medical Officer, Propanc Health Group)
Professor Karrar Khan
Dr. Ralf Brandt

Professor John Smyth

John Smyth has for the past 25 years served as Chair of Medical Oncology in the University of Edinburgh Medical School, where his major research interest is the development and evaluation of new anti-cancer drugs.  He has published over 300 papers and is Editor-in-Chief of the European Journal of Cancer.  He served for several years on the UK Committee on Safety of Medicines; currently Chair's the Expert Advisory Group for Oncology & Haematology for the Commission on Human Medicines and serves on the Expert Oncology Advisory Group to the European Drug Licensing Board.   He is a fellow of the Royal College of Physicians of Edinburgh and London, and fellow of the Royal Society of Edinburgh.  He is a past-president of the European Society of Medical Oncology and was from 2005 - 2007 President of the Federation of European Cancer Societies.
 
Professor Klaus Kutz

Professor Kutz has ten years experience as independent consultant in Clinical Pharmacology and Safety for pharmaceutical companies and CROs.  His specialty over the last six years is Oncology, including preparation of multiple NDAs and INDs for small and medium sized pharmaceutical companies.  He has prepared, organized and reported clinical Phase I studies in oncology and Phase II studies in different cancer indications (prostate, gastric, ovarian, small cell lung cancer) and Non-Hodgkin Lymphomas.  Professor Kutz has more than 12 years experience as Head of Clinical Pharmacology with world-wide responsibilities for Phase I and Clinical Pharmacokinetics in two internationally operating pharmaceutical companies, setting up and restructuring international Clinical Pharmacology departments. His achievements include the successful world-wide registration of multiple important Sandoz’ compounds by preparation of multiple NDAs (New Drug Applications) and Expert reports (including Written Summary), as well as the preparation of multiple INDs (Investigational New Drug Applications) for Sandoz Pharma Ltd and Sanofi Research.  A specialist for Internal Medicine, Gastroenterology, and Clinical Pharmacology, he is also Professor of Medicine at the University of Bonn, Germany.

 
23

 

Professor Karrar Khan

Professor Khan has over 35 years of experience in drug discovery, pharmaceutical development, registration and management of pharmaceutical scientists.  Professor Khan has also held various product development and management positions with Abbott Laboratories and Beecham Pharmaceuticals.  In these roles, he developed medicines for several therapeutic areas including antibiotics, anti depressant, anti inflammatory, anti obesity, psychosis, cardiovascular, pain, cancer, Parkinson’s disease and diabetes.  Professor Khan developed and contributed to the launch of two once a day controlled release dosage forms.  His expertise ranged from development for phase 1 to phase 3- 4 and significant experience of bringing prescription and OTC products to market on a worldwide bases (contributed to the registration and launch of over 60 pharmaceutical products). He is a qualified person under the EC quality assurance directive. He now works as a pharmaceutical development consultant. Professor Khan has authored or co-authored more than 40 scientific publications and is an inventor of several development patents.  He has been an invited speaker at many national and international conferences.

Dr. Ralf Brandt

Dr. Brandt is the co-founder of vivoPharm. He is a biochemist and cell biologist with over 15 years experience in research programs of experimental oncology. Furthermore, he has immense experience in in vivo pharmacology and anti-cancer drug profiling. He received his Licence (BSc in Biochemistry and Animal Physiology) in 1986, and his PhD (in Biochemistry) in 1991 from the Martin-Luther University of Halle-Wittenberg, Germany. Dr. Brandt was employed at research positions at the National Cancer Institute in Bethesda, MD, USA and at Schering AG, Germany. Since 1990, Dr. Brandt has been active in the field of preclinical oncology. He led the Tumour Biology program at Novartis Pharma AG, Switzerland and established several transgenic mouse lines developing tumours under the control of oncogenes. During Dr. Brandt's long career in the pharmaceutical industry he has acquired significant knowledge and expertise in leading business units and representation of services to the pre-clinical research market. Dr. Brandt is a member of the Scientific Advisory Board at Receptor Inc. in Toronto Canada.

