As
filed with the Securities and Exchange Commission on April 3, 2017
Registration
No. _______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
PHI
GROUP, INC.
(Exact
name of Registrant as specified in its charter)
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Nevada
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8741
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90-0114535
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(State
or other jurisdiction of
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(Primary
Standard Industrial
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(I.R.S.
Employer
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incorporation or organization)
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Classification
Code Number)
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Identification
Number)
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5348
Vegas Drive
Las
Vegas, Nevada 89128
(702)
475-5430
(
Address,
including zip code, and telephone number, including
area
code, of Registrant’s principal executive offices)
Henry
Fahman
Chief
Executive Officer
PHI
GROUP, INC.
5348
Vegas Drive
Las
Vegas, Nevada 89128
(702)
475-5430
(
Name,
address, including zip code, and telephone number, including
area
code, of agent for service)
Copies
to:
Christopher
H. Dieterich, Esq.
Dieterich
& Associates
11835
West Olympic Blvd., Suite 1235E
Los
Angeles, California 90064
(310)
312-6888
Approximate
date of commencement of proposed sale to the public:
As
soon as practicable 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: [X]
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 statement 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 file, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated file” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
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Smaller
reporting company [X]
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
Title
of Each Class of
Securities to be Registered
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Amount
to
be Registered (1)
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Proposed
Maximum
Offering
Price
Per
Share(2)
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Proposed
Maximum
Aggregate
Offering
Price(3)
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Amount
of
Registration
Fee
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Common
Stock, $0.001 par value per share
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5,000,000
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(4)
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$
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0.08
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$
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400,000
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$
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46.36
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(1) Pursuant
to Rule 416 under the Securities Act, the shares being registered hereunder include such indeterminate number of shares of common
stock as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends or
similar transactions.
(2) Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act of 1933,
using the average of the high and low prices as reported on the OTCQB market on March 31, 2017.
(3) Estimated
assuming that all 5,000,000 shares are sold at the same price. This number of shares is limited by Rule 415, however the share
prices may increase over the life of the agreements and this registration, such that prices could cumulate to $10,000,000 (the
contractual limitation) if a large number of shares are sold at significantly higher prices than currently exist.
(4) As
of March 30, 2017, the Company had 15,088,595 issued and outstanding shares of common stock. These 5,000,000 shares represent
33.14 % of the number of currently outstanding shares. Upon issuance of these shares, the total number of issued and outstanding
shares of common stock will be 20,088,595 and the registered shares will then represent 24.89 % of those shares. Additionally,
as of the date of this Registration Statement, these 5,000,000 shares represent 59.63% of the current float.
The
registrant hereby amends this registration statement on such date or dates 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 Securities and Exchange Commission acting pursuant to said section 8(a) may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject
to Completion, Dated April 3, 2017
Prospectus
PHI
GROUP, INC.
5,000,000
Shares
Common
Stock
This
prospectus relates to the offer and resale of up to 5,000,000 shares of our common stock, par value $0.001 per share, by the selling
stockholder, Azure Capital, Inc., or “Azure”. Azure has agreed to purchase up to $10,000,000 in share value pursuant
to the investment agreement dated March 6, 2017 between Azure and us. Subject to the terms and conditions of such investment agreement,
which is referred to in this prospectus as the “Investment Agreement,” we have the right to put up to $10,000,000
million in shares of our common stock to Azure. This arrangement is sometimes referred to as an “Equity Line.” For
more information on the selling stockholder, please see the section of this prospectus entitled “Selling Stockholder”.
As
of March 30, 2017, the Company had 15,088,595 issued and outstanding shares of common stock. The 5,000,000 shares represent 33.14
% of the number of currently outstanding shares. Upon issuance of these shares, the total number of issued and outstanding shares
of common stock will be 20,088,595 and the registered shares will then represent 24.89 % of those shares. Additionally, as of
the date of this Registration Statement, these 5,000,000 shares represent 59.63 % of the current float.
We
will not receive any proceeds from the resale of these shares of common stock offered by Azure. We will, however, receive proceeds
from the sale of shares to Azure pursuant to the Equity Line. When we put an amount of shares to Azure, the per share purchase
price that Azure will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment
Agreement. Generally, in respect of each put, Azure will pay us a per share purchase price equal to ninety-four percent (94%)
of the lowest daily volume weighted average price of our common stock during the five (5) consecutive trading day period beginning
on the trading day immediately following the date of delivery of the applicable put notice.
Azure
may sell the shares of common stock from time to time at the prevailing market price on the OTCQB market, or on an exchange if
our shares of common stock become listed for trading on such an exchange, or in negotiated transactions. Azure is an “underwriter”
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) in connection with the resale
of our common stock under the Equity Line. For more information, please see the section of this prospectus entitled “Plan
of Distribution”.
Our
common stock is quoted on the OTCQB market under the symbol “PHIL”. The last reported sale price of our common stock
on the OTCQB market on March 31, 2017 was $0.08 per share.
Investing
in the offered securities involves a high degree of risk, including those risks set forth in the “Risk Factors” section
of this prospectus, as well as those set forth in any prospectus supplement.
We
will be responsible for all fees and expenses incurred in connection with the preparation and filing of this registration statement,
provided, however, we will not be required to pay any underwriters’ discounts or commissions relating to the securities
covered by the registration statement.
You
should read this prospectus and any prospectus supplement carefully before you decide to invest. You should not assume that the
information in this prospectus is accurate as of any date other than the date on the front of this document.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is April 3, 2017
TABLE
OF CONTENTS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. You should rely only
on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you
with information or to make any representation on behalf of the Company that is different from that contained in this prospectus.
You should not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities
offered by this prospectus under circumstances and in jurisdictions where it is lawful to do so. The information in this prospectus
is accurate only as of the date of this prospectus, regardless of the date of delivery of this prospectus or of any sales of these
securities. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus.
This prospectus may be used only in jurisdictions where it is legal to sell these securities.
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING STATEMENTS
Some
of the statements contained or incorporated by reference in this prospectus are “forward-looking statements”. These
statements are based on the current expectations, forecasts, and assumptions of our management and are subject to various risks
and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking
statements. Forward-looking statements are sometimes identified by language such as “believe,” “may,”
“could,” “estimate,” “continue,” “anticipate,” “intend,” “should,”
“plan,” “expect,” “appear,” “future,” “likely,” “probably,”
“suggest,” “goal,” “potential” and similar expressions and may also include references to
plans, strategies, objectives, and anticipated future performance as well as other statements that are not strictly historical
in nature. The risks, uncertainties, and other factors that could cause our actual results to differ materially from those expressed
or implied in this prospectus include, but are not limited to, those noted under the caption “Risk Factors” beginning
on page 8 of this prospectus. Readers should carefully review this information as well the risks and other uncertainties described
in other filings we may make after the date of this prospectus with the Securities and Exchange Commission.
Readers
are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only
as of the date they were made, and we undertake no obligation to publicly update or revise any forward- looking statements in
this prospectus, whether as a result of new information, future events or circumstances, or otherwise.
PROSPECTUS
SUMMARY
This
summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain
all of the information that you should consider before buying shares of our common stock. You should read the entire prospectus
and any prospectus supplements carefully, especially the sections entitled “Caution Regarding Forward Looking Statements,”
“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
together with our financial statements and the related notes included elsewhere in this prospectus and in any prospectus supplements
related thereto, before deciding to purchase shares of our common stock.
PHI
GROUP, INC.
Depending
upon the context, the terms “PHIL,” “PHI Group, Inc,” “Company,” “we,” “our”
and “us,” refers to either PHI Group, Inc. alone or PHI Group, Inc. and its subsidiaries collectively.
Organizational
History
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.
Background
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 financial services company, 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 and its subsidiaries were 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. - Vietnam), PHI
Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and
began to mainly focus on acquisition and development opportunities in energy and natural resource businesses. 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 for other companies in a variety of industries.
Summary
Financial Data
Because
this is only a summary of our financial information, it does not contain all of the financial information that may be important
to you. Therefore, you should carefully read all of the information in this prospectus and any prospectus supplement, including
the financial statements and their explanatory notes and the section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” before making a decision to invest in our common stock. The information
contained in the following summary is derived from our financial statements for the fiscal years ended June 30, 2016, 2015, 2014,
2013 and 2012 and the six-month periods ended December 31, 2016 and December 31, 2015 (unaudited).
SELECTED
FINANCIAL DATA
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FY
JUNE 30,
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2016
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2015
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2014
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2013*
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2012*
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Net Revenues
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$
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332,050
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$
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127,178
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$
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77,439
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$
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-
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$
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570,000
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Income (loss) from
operations
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$
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(132,871
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)
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$
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(305,912
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)
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$
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(304,043
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)
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$
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(403,311
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)
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$
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88,491
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Net other income
(expense)
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$
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124,873
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$
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(1,063,003
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)
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$
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48,048
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$
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(480,737
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)
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$
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(5,261,708
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)
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Net income (loss)
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$
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(7,998
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)
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$
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(1,368,915
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)
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$
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(255,994
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)
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$
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(884,047
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)
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$
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(5,153,603
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)
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Net income (loss) per share
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$
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-
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$
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(00.21
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)
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$
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(00.04
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)
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$
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(6.36
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)
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$
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(33.80
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)
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Total assets
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$
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753,990
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$
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448,780
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$
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444,100
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$
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459,845
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$
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604,676
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Total liabilities
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$
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7,755,950
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$
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9,430,260
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$
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9,585,282
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$
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10,371,750
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$
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10,631,358
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*
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Note:
Net loss per share adjusted for 1:1,500 reverse split of shares issued and outstanding.
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SIX
MONTHS ENDED 12-31
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2016
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2015
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Net revenues
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$
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90,000
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$
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234,700
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Income (loss) from operations
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$
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(262,862
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)
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$
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15,604
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|
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Net other income (expense)
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$
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(389,850
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)
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$
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31,776
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Net income (loss )
|
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$
|
(652,713
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)
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$
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47,379
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Net income ( loss ) per share
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$
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(0.06
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)
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$
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0.01
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Total assets
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$
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973,908
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$
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551,670
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Total liabilities
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$
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7,531,982
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|
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$
|
9,683,782
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|
Our
Principal Executive Offices.
Our principal executive offices are located at 5348 Vegas Drive, Las Vegas, Nevada 89108. Our
telephone number is (702) 475-5430 and our website address is
www.phiglobal.com
. Information included or referred to on
our website is not a part of this prospectus.
Market
Data and Industry Information
We
obtained the market data and industry information contained in this prospectus from internal surveys, estimates, reports and studies,
as appropriate, as well as from market research, publicly available information and industry publications. Although we believe
our internal surveys, estimates, reports, studies and market research, as well as industry publications are reliable, we have
not independently verified such information, and as such, we do not make any representation as to its accuracy.
Summary
of the Offering
This
prospectus relates to the resale of up to 5,000,000 shares of our common stock by Azure. The Investment Agreement with Azure provides
that Azure is committed to purchase up to $10,000,000 of our common stock over the course of 36 months. We may draw on the facility
from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Investment Agreement.
