NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – NATURE OF BUSINESS
INTRODUCTION
PHI
Group, Inc. (the “Company” or “PHI”) (www.phiglobal.com) is primarily engaged in the operations
of PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund” (“RAIF”) under the laws
of Luxembourg, and the development of the Asia Diamond Exchange in Vietnam. Besides, the Company provides corporate finance services,
including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary PHILUX
Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcap.com) and invests in selective industries as
well as special situations that may potentially create significant long-term value for shareholders. PHILUX Global Funds plans
to include a number of sub-funds for investment in the proposed Asia Diamond Exchange in Vietnam (ADE), real estate, infrastructure,
agriculture, renewable energy, and healthcare.
BACKGROUND
Originally
incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication
and filed Articles of Domestication to become a Wyoming corporation on September 20, 2017. In the beginning, 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. In January 2000, the Company changed its name to Providential Securities, Inc., a Nevada
corporation, following a business combination with Providential Securities, Inc., a California-based financial services company.
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 Philand Ranch
Limited, a United Kingdom corporation previously listed on the Frankfurt Stock Exchange (together with its subsidiaries Philand
Ranch - Singapore, Philand Corporation - US, and Philand Vietnam Ltd. - Vietnam), Providential Vietnam Ltd., PHI Gold Corporation
(formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and mainly focused
on acquisition and development opportunities in energy and natural resource businesses.
The
Company is currently focused on operating PHILUX Global Funds, SCA, SICAV-RAIF by setting up a number of sub-funds for investment
in real estate, renewable energy, infrastructure, agriculture and healthcare as well as developing and establishing the Asia Diamond
Exchange in Vietnam. In addition, PHILUX Capital Advisors, Inc. (formerly Capital Holdings, Inc.), a wholly owned subsidiary of
the Company, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory
and consulting services for other client companies. No assurances can be made that the Company will be successful in achieving
its plans.
BUSINESS
STRATEGY
PHI’s
strategy is to:
1.
Identify, build, acquire, commit and deploy valuable resources with distinctive competitive advantages;
2.
Identify, evaluate, acquire, participate and compete in attractive businesses that have large, growing market potential;
3.
Build an attractive investment that includes points of exit for investors through capital appreciation or spin-offs of business
units.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of PHI Group, Inc., its wholly owned subsidiaries (1) American Pacific
Resources, Inc., a Wyoming corporation (100%), (2) PHILUX Capital Advisors, Inc., a Wyoming corporation (100%), and (3) PHI Luxembourg
Development S.A., a Luxembourg corporation (100%), collectively referred to as the “Company.” All significant inter-company
transactions have been eliminated in consolidation.
INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction
with the audited financial statements for the year ended June 30, 2019. In the opinion of management, all adjustments consisting
of normal reoccurring accruals have been made to the financial statements. The results of operation for the three months ended
September 30, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2019.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with generally accepted accounting principles 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 periods. 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.
Typically,
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 quoted on either the OTC Markets or other public exchanges. As such, each investment is
accounted for in accordance with the provisions of 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 September 30, 2019, the marketable securities were recorded at
$158,695, based upon the fair value of the marketable securities at that time.
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,
short-term notes payable, convertible notes, derivative liability 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. At September
30, 2018, 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 also has convertible notes and derivative liabilities
as disclosed in this report that are measured at fair value on a regular basis until paid off or exercised.
Available-for-sale
securities
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.
ACCOUNTS
RECEIVABLE
Management
reviews the composition of accounts receivable and analyzes historical bad debts. As of September 30, 2019, the Company did not
have any accounts receivable.
PROPERTIES
AND EQUIPMENT
Property
and equipment are carried at cost less accumulated depreciation. Depreciation is provided using the straight-line method over
the estimated useful life of the assets from three to five years. Expenditures for maintenance and repairs are charged to expense
as incurred.
REVENUE
RECOGNITION STANDARDS
ASC
606-10 provides the following overview of how revenue is recognized from an entity’s contracts with customers: An entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services.
Step
1: Identify the contract(s) with a customer.
Step
2: Identify the performance obligations in the contract.
Step
3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity
expects to be entitled in exchange for transferring promised goods or services to a customer.
Step
4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction
price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised
in the contract.
Step
5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or
as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer
obtains control of that good or service).