Code of Ethics

Our Board has adopted a Code of Ethics that applies to all of our employees, including our President, Chief Executive Officer and Treasurer.  Although not required, the Code of Ethics also applies to our Board.  The Code provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistle-blowing or the prompt reporting of illegal or unethical behavior.  We will provide a copy of the Code of Ethics to any person without charge, upon request.  The request for a copy can be made in writing to 576 Swan Street, Richmond, VIC, 3121, Australia, Attention: Corporate Secretary.

Shareholder Communications

Although we do not have a formal policy regarding communications with the Board, shareholders may communicate with the Board by writing to us at 576 Swan Street, Richmond, VIC, 3121, Australia, Attention: Corporate Secretary, or by facsimile +61 (0) 3 9208 4110.  Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.

Board Diversity

While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members as well as a particular nominee’s contributions to that mix.  Our Board believes that diversity brings a variety of ideas, judgments and considerations that benefit Propanc and our shareholders.  Although there are many other factors, the Board seeks individuals with experience in business, financial and scientific research and development.

Board Structure

We have chosen to separate the Chief Executive Officer and Board Chairman positions.  We believe that this Board leadership structure is the most appropriate for Propanc.  Our chairman provides us with significant experience in research and development. Our Chief Executive Officer who is responsible for day to day operations is the founder of Propanc who brings significant experience in manufacturing and distribution.
 
 
24

 
 
Board Assessment of Risk

Our risk management function is overseen by our Board.  Our management keeps our Board apprised of material risks and provides our directors access to all information necessary for them to understand and evaluate how these risks interrelate, how they affect Propanc, and how management addresses those risks.  Mr. Nathanielsz, as our Chief Executive Officer works closely together with the Board once material risks are identified on how to best address such risk.  If the identified risk poses an actual or potential conflict with management, our independent directors may conduct the assessment.  Presently, the primary risks affecting Propanc is the lack of working capital, the inability to generate sufficient revenues so that we have positive cash flow from operations and success of future clinical trials.  The Board focuses on these key risks at each meeting and actively interfaces with management on seeking solutions.

EXECUTIVE COMPENSATION

Termination Provisions

Upon termination by Propanc and in accordance with Mr. Nathanielsz employment agreement, Mr. Nathanielsz is entitled to six months base salary.  Upon his resignation, Mr. Nathanielsz is entitled to 12 weeks base salary.


Summary Compensation Table

The following information is related to the compensation paid, distributed or accrued by us for the last two fiscal years to our Chief Executive Officer (principal executive officer).  Mr. Nathanielsz is the only employee to receive compensation in excess of $100,000 in the past two fiscal years. This compensation was paid by our Australian subsidiary.
Summary Compensation Table for Fiscal 2010
 
Name and Principal Position (a)
 
Year (b)
 
Salary ($)(c)
   
All Other
 Compensation
($)(i)(2)
   
Total
($)(j)
 
James Nathanielsz (1)
 
2010
    96,293       9,523       105,816  
  Chief Executive Officer
 
2009
    98,580       9,750       108,330  
___________
(1)  
Under an employment agreement dated August 15, 2010, Mr. Nathanielsz receives a gross annual salary of $150,000AUD per year.
 
(2)  
Represents contributions of 9% of Mr. Nathanielsz’s base salary to a pension fund of which he is the beneficiary.
 
Under an employment agreement, Mr. Nathanielsz receives a gross annual salary of $150,000AUD per year which includes a 9% contribution to a pension of which he is the beneficiary.

Outstanding Equity Awards

There are no outstanding equity awards.

Equity Compensation Plan Information

We currently do not have an equity compensation plan.
 
Director Compensation

We do not pay cash compensation to our directors for service on our Board and our employees do not receive compensation for serving as members of our Board.  Directors are reimbursed for reasonable expenses incurred in attending meetings and carrying out duties as board members.  