A maximum of 125,000,000 shares (estimated by using the last reported sale price of our common stock on the OTCQB market on March
31, 2017 of $0.08 per share) may be issued under the Equity Line at per-share prices set at ninety-four percent (94%) of the lowest
daily volume weighted average price (VWAP) of our common stock during the five (5) consecutive trading day period beginning on
the date of delivery of the applicable put notice (such five-day period, the “Pricing Period”).
The
Investment Agreement is further described below under the heading, “Investment Agreement”.
|
Shares
of common stock offered by us
|
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None.
|
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|
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Shares
of common stock offered by the Selling Stockholder
|
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5,000,000
shares which are available for use under the Equity Line. As of March 30, 2017, the Company had 15,088,595 issued and outstanding
shares of common stock. These 5,000,000 shares represent 33.14 % of the number of currently outstanding shares. Upon issuance
of these shares, the total number of issued and outstanding shares of common stock will be 20,088,595 and the registered shares
will then represent 24.89 % of those shares. Additionally, as of the date of this Registration Statement, these 5,000,000
shares represent 59.63 % of the current float
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Offering
Price
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To
be determined by the prevailing market price for the shares at the time of the sale or in negotiated transactions.
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Use
of proceeds
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|
We
will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the
Equity Line. See “Use of Proceeds.” We intend to use such proceeds for working capital, reduction of indebtedness,
acquisitions and other general corporate purposes.
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|
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Risk
Factors
|
|
An
investment in our common stock is speculative and involves substantial risks. You should read the “Risk Factors”
section of this prospectus for a discussion of certain factors to consider carefully before deciding to invest in shares of
our common stock.
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|
|
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Plan
of Distribution
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The
shares of common stock covered by this prospectus may be sold by the selling stockholder in the manner described under “Plan
of Distribution
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OTC
Markets Symbol
|
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“PHIL”
|
Investment
Agreement
We
entered into the Investment Agreement with Azure on March 6, 2017. Pursuant to the Investment Agreement, Azure committed to purchase
up to $10,000,000 of our common stock, over the course of 36 months. The obligations of Azure as imposed by the terms of this
agreement are non-transferrable. The aggregate number of shares issuable by us and purchasable by Azure under the Investment Agreement
is 125,000,000 (estimated using the last reported sale price of our common stock on the OTCQB market on March 31, 2017
of $0.08 per share). To date, we have sold none of the available shares.
We
may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of
the Investment Agreement. The maximum amount that we are entitled to put in any one notice is the greater of
(i)
200% of the average daily volume (U.S. market only) of the common stock for the three (3) trading days prior to the date of delivery
of the applicable put notice, multiplied by the average of the closing prices for such trading days or (ii) $250,000. The purchase
price shall be set at ninety-four percent (94%) of the lowest daily VWAP of our common stock during the Pricing Period. However,
if, on any trading day during a Pricing Period, the daily VWAP of the common stock is lower than the floor price specified by
us in the put notice, then we will withdraw that portion of the put amount for each such trading day during the Pricing Period,
with only the balance of such put amount above the minimum acceptable price being put to Azure. There are put restrictions applied
on days between the put notice date and the closing date with respect to that particular put. During such time, we are not entitled
to deliver another put notice.
There
are circumstances under which we will not be entitled to put shares to Azure, including the following:
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●
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we
will not be entitled to put shares to Azure unless there is an effective registration statement under the Securities Act to
cover the resale of the shares by Azure;
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|
|
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●
|
we
will not be entitled to put shares to Azure unless our common stock continues to be quoted on the OTCQB market, or becomes
listed on a national securities exchange;
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●
|
we
will not be entitled to put shares to Azure to the extent that such shares would cause Azure’s beneficial ownership
to exceed 4.99% of our outstanding shares; and
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|
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●
|
we
will not be entitled to put shares to Azure prior to the closing date of the preceding put.
|
The
Investment Agreement further provides that the Company and Azure are each entitled to customary indemnification from the other
for any losses or liabilities we or it suffers as a result of any breach by the other of any provisions of the Investment Agreement
or our registration rights agreement with Azure, or as a result of any lawsuit brought by a third-party arising out of or resulting
from the other party’s execution, delivery, performance or enforcement of the Investment Agreement or the registration rights
agreement.
The
Investment Agreement also contains representations and warranties of each of the parties. The assertions embodied in those representations
and warranties were made for purposes of the Investment Agreement and are subject to qualifications and limitations agreed to
by the parties in connection with negotiating the terms of the Investment Agreement. In addition, certain representations and
warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what a stockholder
or investor might view as material, or may have been used for purposes of allocating risk between the respective parties rather
than establishing matters as facts.
In
connection with the preparation of the Investment Agreement and the registration rights agreement, we issued Azure a check for
$5,000 and a convertible promissory note for $15,000, having a conversion price equal to 50% of the average of the three lowest
trading prices during the ten (10) trading days prior to the date of conversion.
Registration
Rights Agreement
Pursuant
to the terms of a Registration Rights Agreement, dated March 6, 2017, between Azure and us, we are obligated to file one or more
registration statements with the SEC to register the resale by Azure of shares of common stock issued or issuable under the Investment
Agreement. The aggregate number of shares registered prior to this registration statement is zero. We have agreed that, in the
event that this registration fails to register all of the shares necessary to fulfill our contractual obligations, we will amend
this statement and file new registration statements. This registration process will continue until such time as all of the dollar
amounts available under the credit line, using shares of common stock issuable under the Investment Agreement, have been registered
for resale on effective registration statements. In no event will we be obligated to register for resale more than $10,000,000
in value of shares of common stock, or 125,000,000 shares (estimated using the last reported sale price of our common stock on
the OTC market on March 31, 2017 of $0.08 per share).
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should consider the risks described below and the other information
contained in this prospectus carefully before deciding to invest in our common stock. If any of the following risks actually occur,
our business, financial condition and operating results could be harmed. As a result, the trading price of our common stock could
decline, and you could lose a part or all of your investment.
Risks
Related to Our Business and Industries
Our
success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.
Our
future success will depend in substantial part on the continued service of our senior management. The loss of the services of
one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure
to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also
depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing
our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or
retain qualified personnel in the future.
Our
strategy in mergers and acquisitions involves a number of risks and we have a limited history of successful acquisitions. Even
when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive
as management may have projected.
The
Company is in the process of evaluating various opportunities and negotiating to acquire other companies, assets and technologies.
Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion
of management’s attention from other business concerns, amortization of acquired intangible assets and potential loss of
key employees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although
potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the
Company’s ability to integrate successfully any operations, personnel, services or products that have been acquired or might
be acquired in the future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the
Company’s business, financial condition and operating results.
Acquisitions
involve a number of special risks, including:
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●
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failure
of the acquired business to achieve expected results;
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diversion
of management’s attention;
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●
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failure
to retain key personnel of the acquired business;
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additional
financing, if necessary and available, could increase leverage, dilute equity, or both;
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●
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the
potential negative effect on our financial statements from the increase in goodwill and other intangibles; and
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the
high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.
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These
risks could have a material adverse effect on our business, results of operations and financial condition since the values of
the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved
in acquisition. In addition, our ability to further expand our operations through acquisitions may be dependent on our ability
to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both.
There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.
As
some of our business activities are currently involved with Southeast Asia, any adverse change to the economy or business environment
in these countries could significantly affect our operations, which would lead to lower revenues and reduced profitability.
Some
of our business activities are currently involved with Southeast Asia. Because of this presence in specific geographic locations,
we are susceptible to fluctuations in our business caused by adverse economic or other conditions in this region, including stock
market fluctuation. A stagnant or depressed economy in these countries generally, or in any of the other markets that we serve,
could adversely affect our business, results of operations and financial condition.
Risks
Associated with Energy Business
As
part of our core business involves acquisitions of energy assets as well as production and trading of energy commodities, our
profitability will depend on the prices we receive for energy commodities such as coal and wood pellets. These prices are dependent
upon factors beyond our control, including: the strength of the global economy; the demand for electricity; the global supply
of thermal coal and biomass products; weather patterns and natural disasters; competition within our industry and the availability
and price of alternatives, including natural gas; the proximity, capacity and cost of transportation; coal industry capacity;
domestic and foreign governmental regulations and taxes, including those establishing air emission standards for coal-fueled power
plants or mandating increased use of electricity from renewable energy sources; regulatory, administrative and judicial decisions,
including those affecting future mining permits; and technological developments, including those intended to convert coal-to-liquids
or gas and those aimed at capturing and storing carbon dioxide.
Risks
Related to Our Securities
Insiders
have substantial control over the company, and they could delay or prevent a change in our corporate control, even if our other
stockholders wanted such a change to occur.
Though
our executive officers and directors as of March 30, 2017, in the aggregate, only hold approximately 44.43 % of our outstanding
common stock, our Board of Directors is able to decide the rights and terms associated with the Company’s Preferred Stock,
which decision may allow the Board of Directors to exercise significant control over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside
party from acquiring or merging with us even if our other stockholders wanted it to occur.
The
price at which investors purchase our common stock may not be indicative of the prevailing market price.
The
stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares. Investors may
be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.
Since
we do not currently meet the requirements for our stock to be quoted on NASDAQ, NYSE MKT LLC or any other senior exchange, the
tradability in our securities will be limited under the penny stock regulations.
Under
the rules of the Securities and Exchange Commission, if the price of our securities on the OTCQB market is below $5.00 per share,
our securities are within the definition of a “penny stock.” As a result, it is possible that our securities may be
subject to the “penny stock” rules and regulations. Broker-dealers who sell penny stocks to certain types of investors
are required to comply with the Commission’s regulations concerning the transfer of penny stock. These regulations require
broker-dealers to:
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*Make
a suitability determination prior to selling penny stock to the purchaser;
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*Receive
the purchaser’s written consent to the transaction; and
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*Provide
certain written disclosures to the purchaser.
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These
requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities.
Our
compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly
for us.
It
may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required
by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order
to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal
controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires publicly traded companies to obtain.
Our
success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.
Our
future success will depend in substantial part on the continued service of our senior management and founder. The loss of the
services of one or more of our key personnel could impede implementation and execution of our business strategy and result in
the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success
will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required
for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract,
train or retain qualified personnel in the future.
Risks
Related to this Offering
We
are registering the resale of a maximum of 5,000,000 shares of common stock, all of which may be issued to Azure under the Equity
Line. The resale of such shares by Azure could depress the market price of our common stock.
We
are registering the resale of a maximum of 5,000,000 shares of common stock under the registration statement of which this prospectus
forms a part. The sale of these shares into the public market by Azure could depress the market price of our common stock. As
of March 30, 2017, there were 15,088,595 shares of our common stock issued and outstanding. In total, we may issue up to 125,000,000
shares (estimated using last reported sale price of our common stock on the OTCQB market on March 31, 2017 of $0.08 per share)
to Azure pursuant to the Equity Line, meaning that, we are obligated to file one or more registration statements covering the
remaining 120,000,000 shares not covered by the registration statement. The sale of those additional shares into the public market
by Azure could further depress the market price of our common stock.
