NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1
–
NATURE OF BUSINESS
ITEM
1. BUSINESS OVERVIEW
PHI
Group, Inc. (the “Company” or “PHI”) is a Nevada corporation engaged in mergers and acquisitions as a
principal (
www.phiglobal.com
). The Company has adopted plans to acquire established operating businesses in selective industries
and invest in various ventures that may potentially create significant long-term value for our shareholders. In addition, we also
provide corporate finance services, including merger and acquisition advisory and consulting services for client companies through
our wholly owned subsidiary PHI Capital Holdings, Inc. (
www.phicapitalholdings.com
). No assurances can be made that the
Company will be successful in achieving its plans.
Originally
incorporated in June 1982 as JR Consulting, Inc., the Company was foremost engaged in mergers and acquisitions and had an operating
subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the
business combination with Providential Securities, Inc., a California-based brokerage firm, in late 1999, the Company changed
its name to Providential Securities, Inc. (Nevada) in January 2000. The Company then changed its name to Providential Holdings,
Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial
services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011,
the Company was engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development,
mining, oil and gas, telecommunications, technology, healthcare, private equity, and special situations. In October 2011, the
Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation, (together
with its subsidiaries Philand Ranch - Singapore, Philand Corporation (US), and Philand Vietnam Ltd.), PHI Gold Corporation (formerly
PHI Mining Corporation), and PHI Energy Corporation, and began to mainly focus on acquisition and development opportunities in
energy and natural resource businesses. Starting July 2016, the Company has engaged Milost Advisors, Inc., a New York-based investment-banking
firm, as its buy-side advisor and begun to seek acquisition opportunities in other industries besides energy and natural resources.
In addition, PHI Capital Holdings, Inc., a wholly owned subsidiary of PHI, continues to provide corporate and project finance
services, including merger and acquisition (M&A) advisory and consulting services and arranging capital for other companies
in a variety of industries.
NOTE
2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of PHI Group, Inc., its wholly owned subsidiary PHI Capital Holdings, Inc.,
and its discontinued operations Providential Securities, Inc., PHI Energy Corporation, PHI Gold Corp, Providential Vietnam Ltd.
and Philand Ranch Limited (including its 100% owned subsidiary Philand Corporation and Philand Vietnam Ltd), Omni Resources, Inc.,
Cornerstone Biomass Corp., and American Pacific Resources, Inc., collectively referred to as the “Company.” All significant
inter-company transactions have been eliminated in consolidation.
USE
OF ESTIMATES
The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America 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 those estimates.
CASH
AND CASH EQUIVALENTS
The
Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible
into cash to be cash equivalents.
MARKETABLE
SECURITIES
The
Company’s securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified
as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.
Each
investment in marketable securities typically represents less than twenty percent (20%) of the outstanding common stock and stock
equivalents of the investee, and each security is nationally quoted on the FINRA’S OTC Bulletin Board (“OTCBB”)
or the OTC Markets. As such, each investment is accounted for in accordance with the provisions of ASC 320 (previously SFAS No.
115).
Unrealized
holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of
stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings
based upon the adjusted cost of the specific security sold. On June 30, 2016 and 2015 the marketable securities have been recorded
at $383,770 and $350,556, respectively based upon the fair value of the marketable securities at that time.
ACCOUNTS
RECEIVABLE
Management
reviews the composition of accounts receivable and analyzes historical bad debts. As of June 30, 2016, the Company had no accounts
receivable.
IMPAIRMENT
OF LONG-LIVED ASSETS
Effective
January 1, 2002, the Company adopted ASC 350 (Previously SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and
the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a
Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in
accordance with ASC 350. ASC 350 requires impairment losses to be recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’
carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market
value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair
market values are reduced for the cost of disposal.
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost. Maintenance and repair costs are charged to expense as incurred; costs of major additions and
betterments are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation
are eliminated from the accounts and any resulting gain or loss is reflected in income. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, ranging from three to ten years.
DEPRECIATION
AND AMORTIZATION
The
cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation and amortization
of fixed assets are computed on a straight-line basis.
NET
EARNINGS (LOSS) PER SHARE
The
Company adopted the provisions of ASC 260 (previously SFAS 128). ASC 260 eliminates the presentation of primary and fully diluted
earnings per share (“EPS”) and requires presentation of basic and diluted EPS. Basic EPS is computed by dividing income
(loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS
is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding
at the end of the period.
The
net earnings (loss) per share is computed as follows:
|
|
|
2016
|
|
|
2015
|
|
|
Basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(7,998
|
)
|
|
$
|
(1,368,915
|
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Basic
weighted average number of common shares outstanding (adjusted for 1:1,500 reverse split)
|
|
|
5,324,120
|
|
|
|
6,573,093
|
|
|
Basic
net income (loss) per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.21
|
)
|
|
Diluted
weighted average number of common shares outstanding (adjusted for 1:1,500 reverse split)
|
|
|
5,324,120
|
|
|
|
6,573,093
|
|
|
Diluted
net income (loss) per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.21
|
)
|
STOCK-BASED
COMPENSATION
Effective
July 1, 2006, the Company adopted ASC 718-10-25 (previously SFAS 123R) and accordingly has adopted the modified prospective application
method. Under this method, ASC 718-10-25 is applied to new awards and to awards modified, repurchased, or cancelled after the
effective date. Additionally, compensation cost for the portion of awards that are outstanding as of the date of adoption for
which the requisite service has not been rendered (such as unvested options) is recognized over a period of time as the remaining
requisite services are rendered.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
Fair
Value - Definition and Hierarchy
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether
or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial
assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair
value measurement.
A
fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable inputs are to be used when available.
Valuation
techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy is
categorized into three levels based on the inputs as follows:
Level
1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the
ability to access.
Level
2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level
3
- Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Fair
value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant
that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are
not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing
the asset or liability at the measurement date. The availability of valuation techniques and observable inputs can vary from investment
to investment and are affected by a wide variety of factors, including; type of investment, whether the investment is new and
not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction.
To
the extent that valuation is based upon models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially
higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree
of judgment exercised by the Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases,
the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in
the fair value hierarchy in which the fair value measurement falls in its entirety is determined based upon the lowest level input
that is significant to the fair value measurement.
Fair
Value - Valuation Techniques and Inputs
The
Company holds and may invest public securities traded on public exchanges or over-the-counter (OTC), private securities, real
estate, convertible securities, interest bearing securities and other types of securities and has adopted specific techniques
for their respective valuations.
Equity
Securities in Public Companies
Unrestricted
The
Company values investments in securities that are freely tradable and listed on major securities exchanges at their last reported
sales price as of the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied,
they are categorized in Level 1 of the fair value hierarchy.
Securities
traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 or 3 of the fair
value hierarchy.
Restricted
Securities
traded on public exchanges or over-the-counter (OTC) where there are formal restrictions that limit (i.e. Rule 144 holding periods
and underwriter’s lock-ups) their sale shall be valued at the closing price on the date of valuation less applicable discounts.
The Company may apply a discount to securities with Rule 144 restrictions. Additional discounts may be assessed if the Company
believes there are other mitigating factors which warrant the additional discounting. When determining potential additional discounts,
factors that will be taken into consideration include, but are not limited to; securities’ trading characteristics, volume,
length and overall impact of the restriction as well as other macro-economic factors. Valuations should be discounted appropriately
until the securities may be freely traded.
If
it has been determined that the exchange or OTC listed price does not accurately reflect fair market value, the Company may elect
to treat the security as a private company and apply an alternative valuation method.
Investments
in restricted securities of public companies may be included in Level 2 of the fair value hierarchy. However, to the extent that
significant inputs used to determine liquidity discounts are not observable, investments in restricted securities in public companies
may be categorized in Level 3 of the fair value hierarchy.
The
Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, marketable securities,
and accounts payable.
As
of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying
values as presented on the balance sheet. This is primarily attributed to the short maturities of these instruments.