 
25

 

PRINCIPAL SHAREHOLDERS

The following table sets forth the number of shares of our voting stock beneficially owned, as of June 21, 2011 by (i) those persons known by Propanc to be owners of more than 5% of Propanc’s common stock, (ii) each director, (iii) our Named Executive Officer, and (iv) all executive officers and directors as a group:  
 
Title of Class
 
Name and Address of Beneficial Owner
 
Amount and
Nature of Beneficial
Owner(1)
   
Percent of
Class (1)
 
                     
Common Stock
 
James Nathanielsz
576 Swan Street
Richmond, VIC, 3121, Australia (2)
   
10,032,261
     
13.9%
 
                     
Common Stock
 
Dr. Douglas Mitchell
145 Male Street
Brighton 3186, Australia (3)
   
32,938,614
     
45.8%
 
                     
Common Stock
 
Dr. Julian Kenyon
Beechwood, Embley Lane
East Wellow, Near Romsey, Hampshire,
SO51 6DN, United Kingdom (4)
   
10,834,064
     
15.1%
 
                     
Common Stock
 
All directors and executive officers as a group (3 persons)
   
53,804,939
     
74.8%
 
                     
5% Shareholders:
                   
                     
Common Stock
 
Ostrowski Properties Pty Ltd
33 Allambee Avenue
Elsternwick, VIC, 3185, Australia (5)
   
6,300,395
     
8.8%
 
______________
* Less than 1%
 
(1) 
Applicable percentages are based on 71,915,889 shares outstanding, adjusted as required by rules of the SEC.  Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person.  Unless otherwise indicated in the footnotes to this table, Propanc believes that each of the shareholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them.  
(2)
Mr. Nathanielsz is a director and executive officer.  Represents shares of common stock held by North Horizon Investments Pty Ltd ATF Nathanielsz Family Trust.  Mr. Nathanielsz has voting and investment power over these shares.
(3)
Dr. Mitchell is a director and executive officer.  Shares are held by Putney Consultants Ltd., an entity controlled by Dr. Mitchell.
(4)
Dr. Kenyon is a director.  Represents shares of common stock.
(5)
Mr. Jan Ostrowski and Mrs. Ywonna Ostrowski, Mr. Nathanielsz’s father-in-law and mother-in-law, have voting power and investment power over these shares.
 
RELATED PARTY TRANSACTIONS

From October 2009 through May 2010, Dr. Douglas Mitchell, a director and executive officer, lent a total of $89,000 to Propanc.  As of the date of this prospectus, Propanc owes Mr. Mitchell approximately $75,000 under this non-interest bearing loan.  Also, Dr. Mitchell and Dr. Kenyon are owed approximately $64,000 for travel and startup costs incurred in October 2007.  
 
 
26

 
 
From inception, we borrowed approximately $370,000, which including interest, totaled $534,856 from three directors, one of whom is also an officer, where the loans had no specific repayment terms and bore interest at a rate of 30% per annum. The loans were to be convertible into shares of common stock at $0.16 per share.  On May 13, 2010 loans and accrued interest due to directors was converted into 3,305,615 shares of common stock.
  
SELLING SHAREHOLDERS

The following table provides information about each selling shareholder listing how many shares of our common stock they own on the date of this prospectus, how many shares are offered for sale by this prospectus, and the number and percentage of outstanding shares each selling shareholder will own after the offering assuming all shares covered by this prospectus are sold.  Each of our officers and director is a selling shareholder as disclosed in the notes to the following table.  Except as disclosed in this prospectus, none of the selling shareholders have had any position, office, or material relationship with us or our affiliates within the past three years. The information concerning beneficial ownership has been taken from our stock transfer records and information provided by the selling shareholders.  Information concerning the selling shareholders may change from time to time, and any changed information will be set forth if and when required in prospectus supplements or other appropriate forms permitted to be used by the SEC.
 
We do not know when or in what amounts a selling shareholder may offer shares for sale. The selling shareholders may not sell any or all of the shares offered by this prospectus. Because the selling shareholders may offer all or some of the shares, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares, we cannot estimate the number of the shares that will be held by the selling shareholders after completion of the offering.  However, for purposes of this table, we have assumed that, after completion of the offering, all of the shares covered by this prospectus will be sold by the selling shareholder.

Unless otherwise indicated, the selling shareholders have sole voting and investment power with respect to their shares of common stock.  All of the information contained in the table below is based upon information provided to us by the selling shareholders, and we have not independently verified this information.  The selling shareholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time or from time to time since the date on which it provided the information regarding the shares beneficially owned, all or a portion of the shares beneficially owned in transactions exempt from the registration requirements of the Securities Act of 1933 or the Securities Act.
 