Existing
Stockholders Could Experience Substantial Dilution Upon the Issuance of Common Stock Pursuant to the Equity Line
Our
Equity Line with Azure contemplates our issuance of up to 125,000,000 shares (estimated using last reported sale price of our
common stock on the OTCQB market on March 31, 2017 of $0.08 per share) of our common stock to Azure, subject to certain restrictions
and obligations. If the terms and conditions of the Equity Line are satisfied, and we choose to exercise our put rights to the
fullest extent permitted and sell all 125,000,000 shares of our common stock to Azure, our existing stockholders’ ownership
will be diluted by such sales.
Azure
Will Pay Less Than the Then-Prevailing Market Price for Our Common Stock Under the Equity Line
The
common stock to be issued to Azure pursuant to the Investment Agreement will be purchased at a 6% discount to the volume weighted
average price of our common stock during the five consecutive trading day period beginning on the trading day immediately following
the date of delivery of a put notice by us to Azure, subject to certain exceptions. Therefore, Azure has a financial incentive
to sell our common stock upon receiving the shares to realize the profit equal to the difference between the discounted price
and the market price. If Azure sells the shares, the price of our common stock could decrease.
We
May Not Be Able to Access Sufficient Funds Under the Equity Line When Needed
Our
ability to put shares to Azure and obtain funds under the Equity Line is limited by the terms and conditions in the Investment
Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Azure at any
one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put shares
to Azure to the extent that it would cause Azure to beneficial own more than 4.99% of our outstanding shares. In addition, we
do not expect the Equity Line to satisfy all of our funding needs, even if we are able and choose to take full advantage of the
Equity Line.
USE
OF PROCEEDS
We
will not receive any proceeds from the resale of our common stock offered by Azure. However, we will receive proceeds from the
sale of our common stock to Azure pursuant to the Investment Agreement. The proceeds from our exercise of the put option pursuant
to the Investment Agreement will be used to support the commercialization of our current and future product candidates, for general
working capital needs, for the reduction of indebtedness and for other purposes that our board of directors, in its good faith,
deems to be in our best interest.
All
net proceeds from the sale of the common stock covered by this prospectus will go to the selling stockholder. See “Selling
Stockholder” and “Plan of Distribution” described below.
SELLING
STOCKHOLDER
The
information provided in the table and discussions below has been obtained from the selling stockholder. The table below identifies
the selling stockholder and shows the number of shares of common stock beneficially owned by it before and after this offering,
and the numbers of shares offered for resale by the selling stockholder. Our registration of these shares does not necessarily
mean that the selling stockholder will sell all or any of their shares of common stock. However, the “Shares Beneficially
Owned After Offering” columns in the table assume that all shares covered by this prospectus will be sold by the selling
stockholder and that no additional shares of common stock will be bought or sold by the selling stockholder. No estimate can be
given as to the number of shares that will be held by the selling stockholder after completion of this offering because the selling
stockholder may offer some or all of the shares and, to our knowledge, there are currently no agreements, arrangements or understanding
with respect to the sale of any of the shares. In addition, the selling stockholder 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, all or a portion of the shares of common stock beneficially owned in transactions exempt from the registration
requirements of the Securities Act.
The
following table sets forth the name of the selling stockholder, an if applicable, the nature of any position, office, or other
material relationship which the selling stockholder has had, within the past three years, with us or with any of our predecessors
or affiliates, the amount of shares of our common stock beneficially owned by the stockholder prior to the offering, the amount
being offered for the stockholder’s account, the amount being offered for the stockholder’s account and the amount
to be owned by such stockholder after completion of the offering.
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Shares
Beneficially Owned
Prior
to Offering (1)
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Shares
Being Offered
Under
this
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Shares
Beneficially
Owned
After Offering (1)
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Beneficial
Owner
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Shares
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%
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Prospectus(3)
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Shares
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%
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Azure Capital, Inc. (2)
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0
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0
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%
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5,000,000
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None
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None
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(1) Beneficial
ownership is determined in accordance with Rule 13d-3(d) promulgated by the Securities and Exchange Commission under the Exchange
Act, and generally includes voting or investment power with respect to securities. The number and percentage of shares beneficially
owned is determined in accordance with Rule 13d-3 of the Exchange Act and is not necessarily indicative of beneficial ownership
for any other purpose. Applicable percentage ownership is based on 15,088,595 shares of common stock outstanding as of March 30,
2017. Except as otherwise noted, we believe that the stockholder named in the table has sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by it, subject to applicable community property laws.
(2) Azure
is a Massachusetts Corporation. Douglas H. Leighton is the sole owner of Azure Capital with voting and investment power over the
shares.
(3) Represents
5,000,000 of the 125,000,000 shares (estimated using last reported sale price of our common stock on the OTCQB market on March
31, 2017 of $0.08 per share) of common stock issuable by us and purchasable by Azure under the Investment.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The
Company’s Common Stock is currently trading on the OTCQB market under the symbol “PHIL”. The following sets
forth the high and low prices of the Company’s Common Stock in the US for the most recent month, two most recent quarters
and each quarter during the preceding two fiscal years.
The
prices for the Company’s common stock quoted by brokers are not necessarily a reliable indication of the value of the Company’s
common stock.
|
Per Share Common
Stock Prices for the Month
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High
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Low
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Ended February 28, 2017
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0.16
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0.08
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Per
Share Common Stock Prices for the Quarters
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High
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Low
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Ended
December 31, 2016
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0.45
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0.10
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Ended September
30, 2016
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2.00
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0.20
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Per
Share Common Stock Prices by Quarter;
For
the Fiscal Year Ended June 30, 2016
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High
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Low
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Quarter Ended June 30, 2016
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1.50
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0.42
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Quarter Ended March 31, 2016
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0.55
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0.25
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Quarter Ended December 31, 2015
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0.50
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0.25
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Quarter Ended September 30, 2015
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0.25
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0.12
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Per
Share Common Stock Prices by Quarter;
For
the Fiscal Year Ended June 30, 2015
|
|
High
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Low
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Quarter Ended June 30,
2015
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0.25
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0.12
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Quarter Ended March 31, 2015
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0.40
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0.10
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Quarter Ended December 31, 2014
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0.40
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0.02
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Quarter Ended September 30, 2014
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0.67
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0.05
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|
Holders
of Common Equity
:
There
are approximately 1,277 shareholders of record of the Company’s common stock. The number of record holders was determined
from the records of our transfer agent and does not include beneficial owner’s common stock whose shares are held in the
names of various securities brokers, dealers and registered clearing agencies. The transfer agent of our common stock is JERSEY
STOCK TRANSFER LLC, PO Box 606, Mount Freedom, NJ 07970-0606 The phone number of the transfer agent is (973) 814-7004.
Dividends:
Cash
dividend: The Company has not declared or paid a cash dividend to common stock shareholders since the Company’s inception.
The Board of Directors presently intends to retain any earnings to finance company operations and does not expect to authorize
cash dividends to common shareholders in the foreseeable future. Any payment of cash dividends in the future will depend upon
Company’s earnings, capital requirements and other factors.
Recent
Sales of Unregistered Securities
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. The Company has subsequently terminated the advisory service agreement with Milost Advisors, Inc. and
requested Milost Advisors, Inc. to return 110,000 shares PHI Group, Inc.’s stock to the Company.
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.
On
October 30, 2016, the Company issued 200,000 shares of PHI Group, Inc.’s restricted Common Stock to two independent consultants
for consulting services at the price of $0.25 per share.
On
December 5, 2016, Rev. Thuong Le converted $150,000 in accrued interest into 606,060 shares of Common Stock of the Company.
On
December 22, 2016, Henry Fahman converted $250,000 from the balance of Loans from Officers to 2,500,000 restricted shares of Common
Stock of the Company.
On
January 30, 2017, EMA Financial, LLC converted $7,010.50 of the principal amount of the convertible promissory note dated July
20, 2016 into 180,000 shares of Common Stock of the Company.
On
February 7, 2017, JSJ Investments, Inc. converted $33,734.68 from the Replacement Convertible Note dated February 2, 2017, which
replaced the same amount of indebtedness with EMA Financial, LLC., into 657,169 shares of Common Stock of the Company.
On
February 9, 2017, EMA Financial, LLC converted $7,200 of the principal amount of the convertible promissory note dated July 20,
2016 into 200,000 shares of Common Stock of the Company.
On
March 08, 2017, EMA Financial, LLC converted $7,867.78 of the principal and accrued interest of the convertible promissory note
dated July 20, 2016 into 244,340 shares of Common Stock of the Company.
As
of March 30, 2017, there were 15,088,595 shares of Common Stock of the Company issued and outstanding.
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.
OUR
BUSINESS
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.
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. - Vietnam), PHI
Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and
began to mainly focus on acquisition and development opportunities in energy and natural resource businesses. 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 for other companies in a variety of industries.
Subsidiaries:
As
of March 30, 2017, the Company owns 100% of PHI Capital Holdings, Inc., a Nevada corporation, 100% of American Pacific Resources,
Inc., a Wyoming corporation, 100% of Abundant Farms, Inc., a Florida corporation, and 100% of PHI Group Regional Center, LLC,
a Florida limited liability company. American Pacific Resources, Inc. is inactive.
PHI
CAPITAL HOLDINGS, INC.
PHI
Capital Holdings, Inc., a Nevada corporation, was originally incorporated under the name of “Providential Capital, Inc.”
in 2004 as a wholly owned subsidiary of the Company to provide merger and acquisition (M&A) advisory services, consulting
services, project financing, and capital market services to clients in North America and Asia. In May 2010, Providential Capital,
Inc. changed its name to PHI Capital Holdings, Inc. This subsidiary has successfully managed merger plans for several privately
held and publicly traded companies and continues to focus on serving the Pacific Rim markets in the foreseeable future.
AMERICAN
PACIFIC RESOURCES, INC.
American
Pacific Resources, Inc. is a Wyoming corporation established in April 2016 with the intention to serve as a holding company for
various natural resource projects in Southeast Asia. As of the date of this registration statement American Pacific Resources,
Inc. has not begun any business operation.
ABUNDANT
FARMS, INC.
Abundant
Farms, Inc., a Florida corporation, was established on December 19, 2016 to develop and operate an organic farming program in
Holmes County, Florida. The Company has signed a purchase agreement and opened escrow to acquire a 408-acre farm in Bonifay, Florida.
PHI
GROUP REGIONAL CENTER, LLC
PHI
Group Regional Center, LLC is a Florida limited liability company established on March 22, 2017 to serve as a new EB5 regional
center for Immigrant Investor Program in connection with Abundant Farms, Inc. Under the EB-5 Program, created by Congress to stimulate
the U.S. economy through job creation and capital investment and administered by the United States Citizenship and Immigration
Services (USCIS), an agency within the Department of Homeland Security, foreign entrepreneurs (and their spouses and unmarried
children under 21) are eligible to apply for a Green Card (permanent residence) if they make the necessary investment in a commercial
enterprise in the United States that creates or preserves at least 10 permanent, full-time jobs for qualified U.S. workers. (
https://www.uscis.gov/w9orking-united-states/permanent-workers/employment-
based-immigration-fifth-preference-eb-5/about-eb-5-visa-classification
)
Discontinued
operations:
The
Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited – UK (together with its subsidiaries
Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (now known as NS International
Corp.), and PHI Energy Corporation since June 30, 2012.