Effective
July 1, 2008, the Company adopted ASC 820 (previously SFAS 157),
Fair Value Measurements
and adopted this Statement for
the assets and liabilities shown in the table below. ASC 820 clarifies the definition of fair value, prescribes methods for measuring
fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the
use of fair value measurements. The adoption of ASC 820 did not have a material impact on our fair value measurements. ASC 820
permits the Company to defer the recognition and measurement of the nonfinancial assets and nonfinancial liabilities until January
1, 2010. At June 30, 2016, the Company did not have any nonfinancial assets or nonfinancial liabilities that are recognized or
disclosed at fair value. ASC 820 requires that financial assets and liabilities that are reported at fair value be categorized
as one of the types of investments based upon the methodology mentioned in Level 1, Level 2 and Level 3 above for determining
fair value.
Assets
measured at fair value on a recurring basis are summarized below. The Company has no financial liabilities measured at fair value
on a recurring basis.
Available-for-sale
securities
|
Securities
available for sale
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
|
June
30, 2016
|
|
|
-
|
|
|
$
|
60,054
|
|
|
$
|
323,717
|
|
|
$
|
383,770
|
|
|
June
30, 2015
|
|
$
|
16,828
|
|
|
$
|
301,562
|
|
|
$
|
32,166
|
|
|
$
|
350,556
|
|
The
Company uses various approaches to measure fair value of available-for-sale securities, while applying the three-level valuation
hierarchy for disclosures, specified in ASC 820. Our Level 1 securities were measured using the quoted prices in active markets
for identical assets and liabilities.
The
company’s policy regarding the transfers in and/or out of Level 3 depends on the trading activity of the security, the volatility
of the security, and other observable units which clearly represents the fair value of the security. If a level 3 security can
be measured using a more fairly represented fair value, we will transfer these securities either into Level 1 or Level 2, depending
on the type of inputs.
REVENUE
RECOGNITION
The
Company’s revenue recognition policies are in compliance with ASC 13 (previously Staff accounting bulletin (SAB) 104). The
Company recognizes consulting and advisory fee revenues when the transaction is completed and the service fees are earned. Expenses
are recognized in the period in which the corresponding liability is incurred. Payments received before all of the relevant criteria
for revenue recognition are recorded as unearned revenue.
ADVERTISING
The
Company expenses advertising costs as incurred. Advertising costs for the years ended June 30, 2016 and 2015 were $79,072 and
$4,350, respectively. The increase in advertising expenses in the current year includes expenses for investor relations and public
relations totaling $64,170.
COMPREHENSIVE
INCOME (LOSS)
ASC
220-10-45 (previously SFAS 130, Reporting Comprehensive Income) establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity, except those
resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items
that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial statements. As of June 30, 2016 and 2015, respectively,
accumulated other comprehensive incomes of $30,263 and $99,341 are presented on the accompanying consolidated balance sheets.
INCOME
TAXES
The
Company accounts for income taxes in accordance with ASC 740 (previously SFAS No. 109, “Accounting for Income Taxes”).
Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
REPORTING
OF SEGMENTS
ASC
280 (previously Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information),
which supersedes Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise,
establishes standards for the way that public enterprises report information about operating segments in annual financial statements
and requires reporting of selected information about operating segments in interim financial statements regarding products and
services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which
separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. The Company operated in one segment that generated revenues during the years
ended June 30, 2016 and 2015.
RISKS
AND UNCERTAINTIES
In
the normal course of business, the Company is subject to certain risks and uncertainties. The Company provides its service and
receives marketable securities upon execution of transactions. Consequently, the value of the securities received from customers
can be affected by economic fluctuations and each customer’s business growth. The actual realized value of these securities
could be significantly different than recorded value.
RECENT
ACCOUNTING PRONOUNCEMENTS
Update
No. 2013-11—Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward,
a Similar Tax Loss, or a Tax Credit Carryforward Exists
(a consensus of the FASB Emerging Issues Task Force)
[Download]
|
|
July
2013
|
|
Effective
for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments
are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption
is permitted.
|
|
|
|
|
|
|
Update
No. 2013-09—
Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic
Employee Benefit Plans in Update No. 2011-04
[Download]
|
|
July
2013
|
|
The
deferral in this amendment is effective upon issuance for financial statements that have not been issued.
|
|
|
|
|
|
|
Update
No. 2013-07—
Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting
[Download]
|
|
April
2013
|
|
Effective
for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013. Early
adoption is permitted.
|
|
|
|
|
|
|
|
|
|
|
|
|
Update
No. 2013-04—
Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which
the Total Amount of the Obligation Is Fixed at the Reporting Date
(a consensus of the FASB Emerging Issues Task Force)
[Download]
|
|
February
2013
|
|
Effective
for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments
are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter.
|
Update
2013-02—
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive
Income
[Download]
|
|
February
2013
|
|
For
public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic
entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption
is permitted.
|
|
|
|
|
|
|
Update
2013-01—
Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
[Download]
|
|
January
2013
|
|
An
entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within
those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented.
The effective date is the same as the effective date of Update 2011-11.
|
The
Company has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible
impact they may have on the Company’s financial statements. In most cases, management has determined that the pronouncement
has either limited or no application to the Company and, in all cases, implementation would not have a material impact on the
financial statements taken as a whole.
NOTE
3
– LOANS RECEIVABLE
Loans
receivable consist of the following at June 30, 2016 and 2015:
|
Loans
Receivable
|
|
June
30, 2016
|
|
|
June
30, 2015
|
|
|
Loan
to Catalyst Resource Group
|
|
|
-
|
|
|
$
|
5,140
|
|
|
Loan
to Provimex, Inc.
|
|
|
-
|
|
|
$
|
2,000
|
|
|
Loan
to Catthai Corp.
|
|
|
-
|
|
|
$
|
2,700
|
|
|
Loan
to Myson Group, Inc.
|
|
$
|
2,282
|
|
|
|
-
|
|
|
Total
|
|
$
|
2,282
|
|
|
$
|
9,841
|
|
We
wrote off a total of $9,841 owed by Catalyst Resource Group, Provimex, Inc., and Catthai Corp. during the year ended June 30,
2016.
NOTE
4
– OTHER ASSETS
The
Other Assets comprise of the following as of June 30, 2016 and 2015:
|
|
|
2016
|
|
|
2015
|
|
|
Other Receivable
|
|
$
|
66,955
|
|
|
$
|
66,955
|
|
|
Deposits for
purchases
|
|
$
|
75,000
|
|
|
$
|
8,224
|
|
|
Investment in a subsidiary
|
|
$
|
-
|
|
|
$
|
2,550
|
|
|
Total
Other Assets
|
|
$
|
141,955
|
|
|
$
|
77,729
|
|
During
the year ended June 30, 2011, the Company signed a consulting agreement to assist Agent155 Media Corp., a Delaware corporation,
with respect to its corporate restructuring and business combination with Freshwater Technologies, Inc., a Nevada corporation.
As part of the restructuring requirements, the Company made payment to Manning Elliot LLP in the amount of $24,476 on behalf of
Freshwater Technologies, Inc. and other loan amounts to Agent155 Media Corp. During the fiscal year ended June 30, 2014, the President
of Agent155 Media Corp. assumed the balance of $66,955 from Agent155 Media Corp. as his personal obligations to the Company.
On
July 17, 2015, the Company made an advance payment of $75,000 to Asia Green Corporation, a Nevada corporation, for a total of
500,000 shares of common stock of Asia Green Corporation. As of June 30, 2016, the total amount owed by Christopher Martinez and
deposit for purchase were collectively reported as Other Assets totaling $141,955.
NOTE
5
–
MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE
The
Company’s marketable securities are classified as available-for-sale and, as such, are carried at fair value. All of the
securities are comprised of shares of common stock of the investee. Securities classified as available-for-sale may be sold in
response to changes in interest rates, liquidity needs, and for other purposes. Each investment in marketable securities represents
less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally
quoted on the National Association of Securities Dealers OTC Bulletin Board (“OTCBB”) or the Pink Sheets. As such,
each investment is accounted for in accordance with the provisions of SFAS No. 115.