The number of shares outstanding and the percentages of beneficial ownership are based on 71,915,889 shares of our common stock issued and outstanding as of June 21, 2011.  For the purposes of the following table, the number of shares common stock beneficially owned has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, or the Exchange Act, and such information is not necessarily indicative of beneficial ownership for any other purpose.  Under Rule 13d-3, beneficial ownership includes any shares as to which a selling shareholder has sole or shared voting power or investment power and also any shares which that selling shareholder has the right to acquire within 60 days of the date of this prospectus through the exercise of any stock option, warrant or other rights.

 
27

 
 
Name (1)
 
Number of
securities
beneficially
owned before
offering
   
Number of
securities
to be
offered
   
Number of
securities
owned after
offering
   
Percentage of
securities
beneficially
owned after
offering
 
                         
Academic Hearing Aids Pty Ltd. (1)
   
280,000
     
56,000
     
224,000
     
*
 
Bassey LLC (2)
   
610,702
     
122,140
     
488,562
     
*
 
Mario Beckles
   
2,354,793
     
470,959
     
2,211,606
     
3.1
%
Paul Clayton
   
640,599
     
128,119
     
512,480
     
*
 
Henkell Brothers Australia Pty Ltd. (3)
   
277,778
     
55,555
     
222,223
     
*
 
Joshua Investments Pty Ltd. (4)
   
165,000
     
33,000
     
132,000
     
*
 
Dr. Julian Kenyon (5)
   
10,834,064
     
2,166,812
     
8,667,252
     
12.1
%
Naibek Pty Ltd (6)
   
1,092,112
     
218,422
     
873,690
     
1.2
%
North Horizon Investments Pty Ltd. (7)
   
10,032,261
     
2,006,452
     
8,025,809
     
11.2
%
Northwind Trading Pty Ltd.
   
450,000
     
90,000
     
360,000
     
*
 
Notestar Pty Ltd. (8)
   
556,000
     
111,200
     
444,800
     
*
 
Ostrowski Properties Pty Ltd. (9)
   
6,300,395
     
1,260,079
     
5,040,316
     
7.0
%
Putney Consultants Ltd. (10)
   
32,938,614
     
6,587,722
     
26,350,892
     
36.6
%
Arnon Rodriguez
   
4,860,571
     
972,114
     
4,216,189
     
5.9
%
Segev Nominees Pty Ltd. (11)
   
223,000
     
44,600
     
178,400
     
*
 
Suzani Pty Ltd. (13)
   
300,000
     
60,000
     
240,000
     
*
 

* Less than 1%.

(1) 
Mr. Richard Dowell has voting power and dispositive control over these shares.
 
(2) 
Mr. Ron Bassey has voting power and dispositive control over these shares.
 
(3) 
Mr. Hans Henkell has voting power and dispositive control over these shares.
 
(4) 
Mr. Josef Zelinger has voting power and dispositive control over these shares.
 
(5) 
Dr. Julian Kenyon is a director of Propanc.
 
(6) 
Mr. Mark Smith has voting power and dispositive control over these shares.
 
(7) 
Mr. James Nathanielsz and Mrs. Sylvia Nathanielsz have voting power and dispositive control over these shares.  Mr. Nathanielsz is an officer and director of Propanc.
 
(8) 
Mr. Paul Mazor has voting power and dispositive control over these shares.
 
(9) 
Mr. Jan Ostrowski and Mrs. Ywonna Ostrowski have voting power and dispositive control over these shares.
 
(10) 
Dr. Douglas Mitchell, a director and executive officer of Propanc, has voting power and dispositive control over these shares.
 
(11) 
Mr. Nick Loizou has voting power and dispositive control over these shares.
 
(12) 
Mr. Richard Alston has voting power and dispositive control over these shares.

 
28

 
 
DESCRIPTION OF SECURITIES

We are authorized to issue 100,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of blank check preferred stock, par value $0.01 per share.


Common Stock

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders, including the election of directors. There is no cumulative voting in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available for payment of dividends subject to the prior rights of holders of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities.
 