The
amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be
satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to
transfer service to a customer). For performance obligations satisfied over time, an entity recognizes revenue over time by selecting
an appropriate method for measuring the entity’s progress toward complete satisfaction of that performance obligation. (Paragraphs
606-10 25-23 through 25-30).
In
addition, ASC 606-10 contains guidance on the disclosures related to revenue, and notes the following:
It
also includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements
with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s
contracts with customers. Specifically, Section 606-10-50 requires an entity to provide information about:
-
Revenue recognized from contracts with customers, including disaggregation of revenue into appropriate categories.
-
Contract balances, including the opening and closing balances of receivables, contract assets, and contract liabilities.
-
Performance obligations, including when the entity typically satisfies its performance obligations and the transaction prices
is that is allocated to the remaining performance obligations in a contract.
-
Significant judgments, and changes in judgments, made in applying the requirements to those contracts.
Additionally,
Section 340-40-50 requires an entity to provide quantitative and/or qualitative information about assets recognized from the costs
to obtain or fulfill a contract with a customer.
The
Company’s revenue recognition policies are in compliance with ASC 606-10. The Company recognizes consulting and advisory
fee revenues in accordance with the above-mentioned guidelines and expenses are recognized in the period in which the corresponding
liability is incurred.
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.
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. 2018-13 – August 2018
Fair
Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement
Modifications:
The following disclosure requirements were modified in Topic 820:
1.
In lieu of a roll-forward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out
of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities.
2.
For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation
of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated
the timing to the entity or announced the timing publicly.
3.
The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement
as of the reporting date.
Additions:
The following disclosure requirements were added to Topic 820; however, the disclosures are not required for nonpublic entities:
1.
The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value
measurements held at the end of the reporting period.
2.
The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain
unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu
of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method
to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.
The
amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019.
Update
No. 2018-07 – June 2018
Compensation
– Stock Compensation (Topic 718)
Improvements
to Nonemployee Share-Based Payment Accounting
Main
Provisions: The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring
goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific
guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based
payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all
share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own
operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments
used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to
customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.
The
amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including
interim periods within that fiscal year.
Update
No. 2017-13 - September 2017
Revenue
Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606)
FASB
Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), issued in May 2014 and codified in
ASC Topic 606, Revenue from Contracts with Customers, and No. 2016-02.
The
transition provisions in ASC Topic 606 require that a public business entity and certain other specified entities adopt ASC Topic
606 for annual reporting 3 periods beginning after December 15, 2017, including interim reporting periods within that reporting
period. FN2 All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018,
and interim reporting periods within annual reporting periods beginning after December 15, 2019.
Update
No. 2016-10 - April 2016
Revenue
from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing
The
core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. To achieve that core principle, an entity should apply the following steps:
1.
Identify the contract(s) with a customer.
2.
Identify the performance obligations in the contract.
3.
Determine the transaction price.
4.
Allocate the transaction price to the performance obligations in the contract.
5.
Recognize revenue when (or as) the entity satisfies a performance obligation.
The
amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update
clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance,
while retaining the related principles for those areas.
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 implementation
of these pronouncements would not have a material impact on the financial statements taken as a whole.
NOTE
3 – 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. These marketable securities are quoted on the
OTC Markets or other public exchanges and are accounted for in accordance with the provisions of SFAS No. 115.
Marketable
securities held by the Company and classified as available for sale as of September 30, 2019 consisted of 905,000 shares of Myson
Group, Inc. (formerly Vanguard Mining Corporation) 292,050,000 shares of Sports Pouch Beverage Co., both of which are publicly-traded
companies quoted on the OTC Markets (Trading symbols “MYSN” and “SPBV,” respectively). The fair value
of the shares recorded as of September 30, 2019 was $158,695.
Securities available for sale
|
|
Level 1
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
September 30, 2019
|
|
None
|
|
$
|
12,670
|
|
|
$
|
146,025
|
|
|
$
|
158,695
|
|
June 30, 2019
|
|
None
|
|
$
|
9,050
|
|
|
$
|
204,435
|
|
|
$
|
213,485
|
|
NOTE
4 – PROPERTIES AND EQUIPMENT
The
Company did not have any properties or equipment as of September 30, 2019.
NOTE
5 – OTHER CURRENT ASSETS
As
of September 30, 2019, Other Current Assets comprise of $862,237 in escrow deposit with DLP Law Firm as part of the fees for setting
up PHILUX Global Funds and $1,605 loan to American Laser Healthcare, Inc.