Marketable
securities owned by the Company and classified as available for sale as of June 30, 2016 consisted of 34,384,106 shares of Myson
Group, Inc. (formerly Vanguard Mining Corporation) and 292,050,000 shares of Sports Pouch Beverage Company, both public companies
traded on the a public company traded on the OTC Markets (Trading symbols MYSN and SPBV, respectively). The fair value of the
marketable securities recorded as of June 30, 2016 was $$383,770. The Company did not recognize another 97,350,000 shares of Sports
Pouch Beverage Company valued at $97,350 as available for sale because these are shares are to be returned to the client and classified
as Other Current Payable in the accompanying consolidated financial statements.
|
Securities
available for sale
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
|
June
30, 2016
|
|
|
-
|
|
|
$
|
60,054
|
|
|
$
|
323,717
|
|
|
$
|
383,770
|
|
|
June
30, 2015
|
|
$
|
16,828
|
|
|
$
|
301,562
|
|
|
$
|
32,166
|
|
|
$
|
350,556
|
|
During
the fiscal year ended June 30, 2016, there was no transfer of securities from level 3 to level 2.
NOTE
6
– PROPERTY AND EQUIPMENT
As
of June 30, 2016, the Company owned and held title to ten acres of land, Parcel Identification Number 09705010180 & 190, in
Suwannee County, Florida at historical cost of $82,733. The Company did not have any property and equipment as of June 30, 2015.
NOTE
7
– DISCONTINUED OPERATIONS
As
of June 30, 2012, the Company decided to recognize the businesses of PHI Gold Corp. (formerly PHI Mining Corporation), Providential
Vietnam Ltd., PHI Energy Corp., and Philand Ranch Ltd., a United Kingdom corporation, together with its wholly-owned subsidiaries
Philand Corporation (USA), Philand Ranch Ltd. (Singapore) and Philand Vietnam Ltd. as discontinued operations for practical business
and accounting purposes. As of June 30, 2013, the Company recorded a total of $2,234,327 for the liabilities and potential liability
contingencies and wrote off all non-performing assets associated with these discontinued operations. As of June 30, 2016, the
Company had a balance of $1,045,232 as Liabilities from Discontinued Operations.
NOTE
8
– ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The
accounts payable and accrued expenses at June 30, 2016 and 2015 consist of the following:
|
Accounts
Payable and Accrued Expenses
|
|
June
30, 2016
|
|
|
June
30, 2015
|
|
|
Accounts payable
|
|
|
144,212
|
|
|
|
131,454
|
|
|
Accrued salaries and payroll
taxes
|
|
|
1,090,279
|
|
|
|
849,279
|
|
|
Accrued interest
|
|
|
2,879,655
|
|
|
|
3,031,152
|
|
|
Accrued legal expenses
|
|
|
172,091
|
|
|
|
172,091
|
|
|
Accrued consulting fees
|
|
|
173,870
|
|
|
|
173,870
|
|
|
Other accrued expenses
|
|
|
26,888
|
|
|
|
26,888
|
|
|
Total
|
|
$
|
4,486,995
|
|
|
$
|
4,384,734
|
|
NOTE
9
– DUE TO OFFICER
Due
to officer, represents loans and advances made by officers of the Company and its subsidiaries, unsecured and due on demand. As
of June 30, 2016 and 2015, the balances were $899,674 and $1,879,458, respectively.
|
Officers/Directors
|
|
June
30, 2016
|
|
|
June
30, 2015
|
|
|
Henry
Fahman
|
|
|
811,324
|
|
|
|
1,577,958
|
|
|
Tam
Bui
|
|
|
63,350
|
|
|
|
276,500
|
|
|
Frank
Hawkins
|
|
|
12,500
|
|
|
|
12,500
|
|
|
Lawrence
Olson
|
|
|
12,500
|
|
|
|
12,500
|
|
|
Total
|
|
$
|
899,674
|
|
|
$
|
1,879,458
|
|
NOTE
10
– LOANS AND PROMISSORY NOTES
SHORT
TERM NOTES PAYABLE:
As
of June 30, 2016 and June 30, 2015, the Company had short-term notes payable amounting to $673,660 and $1,342,618 with accrued
interest of $2,879,655 and $3,031,152, respectively. These notes bear interest rates ranging from 6% to 36% per annum.
CONVERTIBLE
PROMISSORY NOTE:
On
February 29, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited
liability company. This convertible note is due and payable on November 29, 2016 with interest of 10% per annum. This note is
convertible at the election of Auctus Fund, LLC from time to time after the issuance date. In the event of default, the amount
of principal and interest not paid when due bear interest at the rate of 24% per annum and the note becomes immediately due and
payable. Should an event of default occur, the Company is liable to pay 150% of the then outstanding principal and interest. The
note agreement contains covenants requiring Auctus Fund’s written consent for certain activities not in existence or not
committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases,
borrowings, sale of assets, certain advances and loans in excess of $100,000, and certain guarantees with respect to preservation
of existence of the Company and non-circumvention. Outstanding note principal and interest accrued thereon can be converted in
whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s common stock determined
by 55% of the average of the two lowest closing trading prices of the Company’s common stock during the twenty (20) trading
days prior to the date the of the note. The Company may prepay the amounts outstanding to Auctus Fund at any time up to the 180
th
day following the issue date of this note by making a payment to the note holder of an amount in cash equal to 125% to 150%,
multiplied by the sum of: (w) the then outstanding principal amount of this Note
plus
(x) accrued and unpaid interest on
the unpaid principal amount of this Note
plus
(y) Default Interest, depending on the time of prepayment. On August 30,
2016, Auctus Fund, LLC converted the principal amount of $56,750 and $2,829.76 in accrued interest, totaling $59,579.76, into
529,598 shares of free-trading stock of the Company (Note 22 - Subsequent Event).
DUE
TO PREFERRED STOCKHOLDERS:
The
Company classified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock in a previously
discontinued subsidiary of the Company due to deficiency in compliance of the preferred shares subscription agreement in connection
with the referenced subsidiary in the year 2000. The Company has made an offer for these preferred stock holders to receive shares
of common stock in the Company in exchange for the preferred shares but so far only a small number of the preferred shareholders
have accepted the offer.
The
interest expenses payable to holders of preferred stock of $413,255 and $387,455 have been included in accrued interest included
in the accrued expenses on the balance sheets as of June 30, 2016 and June 30, 2015, respectively.
OTHER
CURRENT PAYABLE
During
the fiscal year ended June 30, 2016, the Company received a total 389,400,000 shares of Common Stock of Sports Pouch Beverage
Company, Inc. and recognized 292,050,000 shares as earned revenues. The balance of 97,350,000 shares will be returned to the client
and is recorded as Other Current Payable in the accompanying consolidated financial statements as of June 30, 2016.
ADVANCES
FROM CUSTOMERS
As
of September 30, 2012, the Company decided to reclassify the previously recorded Unearned Revenues as Advances from Customers
because the Company has not been able to complete the consulting services for the related clients due to their inability to provide
GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission.
As of June 30, 2016, the Company recorded $288,219 as Advances from Customers after recognizing $270,000 as other income.
UNEARNED
REVENUES
As
of June 30, 2016, the Company recorded $40,000 from a client as Unearned Revenues because certain conditions have not been met
as of the date of this report.
NOTE
11
– LITIGATION
LEGAL
PROCEEDING SETTLED AND UNPAID AS OF JUNE 30, 2015:
QUANG
VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.
This
case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to
NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s
counsel and unilaterally reached a settlement that had not been approved by the Company. While the Company was in the process
of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association
of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County
Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus
pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations,
the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus
$4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment
for $79,000. In May 2011, the Claimants filed an application for and renewal of judgment for a total of $140,490.78. As of June
30, 2016 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated
financial statements.