Anti-takeover Effects of Delaware Law

We are subject to the “business combination” provisions of Section 203 of the Delaware General Corporation Law.  In general, such provisions prohibit a publicly-held Delaware corporation from engaging in various “business combination” transactions such as a merger with any interested shareholder which includes, a shareholder owning 15% of a corporation’s outstanding voting securities, for a period of three years after the date in which the person became an interested shareholder, unless:

  
The transaction is approved by the corporation’s Board prior to the date the shareholder became an interested shareholder;
  
Upon closing of the transaction which resulted in the shareholder becoming an interested shareholder, the shareholder owned at least 85% of the shares of stock entitled to vote generally in the election of directors of the corporation outstanding excluding those shares owned by persons who are both directors and officers and specified types of employee stock plans; or
  
On or after such date, the business combination is approved by the Board and at least 66 2/3% of outstanding voting stock not owned by the interested shareholder.

A Delaware corporation may opt out of Section 203 with either an express provision in its original Certificate of Incorporation or an amendment to its Certificate of Incorporation or Bylaws approved by its shareholders.  We have not opted out of this Statute.  This Statute could prohibit, discourage or delay mergers or other takeover attempts to acquire us.
 
Dividends
 
We have not paid dividends on our common stock since inception and do not plan to pay dividends on our common stock in the foreseeable future.

Transfer Agent

Direct Transfer LLC is acting as our transfer agent.  The contact information for Direct Transfer LLC is 500 Perimeter Park Drive, Suite D, Morrisville, North Carolina 27560, phone: (919) 481-4000 and facsimile (202) 521-3505.

Share Eligible for Future Sale

We are registering 19,383,174 shares of common stock.  Beginning July 29, 2011, the remaining shares of our common stock will be available for sale under Rule 144 provided that we are current in our filings with the SEC.

PLAN OF DISTRIBUTION

Upon effectiveness of the registration statement, of which this prospectus is a part, we will conduct the sale of shares we are offering on a self-underwritten, best-efforts basis. This offering will be conducted on a best-efforts basis utilizing the efforts of our officers and director.  There is no public market for our common stock. To date, we have not obtained listing or quotation of our securities on a national stock exchange or association, or inter-dealer quotation system. We have not identified any market makers with regard to assisting us to apply for such quotation. We are unable to estimate when we expect to undertake this endeavor or whether we will be successful. In the absence of listing, no market is available for investors in our common stock to sell the shares offered herein. We cannot guarantee that a meaningful trading market will develop or that we will be able to get the shares listed for trading.

If the shares ever become tradable, the trading price of such could be subject to wide fluctuations in response to various events or factors, many of which are beyond our control. As a result, investors may be unable to sell the shares at a price greater than the price at which they are being offered. We do not anticipate entering into any agreements or arrangements for the sale of the shares with any broker/dealer or sales agent.  However, if we were to enter into such arrangements, we will file a post effective amendment to disclose those arrangements.  
 
 
29

 

We will not be conducting a mass-mailing in connection with this offering, nor will we use the Internet to conduct this Offering.  

Our CEO, James Nathanielz, is not subject to a statutory disqualification as such term is defined in Section 3(a)(39) of the Securities Exchange Act of 1934.  He will rely on Rule 3a4-1 to sell our securities without registering as a broker-dealer.  Mr. Nathanielz serves as an our Chief Executive Officer and primarily perform substantial duties for or on our behalf otherwise than in connection with transactions in securities and will continue to do so at the end of the offering, and has not been a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months, and has not nor will not participate in the sale of securities for any issuer more than once every 12 months.  He will not receive commissions in connection with his participation.

We plan to offer our shares to the public at a price of $1.50 per share, with no minimum amount to be sold.  Our officers and directors will not purchase any shares under this offering.  We will keep the offering open until we sell all of the shares registered, or for ninety (90) days from the date of this offering, whichever occurs first.  The Board of Directors may also elect to extend the offering for up to a further ninety (90) days, if all shares have not been sold by the end of the initial ninety (90) day period. There can be no assurance that we will sell all or any of the shares offered.  We have no arrangement or guarantee that we will sell any shares.  