Cornerstone
Biomass Corporation, a Florida corporation, was set up in January 2015 by the Company and the principals of AG Materials, LLC,
an Alabama company, to engage in biomass energy. The Company held 51% of equity ownership in Cornerstone Biomass Corporation.
This subsidiary’s plan was to develop and establish a 200,000 MT wood pellet plant adjacent to Klausner Lumber Mill in Live
Oak, Florida. In July 2015, the Company purchased a 10-acre parcel of land from Klausner Holding USA Corporation in order to build
the wood pellet plant. Due to subsequent changes in market conditions affecting industrial pellet usage in Europe, Cornerstone
Biomass Corp. decided not to pursue this project. The Company has written off its initial investment in the amount of $ 2,550
and sold the land back to Klausner Holding USA. Cornerstone Biomass Corporation was dissolved effective September 23, 2016.
Spun-off
subsidiaries:
TANS
GLOBAL, INC. (Formerly PROVIMEX, INC.)
Provimex,
Inc. was originally formed on April 10, 2001 under the name “Providential Imex”, to focus on trade commerce with Vietnam.
This division changed its name to Provimex on July 5, 2001. Provimex began to generate revenues from its import and export activities
in August 2002 through the fiscal year ended June 30, 2005 and was incorporated as a Nevada corporation on September 23, 2004.
The Company distributed a 15% stock dividend of Provimex, Inc. to PHI Group, Inc.’s shareholders of record as of September
15, 2004. On June 3, 2011, Provimex, Inc. signed an agreement to acquire all the issued and outstanding capital stock of Humex
Medical Group Corp., a California corporation, (“Humex”) in exchange solely for a certain amount of shares of Provimex’s
common stock, par value 0.001, to engage in stem research and therapy in Southeast Asia. On June 13, 2012 this transaction was
rescinded in its entirety effective retroactively June 3, 2011. On June 19, 2012, Provimex, Inc. changed its name to HP.ITA Corporation.
On July 20, 2012, HP.ITA Corporation (“HPUS”) signed a Corporate Combination Agreement to merge with HP.ITA Joint
Stock Company (“HPVN”), a Vietnamese company, in order to go public in the United States but the Corporate Combination
Agreement was subsequently rescinded because HPVN was not able to implement its business plan and complete financial audits according
to the U.S. Generally Accepted Accounting Principals (“GAAP”). On September 16, 2016 HP.ITA Corp. changed its name
to Tans Global, Inc. with the intention to merge with an operating company and file a registration statement with the Securities
and Exchange Commission to become a fully reporting public company in the U.S. This transaction is being put on hold and subject
to further modification.
OMNI
RESOURCES, INC. (Formerly TOUCHLINK COMMUNICATIONS, INC.)
Touchlink
Communications was formed on July 7, 2003 as a division of the Company to provide point-of-sale (POS) terminals and prepaid calling
cards to retailers, convenient stores and non-profit organizations across the US. This subsidiary was later incorporated as a
Nevada corporation in February 2004 under the name of Touchlink Communications, Inc. as a wholly owned subsidiary of the Company
to provide long distance services to residential and business customers in the United States. The Company has declared a 15% stock
dividend of Touchlink Communications, Inc. to shareholders of record as of September 15, 2004. On November 03, 2008, this subsidiary
changed its name to Vietnam Media Group, Inc. with the intent to develop a multi-media business in Vietnam and subsequently resumed
the corporate name of Touchlink Communications, Inc. in February 2011. On April 4, 2014, this company changed its name to Asia
Green Corporation (“AGC”) and entered into a business combination agreement with Asia Green Limited Liability Company,
a Vietnam-based company, to become a holding company for agroforestry and afforestation business in Vietnam and Southeast Asia.
On July 28, 2014, AGC changed its corporate name to Omni Resources, Inc. The Company expects to hold about 10% equity interest
in Omni Resources, Inc. following Omni’s recapitalization. As of the date of this registration statement Omni Resources,
Inc. is inactive and has not implemented any reorganization plan.
Stock
ownerships:
CATALYST
RESOURCE GROUP, INC. (formerly JEANTEX GROUP, INC.)
As
of March 31, 2017, the Company owned 22,535,714 shares of Catalyst Resource Group, Inc. common stock, a Florida corporation, or
equivalent to 2.56%. This company is currently inactive.
MYSON
GROUP, INC. (formerly VANGUARD MINING CORPORATION)
As
of March 31, 2017, PHI Group, Inc. and PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, together owned 33,965,106
shares of Common Stock of Myson Group, Inc., a Nevada corporation currently traded on the OTC Markets under the symbol “MYSN.”
SPORTS
POUCH BEVERAGE COMPANY, INC.
As
of March 31, 2017, the Company through PHI Capital Holdings, Inc. owned 292,050,000 shares of Sports Pouch Beverage Company, Inc.,
a Nevada corporation traded on the OTC Markets under the symbol “SPBV”.
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.
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.
As of the date of this registration statement, the Company has sent letters to Milost Advisors, Inc. and Milost Global, Inc.
(an affiliate of Milost Advisors, Inc.) to terminate all previous agreements with them and request the return of 225,00 shares
of PHI Group, Inc. stock issued to Milost Advisors on July 29, 2016.
CONSULTING
SERVICE AGREEMENT WITH TANS COMPANY 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.
As of the date of this registration statement, this transaction is being put on hold and under review for termination
by the request of Tans Co.
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.
AGREEMENT
TO ACQUIRE A FARM IN HOLMES COUNTY, FLORIDA
On
March 3, 2017, the Company signed a commercial contract to purchase a 408-acre farm together with buildings, fixtures, and farming
systems and in Bonifay, Holmes County, Florida for a total purchase price of $1,500,000. The Company has made a non-refundable
deposit of $37,500 towards to the total price and agreed to make five installment payments of $250,000 each and a final payment
in the amount of $212,500. The final closing date for this transaction is July 3, 2017. The Company intends to use this property
to develop a proprietary organic farming project in conjunction with an EB-5 Immigrant Investment Program.
Properties
As
of March 31, 2017, the Company did not have any properties or equipment.
Legal
proceedings
LEGAL
PROCEEDINGS SETTLED OR UNPAID AS OF THE FISCAL YEAR ENDED JUNE 30, 2016:
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
audited 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 audited
financial statements as of June 30, 2016.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except
for the audited historical information contained herein, this report specifies forward-looking statements of management of the
Company within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934
(“forward-looking statements”) including, without limitation, forward-looking statements regarding the Company’s
expectations, beliefs, intentions and future strategies. Forward-looking statements are statements that estimate the happening
of future events and are not based on historical facts. Forward- looking statements may be identified by the use of forward-looking
terminology, such as “could”, “may”, “will”, “expect”, “shall”, “estimate”,
“anticipate”, “probable”, “possible”, “should”, “continue”, “intend”
or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in this report
have been compiled by management of the Company on the basis of assumptions made by management and considered by management to
be reasonable. Future operating results of the Company, however, are impossible to predict and no representation, guaranty, or
warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements
specified in this report represent estimates of future events and are subject to uncertainty as to possible changes in economic,
legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information
and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment.
To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results,
and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In addition, those forward-looking
statements have been compiled as of the date of this report and should be evaluated with consideration of any changes occurring
after the date of this report. No assurance can be given that any of the assumptions relating to the forward-looking statements
specified in this report are accurate and the Company assumes no obligation to update any such forward-looking statements.
RESULTS
OF OPERATIONS FOR THE FISCAL YEARS ENDED JUNE 30, 2016 AND JUNE 30, 2015
Revenues:
The
Company generated $332,050 in revenues from consulting, advisory and management services during the fiscal year ended June 30,
2016, as compared to $127,178 in revenue for the year ended June 30, 2015.
Operating
Expenses:
The
Company incurred total operating expenses of $464,921 for the year ended June 30, 2016 as compared to $433,090 for the year ended
June 30, 2014. This represents an increase of $31,831 or 7.35 % in total operating expenses from the prior year. The increase
was primarily due to a decrease of $8,559 in professional services and an increase of $38,947 in general and administrative expenses.
The Company spent more on advertising expenses during the current year relative to the previous fiscal year.
Income
(loss) from operations:
The
Company had a loss from operations of $132,871 for the fiscal year ended June 30, 2016 as compared to a loss from operations of
$305,912 for the year ended June 30, 2015. This represents a decrease of $173,041 or – 56.57% in loss from operations during
the current year as compared to that of the precious year. This was mainly due to the fact that the Company generated $204,872
more in revenues while incurring $31,831 more in total operating expenses during the fiscal year ended June 30, 2016 as compared
to the corresponding items during the fiscal year ended June 30, 2015.
Other
income (expense)
The
Company had a net other income of $124,873 for the year ended June 30, 2016 as compared to net other expenses of $1,063,003
for the prior year. This was primarily due to the fact the Company had an interest expense of $267,577, a gain on sale of
marketable securities in the amount of $137,017, and other income in the amount of $255,433 comprising of a reversal of
impairment of assets in the amount of $270,000, a write-off of loans receivable of $9,840, a loss of $2,550 in minority
interest, and a miscellaneous expense of $2,000. For the fiscal year ended June 30, 2015 it had an interest expense of
$319,315, a loss on sale of marketable securities of $45,176, a loss of $25,845 from settlement of debts, and other expense
in the amount of $672,667.
Net
income (loss):
The
Company had a net loss of $7,998 for the year ended June 30, 2016 as compared to a net loss of $1,368,915 for the year ended June
30, 2015, representing a 99.42% reduction in losses between the two corresponding fiscal years. The net income (loss) per share
based on the basic and diluted weighted average number of common shares outstanding for the year ended June 30, 2016 was $(0.00)
as compared to $(0.21) for the year ended June 30, 2015.
Cash
flows
We
had $2,482 in cash and cash equivalents of as of June 30, 2016, as compared to $10,645 in cash and cash equivalents as of June
30, 2015, respectively.
Net
cash used in our operating activities was $1,849,010 for the fiscal year ended June 30, 2016 as compared to net cash used in operating
activities of $1,609,353 for the fiscal year ended June 30, 2015, respectively. The underlying reasons for the increase in net
cash used in operating activities between the two periods were mainly due to a decrease of $1,360,917 in net loss from operations,
a reduction of $16,134 in the increase in other assets and prepaid expenses, and a decrease of $1,616,798 in accounts payable
and accrued expenses between the current fiscal year and the previous fiscal year.
Net
cash used in investing activities was $146,959 for the fiscal year ended June 30, 2016 as compared to cash provided by investing
activities of $65,557 for the year ended June 30, 2015, respectively. The underlying reasons for the change in net cash provided
by (used in) investing activities between the two fiscal years were primarily due to a deposit of $66,776 for acquisition, a purchase
of land for $82,733, and a write-off of $2,550 from investment in joint venture in the current fiscal year, as compared to a write-off
of $73,043 in receivable from discontinued operations, a net deposit of $4,936 for acquisition, and investment in the amount of
$2,550 in a joint venture during the year ended June 30, 2015, respectively.