WILLIAM
DAVIDSON VS. DOAN ET AL.
On
or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California
for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin
Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831).
Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and
the company.
On
July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company,
reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period
of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total
amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability
associated with the balance of these notes in the accompanying consolidated financial statements as of June 30, 2016.
NOTE
12
– PAYROLL LIABILITIES
The
payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the quarter ended June
30, 2014, the Company paid $41,974.22 to the Internal Revenue Service and $ 19,289.94 to the State of California Employment Development
Department towards the balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company is currently
working with the Internal Revenue Service and the State of California Employment Department to resolve the remaining balances.
NOTE
13
– BASIC AND DILUTED NET LOSS PER SHARE
Net
loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No.
128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares
outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the
period and common stock equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares
for the year ended June 30, 2016 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE
14
–
STOCKHOLDER’S EQUITY
The
total number of authorized capital stock of the Company is 400,000,000 shares with a par value of $0.001 per share, consisting
of 300,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares of Preferred Stock with
a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined by the Board of Directors
of the Company.
On
March 15, 2012, the Company effectuated a 1 for 1,500 reverse split of the Company’s Common Stock.
Treasury
Stock:
The
balance of treasury stock as of June 30, 2016 was 67,271 post-split shares valued at $21,823.
Common
Stock:
Since
July 1, 2015, the Company has issued the following amounts of its Common Stock:
On
February 2, 2016, the Company issued 121,212 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the
auspices of Rule 144 for $40,000 in cash, at the price of $0.33 per share.
On
February 2, 2016, the Company issued 98,084 shares of PHI Group, Inc.’s free-trading Common Stock to a lender for conversion
of a $32,000 loan principal at the price of $0.3263 per share.
On
February 4, 2016, the Company issued 100,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant
for marketing and investor relation services.
On
March 28, 2016, Henry Fahman, Chairman and Chief Executive Officer of the Company, converted $1,000,000 of debts into 2,688,172
shares of restricted common stock of the Company at the conversion price of $0.372 per share.
On
March 28, 2016, Tam Bui, an independent director and Chairman of the Audit Committee the Company, converted $276,500 of principal
loan amounts and $76,850 of accrued and unpaid interest amounts, totaling $353,350, into 949,866 shares of restricted common stock
of the Company at the conversion price of $0.372 per share.
On
March 28, 2016, Natalie Bui, the spouse of Tam Bui, converted $384,090.50 of principal loan amounts into 1,032,502 shares of restricted
common stock of the Company at the conversion price of $0.372 per share.
On
May 9, 2016, the Company issued 691,824 shares of PHI Group, Inc.’s free-trading Common Stock to a lender for conversion
of a $275,000 loan principal at the price of $0.3975 per share.
On
June 13, 2016, the Company issued 100,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant
for marketing and investor relation services at the price of $0.3975 per share.
On
June 28, 2016, the Company issued 30,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant
for marketing and investor relation services at the price of $0.50 per share.
On
July 29, 2016, the Company issued 225,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.40 per share to
Milost Advisors, Inc. for buy-side advisory services in connection with contemplated acquisitions of target companies in South
Africa and North America.
On
August 29, 2016, the Company issued 48,930 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the
auspices of Rule 144 for $20,000 in cash, at the price of $0.4088 per share.
On
August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 for the convertible promissory note dated February
29, 2016 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.
As
of October 12, 2016 there were 16,174,353 shares of the Company’s $0.001 par value Common Stock issued, excluding 5,673,327
shares reserved for a special dividend distribution.
Preferred
Stock:
There is no preferred stock issued and outstanding.
Class
A Preferred Stock:
On April 2, 2015, the Company designated the first fifty million (50,000,000) shares of the Company’s
previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, as Class A Cumulative Convertible
Redeemable Class A Preferred Stock (the “
Class A Preferred Stock
”) with the following rights and terms:
1)
Dividends: Each holder of Class A Preferred Stock is entitled to receive twelve percent (12%) non-compounding cumulative dividends
per annum, payable semi-annually.
2)
Conversion: Each share of the Class A Preferred Stock shall be convertible into the Company’s Common Stock any time after
one year from the date of issuance at a Variable Conversion Price (as defined herein) of the Common Stock. The “Variable
Conversion Price” shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%).
“Market Price” means the average Trading Price for the Company’s Common Stock during the ten (10) trading-day
period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Class A Preferred Stock to
the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security as
of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, NYSE or applicable trading market as reported
by a reliable reporting service (“Reporting Service”) mutually acceptable to the Company and Holder of the Class A
Preferred Stock.
3)
Redemption Rights: The Company, after a period of two years from the date of issuance, may at any time or from time to time redeem
the Class A Preferred Stock, in whole or in part, at the option of the Company’s Board of Directors, at a price equal to
one hundred twenty percent (120%) of the original purchase price of the Class A Preferred Stock or of a unit consisting of any
shares of Class A Preferred Stock and any warrants attached thereto, plus, in each case, accumulated and unpaid dividends to the
date fixed for redemption.
NOTE
15
–
STOCK-BASED COMPENSATION PLAN
On
February March 18, 2015, the Company adopted an Employee Benefit Plan to set aside 1,000,000 shares of common stock for eligible
employees and independent contractors of the Company and its subsidiaries. As of June 30, 2016 the Company has not issued any
stock in lieu of cash under this plan.
NOTE
16
–
GAIN (LOSS) ON SETTLEMENT OF DEBTS
For
the fiscal year ended June 30, 2016, there was no gain or loss on settlements of debts, as compared to a net loss in the amount
of $25,845 on conversion of promissory notes by lender during the year ended June 30, 2015.
NOTE
17
–
OTHER INCOME (EXPENSE)
Net
Other Income (Expense) for the fiscal year ended June 30, 2016 consists of the following:
|
OTHER
INCOME (EXPENSE)
|
|
FY
Ended June 30, 2016
|
|
|
Other Income
(Reversal of Impairment)
|
|
$
|
270,000
|
|
|
Interest Income
|
|
$
|
74.54
|
|
|
Write-offs
|
|
$
|
(12,391
|
)
|
|
Debit interest expense
|
|
$
|
(260
|
)
|
|
Net Miscellaneous Income
(Expense)
|
|
$
|
(1,990
|
)
|
|
NET
OTHER INCOME (EXPENSE)
|
|
$
|
255,433
|
|
NOTE
18
–
RELATED PARTY TRANSACTIONS
The
Company accrued $210,000 in salaries for the President and Secretary of the Company during the year ended June 30, 2016.
NOTE
19
–
INCOME TAXES
No
provision was made for income tax since the Company has significant net operating loss carry forward. Through June 30, 2016, the
Company incurred net operating losses for tax purposes of approximately $37,734,753. The net operating loss carry forward may
be used to reduce taxable income through the year 2031. Net operating loss for carry forwards for the State of California is generally
available to reduce taxable income through the year 2022. The availability of the Company’s net operating loss carry-forward
is subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock. (See Note 2).
“Under
section 6501(a) of the Internal Revenue Code (Tax Code) and section 301.6501(a)-1(a) of the Income Tax Regulations (Tax Regulations),
the IRS is required to assess tax within 3 years after the tax return was filed with the IRS. The Company’s 2015 tax return
is open and may be subject to examination by the taxing authorities”.
NOTE
20
–
CONTRACTS AND COMMITMENTS
BUSINESS
AND FINANCIAL CONSULTING AGREEMENT WITH THINH HUNG INVESTMENT CO.