In order to comply with the applicable securities laws of certain states, the securities may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available and with which we have complied. The purchasers in this offering and in any subsequent trading market must be residents of such states where the shares have been registered or qualified for sale or an exemption from such registration or qualification requirement is available. As of this date, we intend to offer our common stock upon effectiveness of this prospectus in New York, Florida, Massachusetts, Connecticut and Illinois.

Investors can purchase the shares in this offering by contacting the company. All payments must be made in United States currency either by personal check, bank draft, or cashier’s check. There is no minimum subscription requirement. We expressly reserve the right to either accept or reject any subscription. All accepted subscription agreements are irrevocable. Any subscription rejected will be returned to the subscriber within five (5) business days of the rejection date. Furthermore, once a subscription agreement is accepted, it will be executed without reconfirmation to or from the subscriber. Once we accept a subscription, the subscriber cannot withdraw it.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by Gersten Savage LLP, New York, New York.  

EXPERTS

The audited financial statements appearing in this prospectus and registration statement for the years ended June 30, 2010 and 2009 and for the period from October 15, 2007 (Inception) through June 30, 2010, have been audited by Salberg & Company, P.A., an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1, including the exhibits, schedules, and amendments to this registration statement, under the Securities Act with respect to the shares of common stock to be sold in this offering.  This prospectus, which is part of the registration statement, does not contain all the information set forth in the registration statement.  For further information with respect to us and the shares of our common stock to be sold in this offering, we make reference to the registration statement.   You may read and copy all or any portion of the registration statement or any other information, which we file at the SEC’s public reference room at 100 F Street, N.E., Washington, DC 20549, on official business days during the hours of 10:00 AM to 3:00 PM.   You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC.  Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.  Also, the SEC maintains an internet site that contains reports, proxy and information statements, and other information that we file electronically with the SEC, including the registration statement.  The website address is www.sec.gov.

 
30

 
 
INDEX TO FINANCIAL STATEMENTS
 
   
Page
 
Years Ended June 30, 2010 and 2009        
       
Report of Independent Registered Public Accounting Firm
 
F-2
 
         
Balance Sheets
   
F-3
 
         
Statements of Operations and Comprehensive Loss
   
F-4
 
         
Statements of Changes in Stockholders’ Equity (Deficit)
   
F-5
 
         
Statements of Cash Flows
   
F-6
 
         
Notes to Financial Statements
   
F-7
 
 
Nine Months Ended March 31, 2011 and 2010          
         
Consolidated Balance Sheets
   
Q-1
 
         
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
   
Q-2
 
         
Consolidated Statements of Cash Flows (Unaudited)
   
Q-3
 
         
Notes to Consolidated Financial Statements (Unaudited)
   
Q-4
 
 
 
F-1

 


 
Report of Independent Registered Public Accounting Firm
 

To the Board of Directors and Stockholders of:
Propanc Health Group Corporation:

We have audited the accompanying balance sheets of Propanc Health Group Corporation (a development stage company) at June 30, 2010 and 2009, and the related statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended June 30, 2010 and for the period from October 15, 2007 (Inception) through June 30, 2010. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Propanc Health Group Corporation (a development stage company) as of June 30, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2010 and for the period from October 15, 2007 (Inception) through June 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a net loss and net cash used in operating activities in 2010 of $842,487 and $191,509, respectively, and has a working capital deficit, stockholders' deficit and a deficit accumulated during development stage of $190,820, $186,903 and $1,694,363, respectively, at June 30, 2010. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan in regards to these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/S/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.
Boca Raton, Florida
June 22, 2011
 
 
F-2

 
 
PROPANC HEALTH GROUP CORPORATION
(A Development Stage Company)
BALANCE SHEETS
 
   
June 30,
 
   
2010
   
2009
 
             
ASSETS
 
             
CURRENT ASSETS:
           
     Cash
 
$
528
   
$
18,507
 
     GST Tax Receivable
   
18,456
     
4,819
 
     Other current assets
   
20,961
     
2,775
 
                 
TOTAL CURRENT ASSETS
   
39,945
     
26,101
 
                 
Property and Equipment, net
   
3,917
     
5,415
 
                 
TOTAL ASSETS
 
$
43,862
   
$
31,516
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
                 
                 
CURRENT LIABILITIES:
               