Net
cash provided by financing activities was $1,987,517 for the fiscal year ended June 30, 2016 as compared to cash provided by financing
activities of $1,523,827 for the fiscal year ended June 30, 2015, respectively. The underlying reasons for the increase in cash
provided by financing activities during the current fiscal year were mainly due to an increase of $2,085,799 in proceeds from
common stock between the current and the previous fiscal years, offset by a change in accumulative other comprehensive income
(loss) of ($69,078) and a change in accumulated deficit in the amount of ($87,108) in the current fiscal year, as compared to
the prior fiscal year.
RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2016 AND DECEMBER 31, 2015 (UNAUDITED)
Total
Revenues:
The
Company had $40,000 in revenue from consulting services for the quarter ended December 31, 2016 as compared to $194,700 in revenue
for the quarter ended December 31, 2015, a decrease of $154,700 between the two periods. The reason for the decrease in revenues
between the two periods was due to higher compensation for consulting services rendered in the previous period as compared to
the current quarter.
Operating
Costs and Expenses:
Total
operating expenses were $112,916 and $121,037 for the three months ended December 31, 2016, and 2015, respectively. The variance
of $8,121 in operating expenses between the two periods was primarily due to decreases in professional services and general and
administrative expenses during the current quarter as compared to the corresponding period in 2015.
Income
(Loss) from Operations:
Loss
from operations for the three months ended December 31, 2016 was $72,916, as compared to a gain from operations of $73,663 for
the previous period ended December 31, 2015.
Other
Income and Expenses:
Net
other expenses were $204,265 for the three months ended December 301 2016, as compared to net other expenses of $45,028 for the
three months ended December 31, 2015. The increase in other expenses of $159,237 between the two periods was mainly due to a loss
of $131,818 on settlement of debts, a loss of $20,011 on sale of assets, discounts on convertible notes in the amount of $18,307
in the current period, offset by a decrease in interest expense in the amount of $31,296 and a decrease in gain on sale of marketable
securities in the amount of $34,222 between the two periods. Interest expenses were $48,627 and $79,923 for the three months ended
December 31, 2016 and 2015, respectively.
Net
Income (Loss):
Net
loss for the three months ended December 31, 2016 was $277,181, as compared to net income of $28,635 for the same period in 2015,
which is equivalent to ($0.03) per share for the current period and $0.01 for the corresponding period ended December 31, 2015,
based on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period.
RESULTS
OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2016 AND DECEMBER 31, 2015 (UNAUDITED)
Total
Revenues:
The
Company had $90,000 in revenue from consulting services for the six months ended December 31, 2016 as compared to $234,700 in
revenue for the six months ended December 31, 2015, a decrease of $144,700 between the two periods. The reason for the decrease
in revenues between the two periods was due to higher compensation for consulting services rendered in the previous six-month
period as compared to the current six-month period.
Operating
Costs and Expenses:
Total
operating expenses were $352,862 and $219,096 for the six months ended December 31, 2016, and 2015, respectively. The variance
of $133,766 in operating expenses between the two periods was primarily due to an increase in professional services of $124,444
and an increase in general and administrative expenses in the amount of $9,826 between the current six-month period as compared
to the corresponding period in 2015.
Income
(Loss) from Operations:
Loss
from operations for the six months ended December 31, 2016 was $262,826, as compared to a gain from operations of $15,604 for
the previous corresponding period ended December 31, 2015.
Other
Income and Expenses:
Net
other expenses were $389,850 for the six months ended December 301 2016, as compared to net other income of $31,776 for the six
months ended December 31, 2015. The variance between the two periods was mainly due to a loss of $131,818 on settlement of debts,
a loss of $20,011 on sale of assets, discounts on convertible notes in the amount of $20,807 in the current period, an in interest
expense in the amount of $64,332 and a decrease in gain on sale of marketable securities in the amount of $190,557 between the
two periods. Interest expenses were $223,763 and $159,431 for the six months ended December 31, 2016 and 2015, respectively.
Net
Income (Loss):
Net
loss for the six months ended December 31, 2016 was $652,713, as compared to net income of $47,379 for the same period in 2015,
which is equivalent to ($0.06) per share for the current period and $0.01 for the corresponding period ended December 31, 2015,
based on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period.
Cash
flows
The
Company’s cash and cash equivalents balance were $40,387 and $41,312 as of December 31, 2016 and December 31, 2015, respectively.
Net
cash used in the Company’s operating activities during the six-month period ended December 31, 2016 was $1,128,036, as compared
to net cash provided by operating activities of $377,807 during the six-month period ended December 31, 2015. This represents
a variance of $1,505,843 in net cash used in operating activities and net cash provided by operating activities between the two
periods. The underlying reason for the variance was primarily due to a net loss from operations of $652,713 during the six-month
period ended December 31, 2016, as compared to a net income from operations in the amount of $47,379 during the corresponding
six-month period ended December 31, 2015; an increase in other assets and prepaid expenses in the amount of $249,746 during the
six-month period ended December 31, 2016, as compared to a decrease in other assets and prepaid expenses in the amount of $77,277
during the corresponding six-month period ended December 31, 2015; and a decrease in accounts payable and accrued expenses in
the amount of $225,577 during the six-month period ended December 31, 2016, as compared to an increase in accounts payable and
accrued expenses in the amount of $253,151 during the six months ended December 31, 2015.
The
Company provided $67,733 in investing activities during the six-month period ended December 31, 2016 and used $149,509 investing
activities during the three-month period ended December 31, 2015.
Cash
provided by financing activities was $1,098,208 for the six-month period ended December 31, 2016, as compared to cash used in
financing activities in the amount of $198,010 for the six-month period ended December 31, 2015. The primary underlying reasons
for the variance between the two periods were due to an increase in proceeds from common stock of $844,757 during the current
period as a result of certain creditors’ conversions of debts into common stock of the Company, an increase in Accumulated
Other Comprehensive Income (loss) of $253,782 between the current six-month period ended December 31, 2016 and the corresponding
previous period ended December 31, 2015.
HISTORICAL
FINANCING ARRANGEMENTS:
SHORT
TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK: In the course of its business, the Company has obtained short-term loans from
individuals and institutional investors and from time to time raised money by issuing restricted common stock of the Company under
the auspices of Rule 144. As of December 31, 2016 and June 30, 2016, the Company had short-term notes payable amounting to $662,637
and $673,660 with accrued interest of $ 2,798,557 and $2,879,655, respectively. These notes bear interest rates ranging from 0%
to 36% per annum.
CONVERTIBLE
PROMISSORY NOTES:
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.
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 equal to 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 January 30, 2017 EMA Financial, LLC converted $7,010.50 of the
principal amount of the convertible note into 180,000 shares of Common Stock of the Company. On February 6, 2017, the Company
assigned $33,734.68 of principal and accrued interest of the note to JSJ Investments, Inc. and paid EMA Financial, LLC $25,301.02
in prepayment penalty. On February 9, 2017 EMA Financial, LLC converted $7,200 of the principal amount of the note into 200,000
shares of Common Stock of the Company. On March 08, 2017, EMA Financial, LLC converted the balance of $7,867.78 of the principal
and accrued interest into 244,340 shares of Common Stock of the Company. This note was paid in full as of March 08, 2017.
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 equal to 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.
On
December 15, 2016, the Company issued a convertible promissory note in the amount of $32,000 to Power Up Lending Group. The Note
has a coupon rate of 8%, matures on September 30, 2017 and is convertible (after 180 days) to Common Stock of the Company at a
conversion price equal to 58% multiplied by the average of the two lowest trading prices during the previous ten trading days
ending on the latest complete trading day prior to the conversion date. The note may be prepaid at 150% of outstanding principal
and interest up to 180 days.
On
February 2, 2017, the Company issued a convertible promissory note in the amount of $42,000 to JSJ Investments, Inc. The note
has a coupon rate of 10%, matures on November 2, 2017 and is convertible (after 180 days) to Common Stock of the Company at a
conversion price equal to 55% multiplied by the average of three lowest trading prices during the previous twenty trading days
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.
On
February 23, 2017, the Company issued a convertible promissory note in the amount of $28,000 to Power Up Lending Group. The Note
has a coupon rate of 8%, matures on November 30, 2017 and is convertible (after 180 days) to Common Stock of the Company at a
conversion price equal to 58% multiplied by the average of the two lowest trading prices during the previous ten trading days
ending on the latest complete trading day prior to the conversion date. The note may be prepaid at 150% of outstanding principal
and interest up to 180 days.
On
March 3, 2017, the Company issued a convertible promissory note in the amount of $75,000 to Auctus Fund, LLC, a Delaware limited
liability company. The note has a coupon rate of 10%, matures on December 3, 2017 and is convertible to Common Stock of the Company
at a conversion price equal to 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 conversion date. The note may be prepaid at 135% - 150% of
outstanding principal and interest up to 180 days.
COMPANY’S
PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS
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 energy, natural resources, agribusiness,
technology, transportation, consumer goods, healthcare, and pharmaceuticals. In addition, the Company also plans to invest in
special situations that may potentially generate significant revenues and profitability for the Company in the short term. We
believe that by closing one or more sizable acquisitions we will be able to build a critical mass and uplist to the Nasdaq Stock
Market or NYSE in the near future. Moreover, 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, investment in special situations, 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.
FINANCIAL
PLANS
MATERIAL
CASH REQUIREMENTS: We must raise substantial amounts of capital to fulfill our plan of acquiring energy-related and natural resource
assets as well as investing in special situations as part of our scope of business. We intend to use equity, debt and project
financing to meet our capital needs for acquisitions and investments.
Management
has taken action and formulated plans to strengthen the Company’s working capital position and generate sufficient cash
to meet its operating needs through June 30, 2017 and beyond. The working capital cash requirements for the next 12 months are
expected to be generated from operations, sale of marketable securities and additional financing. The Company plans to generate
revenues from its consulting services, merger and acquisition advisory services, and acquisitions of target companies with cash
flows.
AVAILABLE
FUTURE FINANCING ARRANGEMENTS: The Company may use various sources of funds, including short-term loans, long-term debt, equity
capital, and project financing as may be necessary. The Company believes it will be able to secure the required capital to implement
its business plan; however, no assurances could be made that management would be successful in achieving its plan.
Equity
Financing Arrangements
On
March 6, 2017, the Company entered into an Investment Agreement (“Investment Agreement”) with Azure Capital (the “Investor”).
Pursuant to the Investment Agreement, the Investor committed to purchase up to $10,000,000 of the Company’s common stock
over thirty-nine months (the “Equity Line”). The aggregate number of shares issuable by the Company and purchasable
by Azure under the Investment Agreement is 125,000,000 (estimated using the last reported sale price of the Company’s common
stock on the OTCQB market on March 31, 2017 of $0.08 per share). The Company may draw on the facility from time to time, as and
when it determines appropriate in accordance with the terms and conditions of the Investment Agreement. The maximum amount that
the Company is entitled to put in any one notice is the greater of (i) 200% of the average daily volume (U.S. market only) of
the common stock for the three (3) trading days prior to the date of delivery of the applicable put notice, multiplied by the
average of the closing prices for such trading days or (ii) $250,000. The purchase price shall be set at ninety-four percent (94%)
of the lowest daily VWAP of the Company’s common stock during the Pricing Period. However, if, on any trading day during
a Pricing Period, the daily volume-weighted average price (VWAP) of the common stock is lower than the floor price specified by
us in the put notice, then the Company reserves the right, to withdraw that portion of the put amount for each such trading day
during the Pricing Period, with only the balance of such put amount above the minimum acceptable price being put to Azure. There
are put restrictions applied on days between the put notice date and the closing date with respect to that particular put. During
such time, the Company is not entitled to deliver another put notice.