During
the fiscal year ended June 30, 2010 the Company signed an agreement with Thinh Hung Investment Co., Ltd., a Vietnam-based company,
to assist Thinh Hung in identifying, locating and, possibly, acquiring various business opportunities for Thinh An Co., Ltd.,
a subsidiary of Thinh Hung, including but not limited to a reverse merger, a stock swap, or a business combination between Thinh
An and a publicly-traded company in the U.S. In exchange for the services rendered, the Company would receive compensation in
cash from Thinh Hung and common stock of the combined company. As of September 30, 2011, the Company consummated a stock purchase
and investment agreement between Thinh Anh Co., Ltd. and Vietnam Foods Corporation, a Nevada corporation. However, the combined
company has not filed a registration statement with the Securities and Exchange Commission to become a reporting company. The
Company has recognized $26,656 as only revenues from this transaction. During the fiscal year ended June 30, 2016, the Company
repaid $5,000 to Thinh Hung Investment Co.. The balance of $288,219 was booked as Customer Advances in the liability portion of
the balance sheet.
BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH AG MATERIALS, LLC.
On
January 7, 2015, the Company signed a Business Cooperation and Investment Agreement with AG Materials, LLC, an Alabama limited
liability company, (“AGM”) to cooperate with each other to establish and operate a 200,000 MT wood pellet plant in
Live Oak, Suwannee County, Florida. Both parties have incorporated Cornerstone Biomass Corporation, a Florida corporation, as
the entity to manage the joint-venture wood pellet project in Live Oak, Florida. On July 31, 2015, PHI Group, Inc. purchased ten
acres of land, namely Lots 18 & 19 Eagle’s Nest, Live Oak, Florida 32060 from Klausner Holding USA, Inc., a Georgia
corporation, for the purpose of establishing the wood pellet plant. Due to recent adverse changes with respect to the global industrial
wood pellet markets, the Company has decided not to pursue this wood pellet plant project. As of June 30, 2016, the Company has
written off its investment in Cornerstone Biomass Corporation.
BUSINESS
COOPERATION AGREEMENT AND MASTER CONTRACT FOR PURCHASE AND SALE OF SAND WITH KIEN HOANG MINERALS JOINT STOCK COMPANY
On
May 8, 2015, the Company signed a Business Cooperation Agreement with Kien Hoang Minerals Joint Stock Company (” KHM JSC”),
a Vietnamese company, to develop and expand international markets for KHM’s mineral products, particularly exports of reclamation
sand and granite to Singapore through Primearth Resources Asia Pte Ltd, another strategic partner of the Company’s. The
Company was granted the first right of refusal by KHM to purchase approximately 102 million cubic meters of sand and 40 million
cubic meters of granite. On June 12, 2015, the Company signed a Master Contract for Purchase and Sale of 60 million cubic meters
of sand recovered from the dredging and clearing of traffic pathways at De Gi estuary and surrounding areas in Binh Dinh Province,
Vietnam over a period of five years for exports to Singapore and other Asian markets. As of the date of this report, the Company
has not shipped any sand under these agreements and intends not to pursue this business activity.
CONSULTING
AGREEMENT WITH SPORTS POUCH BEVERAGE COMPANY
On
June 3, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement with
Sports Pouch Beverage Company (“SPBV”), a Nevada corporation, to provide consulting services and assist SPBV with
respect to business development, mergers and acquisitions, corporate governance, and corporate finance. PHI Capital Holdings,
Inc. is entitled to receive up to forty percent of common stock in SPBV as compensation for the services rendered. The duration
of this agreement is one year. As of June 30, 2016 PHI Capital Holdings, Inc. has received 389,400,000 shares of SPBV stock and
recorded a total of 292,050,000 shares as earned revenues from this transaction. The balance of 97,350,000 shares will be returned
to the client and is recorded as Other Current Payable valued at $97,350 in the accompanying consolidated financial statements.
AGREEMENT
WITH PRIMEFORTH RENEWABLE ENERGY LTD.
On
June 24, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement
with Primeforth Renewable Energy Ltd. (“Primeforth”), a Singaporean company, to provide consulting services with respect
to corporate development, corporate finance and debt financing for Primeforth Renewable Energy. PHI Capital Holdings is entitled
to a one-time non-refundable professional fee of $20,000 and 4% cash success fee for any financing arranged for Primeforth. The
Company is also entitled to additional compensations for advisory and business development services for the client. The term of
this agreement is two years. During the year ended June 30, 2016, the Company recorded $40,000 as earned revenues in connection
with this agreement. Primeforth is engaged in developing alternative energy using patented microalgae technologies.
SETTLEMENT
AGREEMENT WITH HAI P. NGUYEN FOR CONSULTING SERVICE
On
July 16, 2015, the Company signed a Settlement and Payment Agreement with Hai P. Nguyen and agreed to pay the latter $25,000 in
cash and 500,000 shares of Common Stock of Myson Group, Inc. as compensation for Hai P. Nguyen’s portion of contribution
towards the budget to complete the services in connection with the Consulting Agreement dated January 24, 2014 between Vietnam
Mining Corporation (now known as Myson Group, Inc.) and PHI Capital Holdings, Inc. During the year ended June 30, 2016, the Company
fulfilled its obligations under this agreement by paying Hai Nguyen $25,000 in cash, of which $2,500 was advanced by the president
of the company, and 500,000 shares of Common Stock of Myson Group, Inc.
AGREEMENT
FOR DEFRAYAL OF EXPENSES AND STOCK COMPENSATION WITH ASIA GREEN CORPORATION
On
July 17, 2015, the Company signed an agreement to provide $75,000 to Asia Green Corporation (AGMC”), a Nevada corporation,
for AGMC to pay certain required expenses and resume its status as fully reporting company with the Securities and Exchange Commission.
In exchange for the fund, AGMC agrees to allocate 500,000 shares of its Common Stock upon the consummation of a business combination
between itself and a Vietnamese company engaged in agriculture and reforestation. This amount was recorded as Deposit for Acquisition
in the Company’s balance sheet as of June 30, 2016.
BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH CAVICO LAO MINING CO. LTD.
On
August 7, 2015, the Company signed a Business Cooperation and Investment Agreement with Cavico Lao Mining Co., Ltd. (“CLM”)
to provide the initial required capital to be raised from the Company’s 506(c) private placement for CLM’s interim
operations and a budget to conduct an independent JORC report for the nickel portion of the CLM’s a 80-hectare multi-mineral
mine in the Khoam Bang mountainous area at Ban Bo, Bulikhamsay, Laos People’s Democratic Republic. In addition, the Company
shall establish a subsidiary to be the holding company for the CLM’s assets to be spun off as a separate publicly traded
company (“PubCo”) on the NASDAQ Stock Markets, subject to certain conditions and requirements. As of the date of this
report, the Company has not been successful in raising the required capital for CLM and intends not to pursue this transaction
further unless funding is available.
MASTER
AGREEMENT FOR BUSINESS COOPERATION WITH DREDGE MASTERS AND CIVIL WORKS
On
August 19, 2015, the Company signed an agreement with Dredge Masters and Civil Works, Inc., a Filipino corporation, to cooperate
with each other in order to optimize the dredging, transshipment, loading, shipping and unloading of saline sand on large scales
to serve the needs of land reclamation in Singaporean and other Asian countries. The term of this agreement is one year and expired
on August 18, 2016.
STOCK
PURCHASE AND INVESTMENT AGREEMENT WITH VINABENNY ENERGY JOINT STOCK COMPANY
On
September 1, 2015, the Company signed an agreement to acquire a 50.10% equity ownership in VinaBenny Energy Joint Stock Company
(“VinaBenny”, a Vietnamese company, for $10,700,000 and to arrange capital for VinaBenny to complete a 84,000 MT Liquefied
Petroleum Gas (LPG) terminal in Can Giuoc District, Long An Province, Vietnam. This agreement expired on December 31, 2015.
AGREEMENT
WITH REDICSACO JOINT STOCK COMPANY
On
September 11, 2015, the Company signed a Principle Business and Investment Agreement with Redicsaco JSC, a Vietnamese company,
to cooperate with each other with respect to the dredging, transshipment, loading, sale and export of saline reclamation sand
from the Ham Luong River waterway, Ben Tre Province, Vietnam to Singapore, Brunei and other Asian markets. The initial authorized
volume of sand from this location is 25 million cubic meters and the total reserve is more than 390 million cubic meters. As of
the date of this report, the Company has not been successful developing this project due to changes in market conditions and intends
not to pursue this transaction further.