     Accounts payable
 
$
42,215
   
$
10,985
 
     Accrued expenses and other payables
   
38,673
     
2,418
 
     Due to directors - related parties
   
53,222
     
50,751
 
     Loans from directors - related parties
   
75,579
     
303,690
 
     Accrued interest - related parties
   
-
     
59,093
 
     Employee benefit liability
   
21,076
     
13,970
 
                 
TOTAL CURRENT LIABILITIES
   
230,765
     
440,907
 
                 
Commitments and Contingencies (See Note 9)
               
                 
STOCKHOLDERS' DEFICIT:
               
     Preferred stock, $0.01 par value;10,000,000 shares
               
        authorized; zero shares issued and outstanding as of
               
        June 30, 2010 and 2009, respectively
   
-
     
-
 
     Common stock, $0.001 par value;100,000,000 shares
               
        authorized; 56,281,061 and 51,300,000 shares issued and
               
        outstanding  as of June 30, 2010 and 2009, respectively
   
56,281
     
51,300
 
     Additional Paid-in Capital
   
1,551,766
     
444,387
 
     Accumulated other comprehensive income (loss)
   
(100,587
)
   
(53,202
)
     Deficit accumulated during development stage
   
(1,694,363
)
   
(851,876
)
                 
TOTAL STOCKHOLDERS' DEFICIT
   
(186,903
)
   
(409,391
)
                 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
43,862
   
$
31,516
 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-3

 

PROPANC HEALTH GROUP CORPORATION
 (A Development Stage Company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009, AND
FOR THE PERIOD FROM OCTOBER 15, 2007 (INCEPTION) TO JUNE 30, 2010
 
               
For the period from
 
               
October 15,
 
               
2007 (Inception)
 
   
Year Ended June 30,
   
to June 30,
 
   
2010
   
2009
   
2010
 
                   
REVENUE
                 
     Royalty revenue - related party
 
$
-
   
$
2,657
   
$
30,974
 
                         
OPERATING EXPENSES
                       
     Administration expenses
   
680,110
     
258,835
     
1,276,770
 
     Occupancy expenses
   
12,061
     
14,466
     
31,781
 
     Research and development
   
34,031
     
121,369
     
252,267
 
TOTAL OPERATING EXPENSES
   
726,202
     
394,670
     
1,560,818
 
                         
LOSS FROM OPERATIONS
   
(726,202
)
   
(392,013
)
   
(1,529,844
)
                         
OTHER INCOME (EXPENSES)
                       
     Interest expense
   
(116,674
)
   
(54,522
)
   
(171,196
)
     Interest income
   
64
     
2,866
     
8,425
 
     Foreign currency transaction gain (loss)
   
325
     
(180
)
   
(1,748
)
TOTAL OTHER INCOME (EXPENSES)
   
(116,285
)
   
(51,836
)
   
(164,519
)
                         
NET LOSS
   
(842,487
)
   
(443,849
)
   
(1,694,363
)
                         
OTHER COMPREHENSIVE INCOME (LOSS)
                       
         Foreign currency translation
   
(47,385
)
   
(50,680
)
   
(100,587
)
                         
COMPREHENSIVE LOSS
 
$
(889,872
)
 
$
(494,529
)
 
$
(1,794,950
)
                         
                         
BASIC AND DILUTED NET LOSS PER SHARE
 
$
(0.02
)
 
$
(0.01
)
 
$
(0.05
)
                         
BASIC AND DILUTED WEIGHTED
                       
     AVERAGE SHARES OUTSTANDING
   
51,952,264
     
41,829,231
     
36,096,622
 

The accompanying notes are an integral part of these financial statements.
 