There
are circumstances under which the Company will not be entitled to put shares to Azure, including the following:
● the
Company will not be entitled to put shares to Azure unless there is an effective registration statement under the Securities Act
to cover the resale of the shares by Azure;
● the
Company will not be entitled to put shares to Azure unless its common stock continues to be quoted on the OTC Bulletin Board,
or becomes listed on a national securities exchange;
● the
Company will not be entitled to put shares to Azure to the extent that such shares would cause Azure’ beneficial ownership
to exceed 4.99% of our outstanding shares; and
● the
Company will not be entitled to put shares to Azure prior to the closing date of the preceding put.
The
Investment Agreement further provides that the Company and Azure are each entitled to customary indemnification from the other
for any losses or liabilities we or it suffers as a result of any breach by the other of any provisions of the Investment Agreement
or our registration rights agreement with Azure, or as a result of any lawsuit brought by a third-party arising out of or resulting
from the other party’s execution, delivery, performance or enforcement of the Investment Agreement or the registration rights
agreement.
The
Investment Agreement also contains representations and warranties of each of the parties. The assertions embodied in those representations
and warranties were made for purposes of the Investment Agreement and are subject to qualifications and limitations agreed to
by the parties in connection with negotiating the terms of the Investment Agreement. In addition, certain representations and
warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what a stockholder
or investor might view as material, or may have been used for purposes of allocating risk between the respective parties rather
than establishing matters as facts.
The
Company also entered into a Registration Rights Agreement with Azure on March 6, 2017. Pursuant to the terms of the Registration
Rights Agreement, the Company is obligated to file one or more registration statements with the SEC to register the resale by
Azure of shares of common stock issued or issuable under the Investment Agreement. This registration process will continue until
such time as all of the dollar amounts available under the credit line, using shares of common stock issuable under the Investment
Agreement, have been registered for resale on effective registration statements. In no event will the Company be obligated to
register for resale more than $10,000,000 in value of shares of common stock, or 125,000,000 shares (estimated using the last
reported sale price of the Company’s common stock on the OTCQB market on March 31, 2017 of $0.08 per share).
Reports
We
make available free of charge through our website,
www.phiglobal.com
, our annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or to be furnished pursuant to Section 13(a) of
the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish
it to, the SEC. Any information that is included on or linked to our Internet site is not a part of this report or any registration
statement that incorporates this report by reference.
You
may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington,
DC 20549, on official business days during the hours of 10:00 am to 3:00 pm. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC at
http://www.sec.gov
.
MANAGEMENT
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The
following table sets forth certain information as of March 31, 2017, with respect to the Directors and Executive Officers of the
Company.
|
Name
|
|
Age
|
|
Position
|
|
Henry
D. Fahman
|
|
63
|
|
Chairman
of the Board, CFO, President
|
|
Tina
T. Phan
|
|
50
|
|
Treasurer,
Secretary
|
|
Tam
T. Bui
|
|
56
|
|
Director
|
|
Frank
Hawkins
|
|
76
|
|
Director
|
Directors
are elected at the annual meeting of shareholders and hold office until the following annual meeting and until their successors
are elected and qualified. All Executive Officers serve at the discretion of the Board of Directors. The Company’s securities
are not registered under Section 12(g) of the Exchange Act. Accordingly, the Directors and Executive Officers of the Company are
not required to file reports under Section 16(a) of that act.
Henry
D. Fahman
has more than 30 years experience in general management, finance, investments and corporate strategy. He has been
President and Chairman of the Board of PHI Group, Inc. since January 2000, and is currently Acting Financial Officer of the Company.
Mr. Fahman served as President and Chairman of the Board of Providential Securities, Inc. from its inception in October 1992 to
October 2000. He holds a B.S., magna cum laude, in business administration from the University of California at Berkeley, with
emphasis in finance and economic analysis and policy, and is a graduate of the Advanced Management Program (AMP166) from Harvard
Business School. He has also attended other Executive Education programs at Harvard Business School and Stanford University, including
Mergers and Acquisitions, Creating Competitive Advantage, and Advanced General Management. Previously, he served as a Resettlement
Coordinator for the United Nations High Commissioner for Refugees. Mr. Fahman also serves as Chairman/Managing Director of PHI
Capital Holdings, Inc., a wholly owned subsidiary of the Company. Mr. Fahman is the husband of Tina T. Phan, our Secretary and
Treasurer.
Tam
Bui
has been a Director of the Company since April 2009 and served as a Chief Technology Officer from May 2002 to April 2009.
Mr. Bui holds Bachelor and Master of Science degrees from the University of Minnesota and has attended continuing Education at
the University of California, Los Angeles. He has over 25 years of experience with Northrop Grumman, Honeywell, Inc. and TRW in
various capacities such Project Director, Project Manager, Department Manager, Program Manager and Implementation Manager. One
of Mr. Bui’s major responsibilities has been the construction of dual Emergency Command Control Communication (ECCC) centers
and implementation of the Los Angeles Police Department ECCC Systems. He has a broad knowledge and experience in the areas of
information technology, intranet/internet technology, inventory management, material resource planning, enterprise resource planning,
human resource management, investment management, real estate, and international business.
Frank
Hawkins, Director
has been a Director of the Company since April 2009 and Mr. Hawkins is a founder and CEO of Hawk Associates
with 30 years of award-winning investor relations experience, Mr. Hawkins has earned the wide respect of Wall Street’s investment
community for straight talk and integrity. He was formerly vice president/corporate relations and planning and head of the investor
relations program at Knight-Ridder, Inc. in Miami. Mr. Hawkins started his career as an agent handler in clandestine collection
operations for the Defense Intelligence Agency in Germany and went on to become a foreign and war correspondent, international
businessman, senior corporate executive and president of the Access Asia Group in Hong Kong. He has lived in eight countries.
He has been involved in stock listings in Tokyo and Frankfurt and company presentations in London, Zurich, Geneva and Singapore.
Fluent in German, he is a graduate of Cornell University and author of “Ritter’s Gold,” an adventure novel published
in several languages by the New American Library.
He
is a member of the Association of Former Intelligence Officers and the Audubon Society and is listed in Who’s Who in America
and Who’s Who in the World. He serves on the board of the Florida Keys Electric Cooperative.
Tina
T. Phan
has been Treasurer of the Company since April 2009. She served as a Director and Secretary of the Company from January
2000 to April 10, 2009 and was Vice President of Operations of Providential Securities, Inc. from 1995 to 2000. Mrs. Phan holds
a B.S. in management information system from California State University, Los Angeles. Currently Mrs. Phan serves as Treasurer
and Secretary of the Company. Mrs. Phan is the wife of Henry D. Fahman.
EXECUTIVE
COMPENSATION
(a) Any
compensation received by officers, directors, and management personnel of the Company will be determined and approved from time
to time by the Board of Directors of the Company as it deems appropriate and reasonable. Officers, directors, and management personnel
of the Company will be reimbursed for any out-of-pocket expenses incurred on behalf of the Company. Except for any non-cash accruals
disclosed in the financial reports for the previous fiscal years and quarters, there was no monetary compensation paid to any
officers of the Company during the last five years.
(b) There
are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the Company in the
event of retirement at normal retirement date as there is no existing plan provided for or contributed to by the Company.
(c) All
members of the Company’s Board of Directors, whether officers of the Company or not, may receive an amount yet to be determined
annually for their participation in meetings of the Board and will be required to attend a minimum of four meetings per fiscal
year. The Company reimburses all expenses for meeting attendance or out of pocket expenses connected directly with their Board
participation.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock as of
March 30, 2017 (15,088,595 shares issued, excluding 5,673,327 shares reserved for a special dividend distribution) by (i) all
shareholders known to the Company to be beneficial owners of more than 5% of the outstanding common stock; and (ii) all directors
and executive officers of the Company, and as a group:
|
Title
of Class
|
|
Name
and Address of Beneficial Owner (1)
|
|
Amount
of Beneficial Ownership
|
|
|
Percent
of Class
|
|
|
Common Stock
|
|
Henry
D. Fahman (2)
15272
Flintridge Lane
Huntington
Beach,
CA
92647
|
|
|
5,735,847
|
|
|
|
38.01
|
%
|
|
Common Stock
|
|
Natalie
Bui (3)
2563 W Rowland Ave Anahem,
CA
92804
|
|
|
1,032,502
|
|
|
|
6.84
|
%
|
|
Common Stock
|
|
Tam
Bui
2563 W Rowland Ave Anahem,
CA
92804
|
|
|
956,881
|
|
|
|
6.34
|
%
|
|
Common Stock
|
|
Tina
T. Phan (4)
15272
Flintridge Lane Huntington Beach,
CA
92647
|
|
|
11,063
|
|
|
|
**
|
|
|
Common Stock
|
|
Frank
Hawkins
227 Atlantic Boulevard Key Laro,
FL
33037
|
|
|
200
|
|
|
|
**
|
|
|
Common Stock
|
|
Shares of all directors and executive
officers as a group (4 persons):
|
|
|
6,703,991
|
|
|
|
44.43
|
%
|
|
(1)
|
Each
person has sole voting power and sole dispositive power as to all of the shares shown
as beneficially owned by them.
|
|
(2)
|
Certain
of these shares have been pledged to secure certain obligations of the Company.
|
|
(3)
|
Natalie
Bui is the spouse of Tam Bui.
|
|
(4)
|
Tina
Phan is the spouse of Henry Fahman.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Henry
D. Fahman, Chairman and Chief Executive Officer of the Company, has from time to time made cash advances to the Company. The advances
are unsecured, interest free and payable on demand.
Certain
of the officers and directors of the Company are engaged in other businesses, either individually or through partnerships and
corporations in which they have an interest, hold an office, or serve on a board of directors. As a result, certain conflicts
of interest may arise between the Company and its officers and directors. The Company will attempt to resolve such conflicts of
interest in favor of the Company. The officers and directors of the Company are accountable to it and its shareholders as fiduciaries,
which require that such officers and directors exercise good faith and integrity in handling the Company’s affairs. A shareholder
may be able to institute legal action on behalf of the Company or on behalf of itself and other similarly situated shareholders
to recover damages or for other relief in cases of the resolution of conflicts is in any manner prejudicial to the Company.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Audit
Fees
The
negotiated package fees billed by Dave Banerjee, CPA, an independent accountancy firm, were $9,000 for the audit of the Company’s
annual consolidated financial statements for the year ended June 30, 2016 and $1,500 per quarter for the review of unaudited quarterly
financial statements.
All
Other Fees
The
Company did not pay Dave Banerjee, CPA any non-audit fees for fiscal year 2016 or 2015.
DESCRIPTION
OF CAPITAL STOCK
The
Company has two classes of stock authorized: preferred and common.
Common
Stock:
As
of March 30, 2017 there were 15,088,595 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:
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.
There
are no shares of preferred stock issued or outstanding.