AGREEMENT
WITH HATICO INVESTMENT DEVELOPMENT JOINT STOCK COMPANY
On
September 11, 2015, the Company signed a Principle Business Cooperation Agreement with HATICO Investment Development Joint Stock
Company, a Vietnamese company, to cooperate with each other in order to dredge, sell and export saline reclamation sand from Ha
Tien, Kien Giang Province, Vietnam and to develop a deep-water seaport terminal at this location. It is estimated that the volume
of sand from this location is approximately one billion cubic meters. Both parties have agreed in principle for the Company to
acquire 50.90% of HATICO or own the same percentage in a joint venture company to be set up. As of the date of this report, the
Company has not been successful developing this project due to changes in market conditions and intends not to pursue this transaction
further.
BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH HUNG THINH MINERALS INVESTMENT CO.
On
October 26, 2015 the Company signed a Principle Business Cooperation and Investment Agreement with Hung Thinh Minerals Investment
Co., Ltd. “(HTMI”), a Vietnamese company that owns a titanium mine and a slag processing plant in Binh Thuan Province,
Vietnam to cooperate with HTMI to increase its capacity to produce 150,000 MT of titanium slag per year, to develop HTMI into
a major refiner of titanium-related products, including titanium pigments, ingots, sponge, and alloys, and to list HTMI on an
international stock exchange to raise capital for its growth and expansion program. PHI Group, Inc. will acquire 49% of HTMI,
plus 2% proxy voting right in HTMI, as a prerequisite to cooperate with HTMI in this development program. The closing of this
transaction is subject to satisfactory due diligence review of HTMI, the signing of a definitive agreement, and HTMI’s compliance
with the U.S. Generally Accepted Accounting Principles (GAAP). As of the date of this report, the Company has not been successful
in obtaining complete financial information from HTMI to conduct the required due diligence review and intends not to pursue this
transaction further.
BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH SPARTAN MINING AND DEVELOPMENT CORPORATION
On
October 30, 2015, the Company signed a Principle Business Cooperation and Investment Agreement with Spartan Mining and Development
Corporation (“SMDC”), a Philippine company, to form a joint venture between SMDC and PHI Group, Inc. to dredge, extract,
process, sell and export lahar sand from the Sto. Tomas, Maloma and Bucao Rivers in the Province of Zamales, the Philippines.
The total volume of the lahar sand to be dredged from these rivers is estimated at 1.4 billion
metric tonnes. The sand was created by the Mount Pinatubo volcanic eruption in June 1991.
On
November 24, 2015 both parties signed a Joint Venture Agreement to form a joint venture corporation, to be preferably styled “PHI-Spartan
Resources, Inc.,” in order to implement the provisions of the Principle Business Cooperation and Agreement.
As
of the date of this agreement, the Company has not made any investment in the joint venture company.
SALE
AND PURCHASE AGREEMENTS OF MARINE SAND FOR EXPORT TO SINGAPORE
On
December 16, 2015, the Company signed Sale and Purchase Agreements with two Vietnamese companies, Ha Thanh Irrigation Co., Ltd.
and Hoai Nhon Irrigation Co., Ltd., to export marine sand recovered from dredging projects in Binh Dinh Province, Central Vietnam
to Singapore for reclamation purposes. However, the Company was not able to begin shipments of sand in April 2016 as anticipated
due to structural changes that affected both Vietnamese companies. Though these contracts do not expire until December 31, 2016,
they are deemed null and void because of unenforceability.
INVESTMENT
IN ANTIMONY MINE IN LAO PEOPLE’S DEMORACTIC REPUBLIC
On
January 19 and 20, 2016, the Company signed a Business Cooperation Agreement and an Investment Agreement with Khamchaleun Investment
Sole Co., Ltd., a Laotian company, to acquire a 35% equity interest in Hung Kham Lao Investment Co., Ltd and co-invest in a 92km
2
antimony mine in Chalet Village, Boualapha District, Khammuane Province, People’s Democratic Republic. The antimony
mining company has been granted a quota to extract, process and sell 350,000 metric tons of antimony from this mine. As of the
date of this report, the Company has not made any investment into Khamchaleun Investment Sole Co. and intends not to pursue this
transaction further.
ACQUISITION
OF MAJORITY INTEREST IN A LIQUEFIED PETROLEUM GAS COMPANY IN VIETNAM
On
January 23, 2016, PHI Group, Inc. (the “Company”) entered into Private Stock Purchase and Sale Agreement to purchase
50.90% of equity ownership (the “Exchange Ownership”) in Pacific Petro Commercial Joint Stock Company (aka Pacific
Petro Trading Corporation), a Vietnamese company, hereinafter referred to as “Pacific Petro,” in exchange for a combination
of cash and Common Stock and/or Preferred Stock of the Company. The fair value for the Exchange Ownership will be determined by
the majority shareholders of Pacific Petro (the “Majority Shareholders”) and the Company after the completion of a
business valuation of Pacific Petro by Grant Thornton Vietnam Ltd. and the financial audits of Pacific Petro by a PCAOB-registered
auditing firm.
Originally
established as Binh Duong Gas LLC in 1998, Pacific Petro changed its name to Pacific Petro Commercial Joint Stock Company (aka
Pacific Petro Trading Corporation) in May 2010. This company’s headquarters is located at 99 Ich Thanh Street, Truong Thanh
Ward, District 9, Ho Chi Minh City, Vietnam. Website:
http://www.pacificpetro.com.vn/
Pacific
Petro is the third largest private liquefied petroleum gas (LPG) company in Southern Vietnam, engaged in sales of liquefied petroleum
gas (LPG), manufacturing of gas canisters and cylinders, filling of LPG, repair and maintenance of gas tanks, and wholesale of
solid fuels, liquid, gas and related petroleum products.
This
company owns a gas canister-manufacturing factory on a 215,200 square-foot lot in Ben Cat District, Binh Duong Province and a
gas filling plant on a 65,600 square-foot lot in District 9, Ho Chi Minh City, Vietnam. It has also acquired a 93,600 square-foot
lot Go Dau Industrial Park, Dong Nai Province to build a proprietary LPG storage area and has been granted 83 acres in Phu Huu
Village, Nhon Trach District, Dong Nai Province to build an integrated port for imports of energy-related commodities and products.
PHI
Group has engaged Grant Thornton to conduct an independent business valuation but has not completed the required financial audits
of Pacific Petro. After the expiration of the afore-mentioned Purchase and Sale Agreement on June 30, 2016, both parties have
agreed to a conditional extension of the transaction and intend to renegotiate the terms and conditions of payment.
MEMORANDUM
OF UNDERSTANDING FOR BUSINESS COOPERATION & INVESTMENT
On
March 9, 2016, the Company signed a Memorandum of Understanding for Business Cooperation and Investment with Ses Meas Gas Import
Export, Construction & Development Co., Ltd., (“Ses Meas”) a Cambodian company, to cooperate with each other to
develop liquefied petroleum gas (LPG) and other energy-related businesses in Cambodia, including but not limited to increasing
Ses Meas market share of LPG business in Cambodia, establishing dry port and LPG storage and logistics facilities, engaging in
waste-to-energy business, and potentially establishing and operating an oil refinery in Cambodia in conjunction with an qualified
international investor. Subsequently, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate
of Ses Meas, to establish, manage and operate a dry port in Cambodia.
On
April 30, 2016, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate of Ses Meas, to
establish, manage and operate a dry port in Cambodia. According to the Joint Venture Agreement, PHI Group, Inc. will contribute
65% investment capital to the dry port project and hold 65% equity interest in the joint venture company. In light of the recent
contemplated acquisition activities of the Company following the close of the fiscal year ended June 30, 2016, the Company intends
to re-evaluate the potential contribution and priority of this project compared with other investment opportunities.