NOTE
6 – CURRENT LIABILITIES
Current
Liabilities of the Company consist of the followings as of September 30, 2019 and June 30, 2019.
|
|
Sep 30, 2019
|
|
|
Jun 30, 2019
|
|
Accounts payable
|
|
|
212,985
|
|
|
|
189,152
|
|
Subfund obligations
|
|
|
1,266,634
|
|
|
|
1,266,634
|
|
Accrued expenses
|
|
|
2,511,823
|
|
|
|
2,389,111
|
|
Short-term notes payable (net)
|
|
|
334,700
|
|
|
|
331,700
|
|
Convertible Promissory Notes (net)
|
|
|
286,840
|
|
|
|
273,903
|
|
Due to officers
|
|
|
992,052
|
|
|
|
890,897
|
|
Advances from customers
|
|
|
430,500
|
|
|
|
438,000
|
|
Derivative liabilities
|
|
|
281,320
|
|
|
|
1,307,421
|
|
Total current liabilities
|
|
$
|
6,316,854
|
|
|
$
|
7,086,819
|
|
ACCRUED
EXPENSES: Accrued expenses as of September 30, 2019 consist of $1,335,151 in accrued salaries and $1,176,672 in accrued interest
from short-term notes.
NOTES
PAYABLE (NET): As of September 30, 2019, Notes Payable consist of $334,700 in short-term notes payable and $286,840 in convertible
promissory notes.
ADVANCES
FROM CUSTOMERS:
The
Company recorded $430,500 as Advances from Customers for $288,219 of consulting fees previously received from a client and the
balance in accrued interest. The Company was not able to complete the consulting services due to the client’s inability
to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange
Commission.
SUB-FUND
OBILGATIONS: During the fiscal year ended June 30, 2019, the Company received $800,000 from European Plastic Joint Stock Company
towards the expenses and capitalization for setting up the energy sub-fund and $466,634 from Saigon Pho Palace Joint Stock Company
towards the expenses and capitalization for setting up the real estate sub-fund respectively under the master PHILUX Global Funds.
The Company has recorded these amounts as liabilities until these sub-funds are set up and activated, at which time the sub-fund
participants will receive 49% of the general partners’ portion of ownership in the relevant sub-funds for a total contribution
of $2,000,000 each.
NOTE
7 – DUE TO OFFICERS
Due
to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, unsecured and due
on demand. As of September 30, 2019 and June 30, 2019, the balances were $992,052 and $890,897, respectively.
Officers/Directors
|
|
September 30, 2019
|
|
|
June 30, 2019
|
|
Henry Fahman
|
|
|
328,702
|
|
|
$
|
227,547
|
|
Tam Bui
|
|
|
663,350
|
|
|
$
|
663,350
|
|
Total
|
|
$
|
992,052
|
|
|
$
|
890,897
|
|
NOTE
8 – LOANS AND PROMISSORY NOTES
A.
|
SHORT
TERM NOTES PAYABLE:
|
In
the course of its business, the Company has obtained short-term loans from individuals and institutional investors.
During
the quarter ended September 30, 2019, the Company received a $3,000 loan bearing 8% interest per annum from a shareholder .
As
of September 30, 2019, the Company had $334,700 in short-term notes payable with $1,176,672 accrued and unpaid interest. These
notes bear interest rates ranging from 0% to 36% per annum.
B.
|
CONVERTIBLE
PROMISSORY NOTES OUTSTANDING AS OF SEPTEMBER 30, 2019
|
As
of September 30, 2019, the Company had a net balance of $286,840 in convertible promissory notes. The derivative liabilities associated
with these notes are $281,320 as of September 30, 2019.
The
Company relies on the results a professional, independent valuation firm to record the value of derivative liabilities, discounts,
and change in fair value of derivatives in connection with these convertible notes and warrants, if any, that are related to the
convertible notes.
NOTE
9 – PAYROLL TAX LIABILITIES
The
payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the fiscal year 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
has not resolved the remaining balances with the Internal Revenue Service and the State of California Employment Department as
of September 30, 2019. As of April 05, 2021, the total balance as most recently notified by the Internal Revenue Service is estimated
to be $4,704.