All
of these securities issuances were in private direct transactions, exempt under Section 4(2) of the Securities Act of 1933 or
Regulation D promulgated thereunder.
PLAN
OF DISTRIBUTION
The
purpose of this prospectus is to permit the selling stockholder to offer and resell up to 5,000,000 shares of our common stock
at such times and at such places as it chooses. To the extent required, we may amend and supplement this prospectus from time
to time to describe a specific plan of distribution. The decision to sell any shares offered pursuant to this prospectus is within
the sole discretion of the selling stockholder.
The
distribution of the common stock by the selling stockholder may be effected from time to time in one or more transactions. Any
of the common stock may be offered for sale, from time to time, by the selling stockholder at prices and on terms then obtainable,
at fixed prices, at prices then prevailing at the time of sale, at prices related to such prevailing prices, or in negotiated
transactions at negotiated prices or otherwise. The common stock may be sold by one or more of the following:
●
On the OTCQB or any other national common stock exchange or automated quotation system on which our common stock is traded, which
may involve transactions solely between a broker-dealer and its customers which are not traded across an open market and block
trades.
●
hrough one or more dealers or agents (which may include one or more underwriters), including, but not limited to:
●
Block trades in which the broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus.
●
Purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus.
●
Ordinary brokerage transactions.
●
Transactions in which the broker solicits purchasers.
●
Directly to one or more purchasers.
●
A combination of these methods.
Azure
and any broker-dealers who act in connection with the sale of its shares are “underwriters” within the meaning of
the Securities Act, and any discounts, concessions or commissions received by them and profit on any resale of the shares as principal
may be deemed to be underwriting discounts, concessions and commissions under the Securities Act. Because the selling stockholder
is an “underwriter” within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements
of the Securities Act, including Rule 172 thereunder.
The
selling stockholder or its underwriters, dealers or agents may sell the common stock to or through underwriters, dealers or agents,
and such underwriters, dealers or agents may receive compensation in the form of discounts or concessions allowed or reallowed.
Underwriters, dealers, brokers or other agents engaged by the selling stockholder may arrange for other such persons to participate.
Any fixed public offering price and any discounts and concessions may be changed from time to time. Underwriters, dealers and
agents who participate in the distribution of the common stock may be deemed to be underwriters within the meaning of the Securities
Act, and any discounts or commissions received by them or any profit on the resale of shares by them may be deemed to be underwriting
discounts and commissions thereunder. The proposed amounts of the common stock, if any, to be purchased by underwriters and the
compensation, if any, of underwriters, dealers or agents will be set forth in a prospectus supplement.
Unless
granted an exemption by the SEC from Regulation M under the Exchange Act, or unless otherwise permitted under Regulation M, the
selling stockholder will not engage in any stabilization activity in connection with our common stock, will furnish each broker
or dealer engaged by the selling stockholder and each other participating broker or dealer the number of copies of this prospectus
required by such broker or dealer, and will not bid for or purchase any common stock of our or attempt to induce any person to
purchase any of the common stock other than as permitted under the Exchange Act.
We
will not receive any proceeds from the sale of these shares of common stock offered by the selling stockholder. We shall use our
reasonable efforts to prepare and file with the SEC such amendments and supplements to the registration statement and this prospectus
as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of the common stock covered by the registration statement for the period required to effect the distribution
of such common stock.
We
are paying certain expenses (other than commissions and discounts of underwriters, dealers or agents) incidental to the offering
and sale of the common stock to the public. If we are required to update this prospectus during such period, we may incur additional
expenses in excess of the amount estimated above. We have agreed to indemnify the selling stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act and the Exchange Act, subject to certain exceptions.
In
order to comply with certain state securities laws, if applicable, the common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states the shares of common stock may not be sold unless they have been
registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied
with.
CHANGES
AND DISAGREEMENTS WITH ACCOUNTANTS
None.
LEGAL
MATTERS
Selected
legal matters with respect to the validity of the securities offered by this prospectus will be passed upon for us by Dieterich
& Associates, LLP, Los Angeles, California.
EXPERTS
The
financial statements as of and for the years ended June 30, 2016 and 2015, included in this prospectus have been audited by Dave
Banerjee, CPA, an independent registered public accounting firm, as stated in the reports appearing herein. Such financial statements
have been so included in reliance upon the reports of such firms given upon their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed a registration statement on Form S-1 with the SEC for the stock offered pursuant to this prospectus. This prospectus
does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. Statements
contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of such contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference. For further information with respect to us and the common
stock offered hereby, please refer to the registration statement and its exhibits and schedules for further information relating
to us and our common stock.
We
are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934 and in accordance therewith
file reports, proxy statements and other information with the SEC. Such reports, proxy statements, other information and a copy
of the registration statement may be inspected by anyone without charge and copies of these materials may be obtained upon the
payment of the fees prescribed by the SEC, at the Public Reference Room maintained by the SEC at Room 1580, 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of this public reference room by calling 1-800-SEC-0330. The
Registration Statement, including all exhibits and schedules and amendments, has been filed with the SEC through the Electronic
Data Gathering Analysis and Retrieval system and is available to the public from the SEC’s web site at http://www.sec.gov.
PHI
GROUP, INC.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
The
following consolidated financial statements of PHI Group, Inc. and its subsidiaries are included:
Report
of Independent Registered Public Accounting Firm (Dave Banerjee, CPA).
|
Consolidated
Balance Sheets
|
—
|
June
30, 2016 and 2015.
|
|
|
|
|
|
Consolidated
Statements of Operations
|
—
|
For
the fiscal years ended June 30, 2016 and 2015
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
—
|
For
the fiscal years ended June 30, 2016 and 2015
|
|
|
|
|
|
Consolidated
Statements of Changes in Owners’ Equity
|
—
|
For
the fiscal years ended June 30, 2016 and 2015
|
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of PHI Group Inc.
We
have audited the accompanying consolidated balance sheets of PHI Group Inc., (“Company”) as of June 30, 2016, and
2015, and the related statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years
in the two year period ended June 30, 2016.
PHI
Group, Inc.’s management is responsible for these financial statements. 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 audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.
The
company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position
of PHI Group, Inc., as of June 30, 2016 and 2015, and the results of its operations and its cash flows for each of the years in
the two year period ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
The
accompanying financial consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 21, the Company has accumulated deficit of $37,774,842 and total liabilities and stockholders’
deficit of $753,990 as of June 30, 2016, and a negative cash flow from operations amounting to $7,998 for the year ended June
30, 2016. These factors as discussed in Note 21 of the consolidated financial statements raise substantial doubt about the Company’s
ability to continue as a going concern. Managements’ plan in regard to these matters are also described in Note 21. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
|
|
|
|
|
|
Dave
Banerjee CPA
|
|
|
An
Accountancy Corporation
|
|
|
|
|
|
Woodland
Hills, CA 91367
|
|
|
October
11, 2016
|
|
PHI
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS (AUDITED)
|
|
|
June
30, 2016
|
|
|
June
30, 2015
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
2,482
|
|
|
$
|
10,654
|
|
|
Marketable securities
|
|
|
481,120
|
|
|
|
350,556
|
|
|
Loans receivable
|
|
|
2,282
|
|
|
|
9,841
|
|
|
Other current assets
|
|
|
43,417
|
|
|
|
0
|
|
|
Total
current assets
|
|
$
|
529,302
|
|
|
$
|
371,051
|
|
|
Fixed assets:
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
82,733
|
|
|
|
|
|
|
Total
fixed assets
|
|
|
82,733
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
Deposit for acquisition
|
|
|
75,000
|
|
|
|
77,729
|
|
|
Other Receivable
|
|
|
66,955
|
|
|
|
-
|
|
|
Total
other assets
|
|
|
141,955
|
|
|
|
77,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
753,990
|
|
|
$
|
448,780
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
144,212
|
|
|
$
|
131,454
|
|
|
Accrued expenses
|
|
|
4,342,783
|
|
|
|
4,253,280
|
|
|
Short-term notes
payable
|
|
|
673,660
|
|
|
|
1,342,618
|
|
|
Due to officers
|
|
|
899,674
|
|
|
|
1,879,458
|
|
|
Due to preferred
stockholders
|
|
|
215,000
|
|
|
|
215,000
|
|
|
Advances from customers
|
|
|
288,219
|
|
|
|
563,219
|
|
|
Other current payable
|
|
|
97,350
|
|
|
|
-
|
|
|
Unearned revenues
|
|
|
40,000
|
|
|
|
-
|
|
|
Client deposits
|
|
|
9,821
|
|
|
|
-
|
|
|
Liabilities from
discontinued operations
|
|
|
1,045,232
|
|
|
|
1,045,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
$
|
7,755,950
|
|
|
$
|
9,430,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
|
Preferred stock,
$.001 par value, 100,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $.001
par value; 300,000,000 shares authorized; 15,370,825 issued and 9,697,498 outstanding on 06/30/2016, and 9,584,675 issued
and 3,911,348 outstanding on 6/30/2015, respectively, adjusted for 1 for 1,500 reverse split effective March 15, 2012.
|
|
|
243,234
|
|
|
|
237,447
|
|
|
Treasury stock:
67,271 and 3,289 shares as of 06/30/2016 and 6/30/2015, cost method.
|
|
|
(21,823
|
)
|
|
|
(3,801
|
)
|
|
Paid-in capital
|
|
|
30,521,209
|
|
|
|
28,365,269
|
|
|
Acc. other comprehensive
gain (loss)
|
|
|
30,263
|
|
|
|
99,341
|
|
|
Accumulated deficit
|
|
$
|
-37,774,842
|
|
|
$
|
-37,679,736
|
|
|
Total
stockholders’ deficit
|
|
$
|
(7,001,960
|
)
|
|
$
|
(8,981,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
753,990
|
|
|
$
|
448,780
|
|
The
accompanying notes form an integral part of these audited consolidated financial statements
PHI
GROUP, INC. AND SUBSIDI ARIES
CONSOLIDATED
STATEMENT OF OP ERATIONS
FOR
THE YEARS ENDED JUNE 30, 2016 AND 2015
AUDITED
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
|
|
|
|
Consulting,
advisory and management services
|
|
$
|
332,050
|
|
|
$
|
127,178
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Salaries and wages
|
|
|
241,000
|
|
|
|
239,558
|
|
|
Professional services,
including non-cash compensation
|
|
|
66,838
|
|
|
|
75,398
|
|
|
General and administrative
|
|
|
157,083
|
|
|
|
118,135
|
|
|
Total
operating expenses
|
|
$
|
464,921
|
|
|
$
|
433,090
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
$
|
(132,871
|
)
|
|
$
|
(305,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income and
expenses
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(267,577
|
)
|
|
|
(319,315
|
)
|
|
Gain (loss) on sale
of marketable securities
|
|
|
137,017
|
|
|
|
(45,176
|
)
|
|
Gain (loss) on settlement
of debts
|
|
|
-
|
|
|
|
(25,845
|
)
|
|
Other income (expense)
|
|
|
255,433
|
|
|
|
(672,667
|
)
|
|
Net
other income (expenses)
|
|
$
|
124,873
|
|
|
$
|
(1,063,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(7,998
|
)
|
|
$
|
(1,368,915
|
)
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
Accumulated other
comprehensive gain (loss)
|
|
|
30,263
|
|
|
|
99,341
|
|
|
Comprehensive
income (loss)
|
|
$
|
22,265
|
|
|
$
|
(1,269,574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.21
|
)
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,324,120
|
|
|
|
6,573,093
|
|
|
Diluted
|
|
|
5,324,120
|
|
|
|
6,573,093
|
|
The
accompanying notes form an integral part of these audited consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED JUNE 30, 2016 AND 2015
AUDITED
|
|
|
2016
|
|
|
2015
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from operations
|
|
$
|
(7,998
|
)
|
|
$
|
(1,368,915
|
)
|
|
Adjustments to reconcile
net income to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease
in other assets and prepaid expenses
|
|
|
(69,072
|
)
|
|
|
(85,206
|
)
|
|
Increase (decrease)
in accounts payable and accrued expenses
|
|
|
(1,772,030
|
)
|
|
|
(155,232
|
)
|
|
Net
cash provided by (used in) operating activities
|
|
|
(1,849,100
|
)
|
|
|
(1,609,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
Receivable from
discontinued operations
|
|
|
-
|
|
|
|
73,043
|
|
|
Deposit for acquisition
|
|
|
(66,776
|
)
|
|
|
(4,936
|
)
|
|
Land purchase
|
|
|
(82,733
|
)
|
|
|
|
|
|
Investment in joint
venture
|
|
|
2,550
|
|
|
|
(2,550
|
)
|
|
Net
cash provided by (used in) investing activities
|
|
|
(146,959
|
)
|
|
|
65,557
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from common
stock
|
|
|
2,161,726
|
|
|
|
75,927
|
|
|
Change in Accum.