BUSINESS
COOPERATION AGREEMENT WITH PT JAYA SAKTI GLOBALINDO
On
March 17, 2016, the Company signed a Business Cooperation Agreement with PT Jaya Sakti Globalindo (JSG), an Indonesian company,
to utilize hard assets held by JSG and its affiliates as collaterals for project financing. The parties intend to enter into definitive
agreements for the collateral provision in connection with specific projects and the terms and conditions of such provisions.
As of the date of this report, the Company has not undertaken any projects that would qualify for the utilization of collateral
assets from JSG and its affiliates.
LETTER
OF INTENT TO ACQUIRE WOOD PELLET COMPANY IN ALABAMA
On
April 27, 2016, the Company signed a Letter of Intent to acquire Lee Energy Solutions, LLC, an Alabama company that owns a 100,000
MT/year wood pellet manufacturing facility in Crossville, Alabama. The Letter of Intent was amended twice and expired on September
20, 2016.
NOTE
21
–
GOING CONCERN UNCERTAINTY
As
shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $37,734,753 and total liabilities
and stockholders’ deficit of $656,730 as of June 30, 2016 . These factors as well as the uncertain conditions that the Company
faces in its day-to-day operations with respect to cash flows create an uncertainty as to the Company’s ability to continue
as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable
to continue as a going concern. Management has taken action to strengthen the Company’s working capital position and generate
sufficient cash to meet its operating needs through June 30, 2017 and beyond.
In
the next twelve months the Company intends to continue pursuing its merger and acquisition program by acquiring all or controlling
interests in target companies in a number of industries, including but not limited to conventional energy, renewables, natural
resources, agribusiness, technology, transportation, education, distribution, mining, oil & gas, financial Services, healthcare,
and pharmaceuticals. We believe that by closing one or more of the transactions contemplated in Note 22 – Subsequent Event
we will be able to build a critical mass and uplist to the Nasdaq Stock Market or NYSE in the near future. In addition, we will
continue to provide advisory and consulting services to international clients through our wholly owned subsidiary PHI Capital
Holdings, Inc.
The Company anticipates
generating substantial amounts of revenues through the merger and acquisition program and advisory services mentioned herein.
However, no assurances could be made that management would be successful in achieving its plan. The president and chairman of
the Company has committed to funding the Company’s operations from various sources for the next 12 months.
NOTE
22 – SUBSEQUENT EVENT
These
financial statements were approved by management and available for issuance on October 11, 2016. Subsequent events have been evaluated
through this date.
ENGAGEMENT
LETTER WITH MILOST ADVISORS, INC.
On
July 11, 2016, the Company signed an engagement letter with Milost Advisors, Inc. to assist the Company in its analysis, consideration
and, if appropriate, execution of various financial and strategic alternatives available to it, including securing additional
equity and/or debt capital, assisting the Company in its analysis and consideration of financial aspects of certain potential
strategic transactions such as mergers, acquisitions, spin-offs, joint ventures, minority investments, negotiated purchases, or
other similar transactions. In consideration for the services rendered by Milost, the Company agrees to pay Milost a retainer
fee equal to $100,000, payable in the form of $10,000 in cash and $90,000 in stock of the Company valued at $0.40 per share. The
Company also agrees to pay Milost a success fee of 8% for equity financing and 5% for mezzanine and senior debt financings.
MEMORANDUM
OF UNDERSTANDING BETWEEN MILOST GLOBAL, INC.
On
July 18, 2016, the Company signed a Memorandum of Understanding with Milost Global, Inc., a U.S. private equity firm, to cooperate
in promoting the competitiveness of each other as well as joint activities to acquire cash-flow positive companies in North America,
South Africa, Australia, Singapore and New Zealand and seek growth through M&A alternatives in order to fast-track shareholder
value and dividend distribution. Both parties agree to use Milost Advisors, Inc. as the first right of refusal advisor to conduct
a strategic planning exercise, form a new Special Purpose Company (SPC) through which the partnership activities will be carried
out. The same SPC will be held, managed and controlled by both parties pari passu. It is intended that this partnership will assist
both parties with the implementation of their combined growth strategies and will help identify areas where each party can provide
capacity building support.
LETTER
OF INTENT TO ACQUIRE A SOUTH AFRICAN MINING SERVICES COMPANY
On
July 19, 2016, the Company presented a pre-conditional non-binding undertaking to make an offer to acquire the entire issued capital
of an undisclosed South African mining services company listed on the Johannesburg Stock Exchange (“SA Target”). On
July 25, 2016, approval was given by the SA Target’s Board of Directors to its management team to enter into further discussions
with PHI Group in good faith and to proceed with the due diligence process outlined in the undertaking.
Following
the completion of the due diligence process conducted by Milost Advisors, Inc. and the Company, on September 3, 2016, the Company
presented a Letter of Intent (“LOI”) to the SA Target to acquire all its issued capital in exchange for common stock
in PHI Group. The exchange rate would be determined on the basis of 10 days’ Volume-Weighted Average Price (VWAP) of both
companies before the day of the LOI. According to the LOI, the Company also commits to the provision of a USD $ 20 million shareholder
loan facility to the SA Target. Approximately USD $ 12 million will be used for the repayment of the SA Target subsidiary’s
term loan and the remaining USD $ 8 million will be available as a draw down facility for financing the working capital requirements
of the SA Target. The USD $ 12 million facility will be non-interest bearing until the company has effectively turned around or
whilst there are minority shareholders in Buildmax. Thereafter, interest of 5% per annum will be charged on the shareholder loan
and the loan will be repaid over a period to be agreed depending on the free cash flow generated by the SA Target.
On
September 6, 2016, approval was granted by both the SA Target’s Board of Directors and Independent Board to its management
team to enter into further discussions with PHI Group in good faith and to proceed with the transaction.
On
September 14, 2016, the Company received confirmation from SA Target’s management that 77% of the shareholders of the SA
Target approved the acquisition offer by PHI Group.
On
October 10, 2016, Milost Global, Inc. submitted a revised offer to SA Target, which was declined by SA Target’s Board of
Directors on October 11, 2016. The Company intends to renegotiate the terms and conditions for this transaction.
SECURED
LINE OF CREDIT FACILITY WITH TCA GLOBAL CREDIT MASTER FUND, LP
On
August 30, 2016, the Company signed a term sheet with TCA Global Credit Master Fund, LP (“Investor”) for a maximum
$15,000,000 senior secured line of credit, of which $4,000,000 will be made available to the Company on the first drawdown (the
“Initial Line of Credit”) for acquisition financing. The Closing Date will be the start date for the Line of
Credit Facility.
The
Company, at the discretion of the Investor, may request an increase in the line of credit at agreed upon time periods and agreed
upon amounts. The sum of the Initial Line of Credit and the subsequent line increases, if any, (the “Then Current Line Size”)
shall not exceed the maximum line of credit. Each subsequent line increase will require the Company to execute and deliver
a new or revised revolving note to the Investor and be responsible for any fees and expenses associated with the line increase.
The
line of credit may be drawn down, at the Investor’s discretion, and repaid by the Company throughout the term of the facility.
The amount requested to be drawn down (the “Advance”) shall not exceed 80% of repayments to the Investor’s designated
account, less interest and fees, if the reserve amount on the Then Current Line Size has not been satisfied. The frequency of
Advances will be mutually agreed upon between the Investor and the Company.
MILOST
GLOBAL, INC. AGREES TO INVEST UP TO $100 MILLION IN PHI GROUP, INC.
On
September 8, 2016, the Company entered into a Letter of Intent with Milost Global, Inc., a U.S. private equity firm, with respect
to the principal terms and conditions under which Milost Global, Inc. will invest up to $100 million in PHI Group, Inc.
Investment
in the amount of $50 million will be as equity and $50 million as loan.