NOTE
10 – BASIC AND DILUTED NET PROFIT (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 period ended September 30, 2019 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE
11 – STOCKHOLDER’S EQUITY
As
of September 30, 2019, the total number of authorized capital stock of the Company was shares with a par value of $0.001 per share,
consisting of 30,500,000,000 shares of voting Common Stock with a par value of $0.001 per share and 500,000,000 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.
TREASURY
STOCK
The
balance of treasury stock as of September 30, 2019 was 484,767 post-split shares valued at $44,170 according to cost method.
COMMON
STOCK
During
the quarter ended September 30, 2019, the Company issued the following amounts of its Common Stock for cash and conversion of
notes:
DATE
|
|
NAME
|
|
AMOUNT OF SHARES
|
|
|
CONSIDERATIONS
|
7/19/19
|
|
ANDREAS HELD
|
|
|
20,000,000
|
|
|
Cash
|
7/25/19
|
|
JSJ INVESTMENTS, INC.
|
|
|
491,458,083
|
|
|
Note conversion
|
8/16/19
|
|
JSJ INVESTMENTS, INC.
|
|
|
212,148,000
|
|
|
Note conversion
|
8/22/19
|
|
JSJ INVESTMENTS, INC.
|
|
|
525,934,781
|
|
|
Note conversion
|
8/29/19
|
|
CROWN BRIDGE PARTNERS LLC
|
|
|
525,000,000
|
|
|
Note conversion
|
9/4/19
|
|
AUCTUS FUND, LLC
|
|
|
224,451,600
|
|
|
Note conversion
|
9/5/19
|
|
ADAR ALEF LLC
|
|
|
599,230,769
|
|
|
Note conversion
|
9/6/19
|
|
JSJ INVESTMENTS, INC.
|
|
|
588,428,714
|
|
|
Note conversion
|
As
of September 30, 2019, there were 13,196,408,755 shares of the Company’s common stock issued and outstanding.
PREFERRED
STOCK
The
Company has filed Certificates of Designation and Amendments to Certificate of Designation with the Nevada Secretary of State
to designate the Company’s authorized Preferred Stock. As of September 30, 2019 the designations of the Company’s
Preferred Stock were as follows:
CLASS
A PREFERRED STOCK
I.
DESIGNATIONS, AMOUNTS AND DIVIDENDS
1.
Class A Series I Cumulative Convertible Redeemable Preferred Stock
A.
Designation: Twenty million (20,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001
per share, are designated as Class A Series I Cumulative Convertible Redeemable Preferred Stock
B.
Number of Shares: The number of shares of Class A Series I Preferred Stock authorized shall be twenty million (20,000,000) shares.
C.
Dividends: Each holder of Class A Series I Preferred Stock is entitled to receive ten percent (10%) non-compounding cumulative
dividends per annum, payable semi-annually.
2.
Class A Series II Cumulative Convertible Redeemable Preferred Stock
A.
Designation. Twenty-five million (25,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value
of $0.001 per share, are designated Class A Series II Cumulative Convertible Redeemable Preferred Stock (the “Class A
Series II Preferred Stock”).
B.
Number of Shares. The number of shares of Class A Series II Preferred Stock authorized shall be twenty-five million (25,000,000)
shares.
C.
Dividends: Each holder of Class A Series II Preferred Stock is entitled to receive eight percent (8%) cumulative dividends per
annum, payable semi-annually.
3.
Class A Series III Cumulative Convertible Redeemable Preferred Stock
A.
Designation. Fifty million (50,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001
per share, are designated as Class A Series III Cumulative Convertible Redeemable Preferred Stock (the “Class A Series
III Preferred Stock”).
B.
Number of Shares. The number of shares of Class A Series III Preferred Stock authorized shall be fifty million (50,000,000) shares.
C.
Dividends: Each holder of Class A Series III Preferred Stock is entitled to receive eight percent (8%) cumulative dividends per
annum, payable semi-annually.
II.
CONVERSION
1.
Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of PHI Group, Inc.
Each
share of the Class A Preferred Stock, either Series I or Series II shall be convertible into the Company’s Common Stock
any time after two years 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, 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.
2.
Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of a subsidiary of PHI Group, Inc.’s.
Alternatively,
each share of the Class A Preferred Stock, either Series I or Series II, may be convertible into Common Stock of a subsidiary
of PHI Group, Inc.’s, to be determined by the Company’s Board of Directors, any time after such subsidiary has become
a fully-reporting publicly traded company for at least three months, at a Variable Conversion Price (as defined herein). The Variable
Conversion Price to be used in connection with the conversion into Common Stock of a subsidiary of PHI Group, Inc.’s shall
mean 50% multiplied by the Market Price (as defined herein), representing a discount rate of 50%, of that Common Stock. “Market
Price” means the average Trading Price for the Common Stock of said subsidiary of PHI Group, Inc.’s 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 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, said subsidiary and Holder
of the Class A Preferred Stock.”