other comprehensive income (loss)
|
|
|
(69,078
|
)
|
|
|
808,524
|
|
|
Change in Accumulated
deficit
|
|
|
(87,108
|
)
|
|
|
639,376
|
|
|
Change in treasury
stock
|
|
|
(18,022
|
)
|
|
|
-
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
1,987,517
|
|
|
|
1,523,827
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
|
|
(8,542
|
)
|
|
|
(19,969
|
)
|
|
Cash and cash equivalents, beginning
of period
|
|
|
11,024
|
|
|
|
30,623
|
|
|
Cash
and cash equivalents, end of period
|
|
$
|
2,482
|
|
|
$
|
10,654
|
|
The
accompanying notes form an integral part of these audited consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 (Auditted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Shares
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
|
Common
Stock
|
|
|
Treasury
Stock
|
|
|
Paid-in
|
|
|
to
be
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
issued
|
|
|
Income/(loss)
|
|
|
(Deficit)
|
|
|
(Deficit)
|
|
|
Balance
at June 30, 2012
|
|
|
180,689
|
|
|
$
|
233,719
|
|
|
|
-887
|
|
|
$
|
(1
|
)
|
|
$
|
26,756,379
|
|
|
$
|
57,000
|
|
|
$
|
(554,619
|
)
|
|
$
|
(35,814,954
|
)
|
|
$
|
(9,322,477
|
)
|
|
Shares issued for conversion of notes
|
|
|
2,365,208
|
|
|
$
|
2,365
|
|
|
|
|
|
|
|
|
|
|
$
|
1,156,303
|
|
|
$
|
(57,000
|
)
|
|
|
|
|
|
|
|
|
|
$
|
1,101,668
|
|
|
Shares issued for consulting
|
|
|
44,763
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45
|
|
|
Shares issued for investment
|
|
|
3,288,443
|
|
|
$
|
3,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,288
|
|
|
Shares issued for sale
|
|
|
100,887
|
|
|
$
|
101
|
|
|
|
|
|
|
|
|
|
|
$
|
39,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,000
|
|
|
Purchase
of Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
-2,100
|
|
|
$
|
(3,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(3,801
|
)
|
|
Acc. Other Comprehensive
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(142,376
|
)
|
|
|
|
|
|
$
|
(142,376
|
)
|
|
Net income (loss) for
the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(884,047
|
)
|
|
$
|
(884,047
|
)
|
|
Balance at June 30,
2013
|
|
|
5,979,990
|
|
|
$
|
239,518
|
|
|
|
-2,987
|
|
|
$
|
(3,801
|
)
|
|
$
|
27,952,581
|
|
|
$
|
-
|
|
|
$
|
(142,376
|
)
|
|
$
|
(36,699,002
|
)
|
|
$
|
(9,207,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for conversion of notes on Jul
01, 2013
|
|
|
412,569
|
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
$
|
177,527
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
$
|
177,940
|
|
|
Shares issued for conversion of note on Feb 11,
2014
|
|
|
337,097
|
|
|
|
337
|
|
|
|
-
|
|
|
|
0
|
|
|
$
|
156,413
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
$
|
156,750
|
|
|
Acc. Other Comprehensive
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(709,183
|
)
|
|
|
|
|
|
$
|
(709,183
|
)
|
|
Net income (loss) for
the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(255,994
|
)
|
|
$
|
(255,994
|
)
|
|
Balance at June 30,
2014
|
|
|
6,729,656
|
|
|
$
|
240,268
|
|
|
|
-2,987
|
|
|
$
|
(3,801
|
)
|
|
$
|
28,286,521
|
|
|
$
|
-
|
|
|
$
|
(709,183
|
)
|
|
$
|
(36,954,987
|
)
|
|
$
|
(9,141,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for conversion of notes on Aug
27, 2014
|
|
|
91,440
|
|
|
$
|
91
|
|
|
|
|
|
|
|
|
|
|
$
|
27,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,432
|
|
|
Shares issued for conversion of notes on Jan
22, 2015
|
|
|
77,049
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
$
|
30,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,820
|
|
|
Shares issued for cash on Feb 11, 2015
|
|
|
300,000
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
$
|
20,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,000
|
|
|
Cancellation of shares
issued for investment - 5/18/15
|
|
|
-3,288,443
|
|
|
$
|
(3,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(3,288
|
)
|
|
Adjustment for common
stock
|
|
|
1,646
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
Adjustment for treasury
stock
|
|
|
|
|
|
|
|
|
|
|
-302
|
|
|
$
|
0
|
|
|
$
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(36
|
)
|
|
Acc. Other Comprehensive
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
99,341
|
|
|
|
|
|
|
$
|
99,341
|
|
|
Net income (loss) for
the year ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,368,915
|
)
|
|
$
|
(1,368,915
|
)
|
|
Balance at June 30,
2015
|
|
|
3,911,348
|
|
|
$
|
237,447
|
|
|
|
-3,289
|
|
|
$
|
(3,801
|
)
|
|
$
|
28,365,269
|
|
|
$
|
0
|
|
|
$
|
99,341
|
|
|
$
|
(37,679,736
|
)
|
|
$
|
(8,981,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of 25,510 shares - Uy Tran 9/28/2015
|
|
|
-25,510
|
|
|
$
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(9,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(10,000
|
)
|
|
Shares issued for cash
- 2/2/2016
|
|
|
121,212
|
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
$
|
39,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,000
|
|
|
Shares issued for conversion
of notes - 2/2/2106
|
|
|
98,084
|
|
|
$
|
98
|
|
|
|
|
|
|
|
|
|
|
$
|
31,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,000
|
|
|
Shares issued for consulting
service - 2/4/2016
|
|
|
100,000
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
$
|
32,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
33,000
|
|
|
Shares issued for conversion
of notes and accruals - 3/28/2016
|
|
|
4,670,540
|
|
|
$
|
4,671
|
|
|
|
|
|
|
|
|
|
|
$
|
1,732,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,737,441
|
|
|
Shares issued for conversion
of notes - 5/9/2016
|
|
|
691,824
|
|
|
$
|
692
|
|
|
|
|
|
|
|
|
|
|
$
|
274,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
275,000
|
|
|
Shares issued for consulting
service - 6/13/2016
|
|
|
100,000
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
$
|
39,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
39,250
|
|
|
Shares issued for consulting
service - 6/28/2016
|
|
|
30,000
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
|
$
|
14,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
Adjustment to APIC for
treasury stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
|
Change in treasury stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(18,022
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(18,022
|
)
|
|
Acc. Other Comprehensive
Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,263
|
|
|
|
|
|
|
$
|
30,263
|
|
|
Net income (loss) for
the year ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(7,998
|
)
|
|
$
|
(7,998
|
)
|
|
Balance at June 30,
2016
|
|
|
9,697,498
|
|
|
$
|
243,233
|
|
|
|
-67,271
|
|
|
$
|
(21,823
|
)
|
|
$
|
30,521,209
|
|
|
|
|
|
|
$
|
30,263
|
|
|
$
|
(37,774,842
|
)
|
|
$
|
(7,001,960
|
)
|
The
accompanying notes form an integral part of these audited consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
(FORMERLY
PROVIDENTIAL HOLDINGS, INC.)
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 for1:1,500 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, 2016:
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.
Item
16.
Exhibits and Financial Statement Schedules
The
exhibits set forth under the caption “Exhibit Index” below are included in this filing and incorporated by reference.
The financial statement schedules have been omitted because they are not applicable, not required, or the information is included
in the consolidated financial statements or notes thereto.
Item
17.
Undertakings
The
undersigned registrant hereby undertakes:
1. To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To
include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii. To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
iii. To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
2. That,
for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial
bona fide
offering thereof.
3. To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at
the termination of the offering.
4. That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of Huntington Beach, State of California, on April
3, 2017.
|
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PHI
GROUP, INC.
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By:
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/s/
Henry Fahman
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Name:
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Henry
Fahman
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|
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Title:
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Chief
Executive Officer
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POWER
OF ATTORNEY
We,
the undersigned officers and directors of PHI Group, Inc., do hereby constitute and appoint Henry Fahman, our true and lawful
attorney-in-fact and agent with full power of substitution and re-substitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, or any
related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same, with exhibits thereto, and other documents in connection therewith, with the SEC, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 has been signed below by the following
persons in the capacities and on the dates indicated.
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Name
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Title
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Date
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|
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Henry
Fahman
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Chief
Executive Officer and Chairman
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|
April
3, 2017
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|
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(Principal
Executive Officer)
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|
|
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|
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|
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Henry
Fahman
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Chief
Financial Officer and Director
|
|
April
3, 2017
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(Principal
Accounting Officer)
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EXHIBIT
INDEX
|
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Exhibit
|
|
|
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Number
|
|
Description
of Exhibit
|
|
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5.1
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Opinion
of Legal Counsel, Dieterich & Associates, LLP
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10.20
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Investment
Agreement between the Company and Azure Capital, a Massachusetts corporation, dated March 6, 2017*
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10.21
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Registration
Rights Agreement between the Company and Azure Capital, a Massachusetts corporation, dated March 6, 2017*
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23.1
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Consent
of Independent Registered Public Accounting Firm (David Banerjee, CPA)
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23.2
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Consent
of Dieterich & Associates, LLP (Legal Counsel, included in Exhibit 5.1)
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24.1
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Power
of Attorney (included in the Signature Page to Registration Statement).
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*
Filed as exhibits to the Company’s Form S-1 on April 3, 2017
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