 
F-4

 

PROPANC HEALTH GROUP CORPORATION
 (A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009, AND
FOR THE PERIOD FROM OCTOBER 15, 2007 (INCEPTION) TO JUNE 30, 2010
 
                                       
Deficit
       
                                 
Accumulated
   
Accumulated
       
   
Preferred Stock
   
Common Stock
         
Other
   
During
   
Total
 
   
Number of
         
Number of
         
Additional
   
Comprehensive
   
Development
   
Stockholders'
 
   
Shares
   
Value
   
Shares
   
Value
   
Paid-in Capital
   
Loss
   
Stage
   
Equity (Deficit)
 
                                                 
Balance at October 15, 2007 (Inception of Development Stage)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
                                                                 
Issuance of Common Stock for cash @ $0.01 - related parties
   
-
     
-
     
41,040,000
     
41,040
     
(41,022
)
   
-
     
-
     
18
 
                                                                 
Contributed capital - related party
   
-
     
-
     
-
     
-
     
495,665
     
-
     
-
     
495,665
 
                                                                 
Foreign currency translation gain (loss)
   
-
     
-
     
-
     
-
     
-
     
(2,522
)
   
-
     
(2,522
)
                                                                 
Net loss, October 15, 2007 (Inception) through June 30, 2008
   
-
     
-
     
-
     
-
     
-
     
-
     
(408,027
)
   
(408,027
)
                                                                 
Balance at June 30, 2008
   
-
     
-
     
41,040,000
     
41,040
     
454,643
     
(2,522
)
   
(408,027
)
   
85,134
 
                                                                 
Issuance of Common Stock for cash @ $0.01 - related parties
   
-
     
-
     
10,260,000
     
10,260
     
(10,256
)
   
-
     
-
     
4
 
                                                                 
Foreign currency translation gain (loss)
   
-
     
-
     
-
     
-
     
-
     
(50,680
)
   
-
     
(50,680
)
                                                                 
Net loss, June 30, 2009
   
-
     
-
     
-
     
-
     
-
     
-
     
(443,849
)
   
(443,849
)
                                                                 
Balance at June 30, 2009
   
-
     
-
     
51,300,000
     
51,300
     
444,387
     
(53,202
)
   
(851,876
)
   
(409,391
)
                                                                 
Issuance of common stock for cash @ $0.18
   
-
     
-
     
583,334
     
583
     
91,227
     
-
     
-
     
91,810
 
                                                                 
Issuance of stock for services
   
-
     
-
     
1,092,112
     
1,092
     
175,613
     
-
     
-
     
176,705
 
                                                                 
Officer shares contributed to third party for services rendered
   
-
     
-
     
-
     
-
     
299,737
     
-
     
-
     
299,737
 
                                                                 
Conversion of notes payable and accrued interest to common stock - Related parties
   
-
     
-
     
3,305,615
     
3,306
     
531,550
     
-
     
-
     
534,856
 
                                                                 
Gain on related party debt converted to common stock
   
-
     
-
     
-
     
-
     
9,252
     
-
     
-
     
9,252
 
                                                                 
Foreign currency translation gain (loss)
   
-
     
-
     
-
     
-
     
-
     
(47,385
)
   
-
     
(47,385
)
                                                                 
Net loss, June 30, 2010
   
-
     
-
     
-
     
-
     
-
     
-
     
(842,487
)
   
(842,487
)
                                                                 
Balance at June 30, 2010
   
-
   
$
-
     
56,281,061
   
$
56,281
   
$
1,551,766
   
$
(100,587
)
 
$
(1,694,363
)
 
$
(186,903
)

The accompanying notes are an integral part of these financial statements.
 
 
F-5

 

(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009,
AND FOR THE PERIOD FROM OCTOBER 15, 2007 (INCEPTION) TO JUNE 30, 2010
 
               
For the Period from
 
   
Year Ended June 30,
   
October 15, 2007 (Inception)
 
   
2010
   
2009
   
to June 30, 2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net Loss
 
$
(842,487
)
 
$
(443,849
)
 
$
(1,694,363
)
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities:
                       
Issuance of common stock for services
   
176,705
     
-
     
176,705
 
Officer shares contributed to third party consultant
   
299,737
     
-
     
299,737
 
Depreciation expense
   
1,828
     
2,232
     
6,500
 
Changes in Assets and Liabilities:
                       
Accounts receivable
   
-
     
2,977
     
(664
)
GST receivable
   
(13,917
)
   
192
     
(19,396
)
Other assets
   
(18,743
)
   
200
     
(21,919
)
Accounts payable
   
31,874
     
5,287