3.
Conversion of Class A Series III Preferred Stock of PHI Group, Inc. into Common Stock of American Pacific Plastics, Inc., a subsidiary
of PHI Group, Inc.’s.
The
entire Class A Series III Preferred Stock of PHI Group, Inc. (i.e. fifty million (50,000,000) shares) may be convertible into
eighty percent (80%) American Pacific Plastics, Inc.’s Common Stock which will have been issued and outstanding immediately
after such conversion or exchange on a pro rata basis.
4.
Conversion Shares.
The
amount of shares of Common Stock of PHI Group, Inc., or alternatively, of a subsidiary of PHI Group, Inc.’s, to be received
by Holder at the time of conversion of Class A Series I or Series II Preferred Stock of PHI Group, Inc. will be based on the following
formula:
|
|
|
Where
|
CS:
|
Common
Shares of PHI Group, Inc.,
|
Amount
of CS =
|
OIP
+ AUD
|
|
|
|
or
alternatively, of a subsidiary of PHI Group, Inc.’s.
|
|
|
|
|
VCP
|
|
|
OIP:
|
Original
Issue Price of Class A Series I or Series II Preferred Stock of PHI Group, Inc.
|
|
|
|
|
AUD:
|
Accrued
and Unpaid Dividends.
|
|
|
|
|
VCP:
|
Variable
Conversion Price of PHI Common Stock or of a subsidiary of PHI Group, Inc.’s as defined above.
|
III.
REDEMPTION RIGHTS
The
Corporation, 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, either Series I, Series II or Series III, 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.
IV.
LIQUIDATION
Upon
the occurrence of a Liquidation Event (as defined below), the holders of Class A Preferred Stock are entitled to receive net assets
on a pro rata basis. As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up,
whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class
of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the
holders of the Class A Preferred Stock receive securities of the surviving corporation having substantially similar rights as
the Class A Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least
a majority of the voting securities of the successor corporation immediately thereafter (the “Permitted Merger”),
unless the holders of the shares of Class A Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially
all, or any material part of, the Corporation’s assets, unless the holders of Class A Preferred Stock elect otherwise.
V.
RANK
All
shares of the Class A Preferred Stock shall rank (i) senior to the Corporation’s Common Stock and any other class or series
of capital stock of the Corporation hereafter created, (ii) pari passu with any class or series of capital stock of the
Corporation hereafter created and specifically ranking, by its terms, on par with the Class A Preferred Stock and (iii) junior
to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the
Class A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
VI.
VOTING RIGHTS
1.
Class A Series I, II and III Preferred Stock of PHI Group, Inc. shall have no voting rights.
VII.
PROTECTION PROVISIONS
So
long as any shares of Class A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the majority
written consent of the holders of Class A Preferred Stock, alter or change the rights, preferences or privileges of the Class
A Preferred Stock so as to affect adversely the holders of Class A Preferred Stock.
VIII.
MISCELLANEOUS
A.
Status of Redeemed Stock: In case any shares of Class A Preferred Stock shall be redeemed or otherwise repurchased or reacquired,
the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock,
and shall no longer be designated as Class A Preferred Stock.
B.
Lost or Stolen Certificates: Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation
of any Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security)
reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for
cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. However, the Corporation shall not
be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificates if the holder of Class A Preferred
Stock contemporaneously requests the Corporation to convert such holder’s Class A Preferred Stock into Common Stock.
C.
Waiver: Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein
and any right of the holders of Class A Preferred granted hereunder may be waived as to all shares of Class A Preferred Stock
(and the holders thereof) upon the majority written consent of the holders of the Class A Preferred Stock.
D.
Notices: Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered
mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile
transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt,
if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed
to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in
the same manner as set forth in this Section.
If
to the Corporation:
PHI
GROUP, INC.
5348
Vegas Drive # 237
Las
Vegas, NV 89108
Telephone:
702-475-5430
Facsimile:
702-472-8556
If
to the holders of Class Preferred Stock, to the address to be listed in the Corporation’s books and Records.