On
September 25, 2016, the Company signed an agreement with Milost Global, Inc. for up to $50 million structured as a Milost Equity
Subscription Agreement (the ‘MESA”) whereby Milost Global is willing to initially invest $15 million for working capital
needs of PHI Group. The amount of $15 million will be drawn down in tranches at a minimum of $500,000 until fully utilized. Further,
the MESA will be utilized for the share exchange between Milost Global, Inc. and PHI Group and the balance of the $50 million
facility will be available for equity leakage fir future acquisitions of PHI Group. According to the structure of the MESA, Milost
Global, Inc. is entitled to purchase shares of common stock of PHI Group for a price per share on the basis of $2 at a discount
of 20%. The Company and Milost agree that for as long as the Company’s stock price has not reached $2 per share, Milost
Global, Inc. will receive the Company’s convertible notes instead of the Company’s shares for each drawdown. Milost
Global, Inc. has the right to convert the convertible notes into common shares of the Company once the price of PHI Group’s
stock reaches the target price of $2. The Company agrees to pay Milost Global, Inc. a commitment fee equal to 4% of the total
commitment, payable within 3 business days after the price of the Company’s common stock reaches the target price of $6.
On
September 27, 2016, the Company submitted a Drawdown Notice to Milost Global, Inc. for a total of $2,750,000 from the MESA’s
total $50-million commitment in form of a convertible note bearing annual interest of 5% and convertible to common stock at 20%
discount when PHI Group’s common stock reaches $2 per share. The proceeds from this drawdown are allocated as follows: $2,150,000
towards the cash payment for the purchase of the agricultural company (“Agri Target”) in Southeastern United States,
$500,000 for due diligence and document fees for the acquisitions of the SA Target, Agri Target and an educational company in
Canada, and $100,000 for general working capital. On September 28, 2016, Milost Global, Inc. confirmed that $500,000 had been
remitted to Milost Advisors from Milost Global, Inc. on behalf of PHI Group, Inc. as part of the first Drawdown Notice presented
to Milost Global, Inc. by the Company.
LETTER
OF INTENT TO ACQUIRE AGRICULTURAL BUSINESS IN SOUTHEASTERN UNITED STATES
On
August 24, 2016, the Company tendered a Letter of Intent to acquire an undisclosed fruit and vegetable company (“Agri Target”)
in Southeastern United States for a total of 81% in cash and 19% in common stock of PHI Group. On September 6, 2016, the owner
of the Agri Target made a counter offer which was accepted by the Company on September 16, 2016.
The
Company is in the process of conducting the due diligence review of the Agri Target and expects to close this transaction as soon
as practical. Average annual sales of the Agri Target are approximately $25 million.
LETTER
OF INTENT TO ACQUIRE CANADIAN EDUCATIONAL COMPANY.
On
September 3, 2016, the Company signed a Letter of Intent for Acquisition (“LOIA”) with an undisclosed educational
company in Canada (“EDU Target”) that
owns and operates 21 campuses and enrolls
approximately 20,000 students yearly in various English language and career training educational courses. According to the LOIA,
the Company will acquire all the issued and outstanding shares of the EDU Target in exchange for common stock of PHI Group and
provide a total of C$20 million in cash and stock investment in EDU Target to settle bank debts and allow for operating working
capital.
On
October 3, 2016, the Company presented a revised LOIA to EDU Target to modify the terms of the transaction, whereby the Company
agrees to acquire approximately 311,286,356 shares of EDU Target’s stock valued at C$0.0165 per shares in exchange for common
stock of PHI Group. In addition, the Company will provide C$20 million cash investment of which C$6.2 million will be for settlement
of bank debts and the remaining balance of C$13.8 as operating working capital. Both parties intend to proceed with a definitive
Sale and Purchase Agreement in order to close this transaction as soon as practical, subject to additional due diligence review
of EDU Target.
CONSULTING
SERVICE AGREEMENT WITH TANS COMPAMY LTD.
On
September 9, 2016, PHI Capital Holdings, Inc. signed a Consulting Service Agreement with Tans Company, Ltd., a Vietnam-based company,
to provide advisory and consulting services on a non-exclusive basis to assist Tans Co. in becoming a publicly traded company
in the U.S. Stock Market. The Company is entitled to cash compensations from Tans Co. and a portion of equity in the new public
company.
SALE
OF LAND IN LIVE OAK, FLORIDA
On
September 21, 2016, the Company entered into a Sale and Purchase Agreement to sell two lots of land in Live Oak, Florida (Lot
18 & 19 of EAGLE’s NEST, according to Plat Book 1, Page 502, of the Public Records of Suwannee County, Florida) back
to Klausner Holding USA, Inc., a Georgia corporation, for $65,000. This transaction is scheduled to close on or before December
9, 2016.
CONSULTING
SERVICE AGREEMENT
On
September 23, 2016, the Company signed an agreement to engage a consultant for M&A due diligence, business development, and
other corporate services for a period of on year. The Company has agreed to pay the consultant a one-time fee of one hundred thousand
restricted shares of the PHI Group’s stock as compensations for the term of the agreement.
OPTION
GRANTS
On
September 23, 2016, the Board of Directors of the Company approved option grants for the current members of the Board of Directors
and the President and Chief Executive Officer of PHI Group, Inc. to acquire up to 6,520,000 shares of the Company’s common
stock at an exercise price of $0.24 per share, based on the 10-days’ volume-weighted average price of PHI Group, Inc.’s
Common Stock prior to the grant date. These options will be vested in one year after the grant date.
MEMORANDUM
OF UNDERSTANDING TO ACQUIRE ABOUND FARMS, INC.
On
September 30, 2016, the Company signed a Memorandum of Understanding with Abound Farms, Inc., (“AFI Target”) a U.S.
company, to acquire 100% of AFI Target. AFI Target is engaged in hydroponics and possesses proprietary water treatment systems
and nutrients that are known to substantially enhance farming yields. The MOU sets forth the guidelines for further negotiations
between AFI Target and the Company before the signing of a definitive agreement that contains representations, warranties, covenants,
and indemnities customary for a transaction of this type. The Company intends to incorporate the AFI Target’s water treatment
systems and nutrients to the Agri Target’s business after the closing of these transactions.
AGREEMENTS
FOR INVESTOR AND PUBLIC RELATIONS SERVICES
On
September 30, 2016, the Company signed agreements with two independent consulting firms for investor and public relations services
for a total period of six months. The Company has agreed to pay these companies a total of $35,000 in cash and 100,000 shares
of restricted common stock of PHI Group, Inc.
ISSUANCES
OF CONVERTIBLE PROMISSORY NOTES
On
July 20, 2016, the Company issued a convertible promissory note in the amount of $50,000 to EMA Financial, LLC, a Delaware limited
liability company. The note has a coupon rate of 10%, matures in one year and is convertible to Common Stock of the Company at
a conversion price equals the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading
immediately preceding the Closing Date of this note, and (ii) 55% of the lowest sale price for the Common Stock on the Principal
Market during the twenty (20) consecutive Trading Days immediately preceding the Conversion Date. The note may be prepaid at 130%
- 145% of outstanding principal and interest up to 180 days.
On
August 16, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited
liability company. The note has a coupon rate of 10%, matures on May 16, 2017 and is convertible to Common Stock of the Company
at a conversion price equals the lower of: (i) 50% multiplied by the average of the two lowest Trading Price during the previous
twenty-five Trading Day period ending on the latest complete Trading Date prior to the date of this note and (ii) 50% multiplied
by the average of the two lowest Trading Prices for the Common Stock during the twenty-five Trading Day period ending on the latest
complete Trading Day prior to the Conversion Date. The note may be prepaid at 135% - 150% of outstanding principal and interest
up to 180 days.
The
Company intends to prepay these notes within the respective allowable prepayment time frames.
ISSUANCES
OF COMPANY’S COMMON STOCK
On
July 29, 2016, the Company issued 225,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.40 per share to
Milost Advisors, Inc. for buy-side advisory services in connection with contemplated acquisitions of target companies in South
Africa and North America.
On
August 29, 2016, the Company issued 48,930 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the
auspices of Rule 144 for $20,000 in cash, at the price of $0.4088 per share.
On
August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 for the convertible promissory note dated February
29, 2016 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.