CLASS
B PREFERRED STOCK
Class
B Series I Preferred Stock
A.
Designation: Two hundred thousand shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per
share, are designated as Class B Series I Preferred Stock.
B.
Number of Shares: The number of shares of Class B Series I Preferred Stock authorized will be two hundred thousand shares.
C.
Dividend: None
D.
Voting rights: Except as provided by law, the shares of Class B Series I Preferred Stock shall have the same right to vote or
act on all matters on which the holders of Common Stock have the right to vote or act and the holders of the shares of Class B
Series I shall be entitled to notice of any stockholders’ meeting or action as to such matters on the same basis as the
holders of Common Stock, and the holders of Common Stock and shares of Class B Series I shall vote together or act together thereon
as if a single class on all such matters; provided, in such voting or action each one share of Class B Series I shall be entitled
to one hundred thousand votes.
As
of September 30, 2019, the following amounts of Preferred Stock were issued and outstanding:
Class
A Series II Preferred Stock: 10,000,000 shares.
Class
B Series I Preferred Stock: 120,000 shares.
AMENDMENTS
TO ARTICLES OF INCORPORATION:
On
October 29, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 3,000,000,000
shares with a par value of $0.001 per share, consisting of 2,800,000,000 shares of voting Common Stock with a par value of $0.001
per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with
the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
November 08, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 4,000,000,000
shares with a par value of $0.001 per share, consisting of 3,800,000,000 shares of voting Common Stock with a par value of $0.001
per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with
the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
November 27, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 5,000,000,000
shares with a par value of $0.001 per share, consisting of 4,800,000,000 shares of voting Common Stock with a par value of $0.001
per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with
the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
January 03, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 7,000,000,000
shares with a par value of $0.001 per share, consisting of 6,900,000,000 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 shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
February 19, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to ten
billion shares with a par value of $0.001 per share, consisting of 9.8 billion shares of voting Common Stock with a par value
of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated
with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
February 27, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to fifteen
billion shares with a par value of $0.001 per share, consisting of 14.8 billion shares of voting Common Stock with a par value
of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated
with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
On
March 29, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary
of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to thirty-one
billion shares with a par value of $0.001 per share, consisting of 30.5 billion shares of voting Common Stock with a par value
of $0.001 per share and 500,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated
with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
DOMESTICATION
IN THE STATE OF WYOMING
On
September 20, 2017, the Company applied for a Certificate of Domestication and filed Articles of Domestication with the office
of the Secretary of State of Wyoming to re-domicile the Company’s jurisdiction to the State of Wyoming.
On
September 20, 2017, the Company filed Articles of Amendment with the Wyoming Secretary of State to amend the authorized capital
of the Company as follows:
“The
total number of shares into which the authorized capital stock of the corporation is divided is one billion shares, consisting
of: nine hundred million shares of voting Common Stock with a par value of $0.001 per share; fifty million shares of non-voting
Class A Series I Preferred Stock with a par value of $5.00 per share; twenty-five million shares of non-voting Class A Series
II Preferred Stock with a par value of $5.00 per share; twenty million shares of non-voting Class A Series III Preferred Stock
with a par value of $5.00 per share and five million shares of voting Class A Series IV Preferred Stock with a par value of $5.00
per share. The relative rights, preferences, limitations and restrictions associated with the afore-mentioned shares of Class
A Preferred Stock will be determined by the Board of Directors of the corporation.”
On
June 25, 2020, the Company filed Articles of Amendment with the Wyoming Secretary of State to amend the authorized capital of
the Company as follows:
Total
authorized capital: Forty billion shares of Common Stock with a par value of $0.001 per share and five hundred million shares
of Preferred Stock with a par value of $0.001 per share.
The
rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.
The
Company continued to operate as a Nevada corporation until June 30, 2020.
NOTE
12 – 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 March 31, 2018 the Company has not issued any
stock in lieu of cash under this plan.
On
September 23, 2016, the Company issued incentive stock options and nonqualified stock options to certain key employee(s) (Henry
Fahman – CEO/CFO) and directors (Tam Bui, Henry Fahman, and Frank Hawkins constitute the Board of Directors) as deferred
compensation. The options allow the holders to acquire the Company’s Common Stock at the fair exercise price of the Company’s
Common Stock on the grant date of each option at $0.24 per share, based on the 10-days’ volume-weighted average price prior
to the grant date. The number of options is equal to a total of 6,520,000. The options terminate seven years from the date of
grant and become vested and exercisable after one year from the grant date. The following assumptions were used in the Monte Carlo
analysis by Doty Scott Enterprises, Inc., an independent valuation firm, to determine the fair value of the stock options:
Risk-free interest rate
|
|
|
1.18
|
%
|
Expected life
|
|
|
7 years
|
|
Expected volatility
|
|
|
239.3
|
%
|
Vesting is based on a one-year cliff from grant date.
|
|
|
|
|
Annual
attrition rates were used in the valuation since ongoing employment was condition for vesting the options.
The
fair value of the Company’s Stock Options as of issuance valuation date is as follows:
Holder
|
|
Issue Date
|
|
Maturity
Date
|
|
Stock Options
|
|
|
Exercise Price
|
|
Fair Value at
Issuance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tam Bui
|
|
9/23/2016
|
|
9/23/2023
|
|
|
875,000
|
|
|
Fixed price: $0.24
|
|
$
|
219,464
|
|
Frank Hawkins
|
|
9/23/2016
|
|
9/23/2023
|
|
|
875,000
|
|
|
Fixed price: $0.24
|
|
$
|
219,464
|
|
Henry Fahman
|
|
9/23/2016
|
|
9/23/2023
|
|
|
4,770,000
|
|
|
Fixed price: $0.24
|
|
$
|
1,187,984
|
|
NOTE
13 – RELATED PARTY TRANSACTIONS
The
Company accrued $52,500 in salaries for the President and the Secretary & Treasurer of the Company during the quarters ended
September 30, 2019 and September 30, 2018.
During
the quarter ended September 20, 2019, the Company received $100,000 from Henry Fahman, Chairman and Chief Executive Officer of
the Company, as a short-term loan to be paid on demand without interest.
NOTE
14 – CONTRACTS AND COMMITMENTS
BUSINESS
CONSULANCY AND STRUCTURING AGENCY AGREEMENT TO SET UP INSTITUTIONAL BANK FUNDS IN LUXEMBOURG
On
November 30, 2017, the Company signed an agreement with a structuring agent and legal experts to set up a bank fund in Luxembourg
in order to provide financing for the Company’s and its clients’ projects.
The
Reserved Alternative Investment Fund (RAIF) can be established under the form of common funds (“FCP”), investment
companies with variable capital (“SICAV”) or under the form that does not have to have the legal form of a SICAV or
an FCP. There will be no restriction in terms of eligible assets. RAIFs are free to introduce any kind of assets and financial
instruments in their investment policy. According to the Luxembourg Law of July 12, 2013, RAIFs must entrust their assets to a
Luxembourg custodian bank for safekeeping and must appoint an approved statutory auditor.
One
of the distinctive advantages of RAIF is that it may have various sub-funds, each corresponding to a distinct part of the assets
and liabilities of the RAIF. As such, sub-funds can be established under a RAIF umbrella to target different investment opportunities
in a variety of industries as desired.
On
February 21, 2018, the Company signed an amendment to the Business Consultancy and Structuring Agency Agreement to be solely responsible
for all the costs of Euros 3,500,000 associated with establishing the RAIF. On October 4, 2018, a Payment Agreement was signed
by the structuring agent and the Company calling for an extra amount of Euros 1,500,000 to be paid to the structuring agent by
November 15, 2018. The master Luxembourg RAIF fund named “PHILUX Global Funds SCA, SICAV – RAIF” was registered
and activated with the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) on June 11, 2020, Registration No. B244952.
ACQUISITION
OF 51% EQUITY INTEREST IN VINAFILMS JOINT STOCK COMPANY
On
August 06, 2018, signed a Business Cooperation Agreement with Vinafilms JSC (Công ty Cổ phần Màng Bao
Bì Tân Vinh Nam Phát), a Vietnamese joint stock company, with principal business address at Lot G9, Road No.
9, Tan Do Industrial Zone, Duc Hoa Ha Village, Duc Hoa District, Long An Province, Vietnam, hereinafter referred to as “VNF”
and its majority shareholder, to exchange fifty-one percent ownership in VNF for Preferred Stock of PHI. According to the Agreement,
PHI will be responsible for filing a S-1 Registration Statement with the Securities and Exchange Commission for American Pacific
Plastics, Inc., a subsidiary of PHI that holds the 51% equity ownership in VNF, to become a fully-reporting public company in
the U.S. Stock Market.
On
September 20, 2018, a Stock Swap Agreement was signed by and between Ms. Do Thi Nghieu, the majority shareholder holding 76% of
ownership in VNF, and PHI to exchange 3,060,000 shares of ordinary stock of VNF owned by Ms. Do Thi Nghieu for 50 million shares
of Class A Series III Cumulative, Convertible, Redeemable Preferred Stock of PHI. Though this transaction was technically closed
on September 28, 2018, the Company did not recognize the operations of Vinafilms JSC in its consolidated financial statements
as of September 30, 2019 and will not do so until a GAAP audit of Vinafilms JSC financial statements are conducted and completed
by a PCAOB-registered auditing firm.
NOTE
15 – GOING CONCERN UNCERTAINTY
As
shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $42,159,225 as of September
30, 2019 and total stockholders’ deficit of $5,213,365. For the quarter ended September 30, 2019, the Company incurred a
net loss of $353,432 as compared to a net loss in the amount of $917,683 during the same period ended September 30, 2018. 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, 2021 and
beyond.
NOTE
16 – SUBSEQUENT EVENT
These
financial statements were approved by management and available for issuance on or about April 9, 2021. Subsequent events have
been evaluated through this date.
1.
ISSUANCE OF COMMON STOCK.
The
Company has issued the following amounts of Common Stock since the end of the quarter ended September 30, 2019:
SHARES
ISSUED FROM OCTOBER 01, 2019 THROUGH APRIL 09, 2021
DATE
|
|
NAME
|
|
AMOUNT OF SHARES
|
|
|
CONSIDERATIONS
|
5/14/20
|
|
ANDREAS HELD
|
|
|
16,000,000
|
|
|
Cash
|
6/10/20
|
|
ANDREAS HELD
|
|
|
20,000,000
|
|
|
Cash
|
8/7/20
|
|
ONE44 CAPITAL LLC
|
|
|
239,611,455
|
|
|
Note conversion
|
12/2/20
|
|
ADAR ALEF LLC
|
|
|
318,050,962
|
|
|
Note conversion
|
12/3/20
|
|
ONE44 CAPITAL LLC
|
|
|
154,538,182
|
|
|
Note conversion
|
12/15/20
|
|
ONE44 CAPITAL LLC
|
|
|
163,666,182
|
|
|
Note conversion
|
12/22/20
|
|
JSJ INVESTMENTS, INC.
|
|
|
100,000,000
|
|
|
Note conversion
|
12/24/20
|
|
ONE44 CAPITAL LLC
|
|
|
155,732,187
|
|
|
Note conversion
|
12/30/20
|
|
JSJ INVESTMENTS, INC.
|
|
|
100,000,000
|
|
|
Note conversion
|
1/4/21
|
|
ONE44 CAPITAL LLC
|
|
|
170,025,603
|
|
|
Note conversion
|
1/8/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
100,000,000
|
|
|
Note conversion
|
1/8/21
|
|
EMA FINANCIAL LLC
|
|
|
200,000,000
|
|
|
Note conversion
|
1/12/21
|
|
ONE44 CAPITAL LLC
|
|
|
200,308,909
|
|
|
Note conversion
|
1/15/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
100,000,000
|
|
|
Note conversion
|
1/21/21
|
|
EMA FINANCIAL LLC
|
|
|
250,000,000
|
|
|
Note conversion
|
1/22/21
|
|
ONE44 CAPITAL LLC
|
|
|
323,442,182
|
|
|
Note conversion
|
1/25/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
100,000,000
|
|
|
Note conversion
|
1/26/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
200,000,000
|
|
|
Note conversion
|
2/3/21
|
|
ONE44 CAPITAL LLC
|
|
|
246,027,364
|
|
|
Note conversion
|
2/9/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
571,064,466
|
|
|
Note conversion
|
2/9/21
|
|
CROWN BRIDGE PARTNERS LLC
|
|
|
216,393,200
|
|
|
Note conversion
|
2/9/21
|
|
CROWN BRIDGE PARTNERS LLC
|
|
|
238,365,100
|
|
|
Note conversion
|
2/22/21
|
|
EMA FINANCIAL LLC
|
|
|
200,000,000
|
|
|
Note conversion
|
2/23/21
|
|
EMA FINANCIAL LLC
|
|
|
650,000,000
|
|
|
Note conversion
|
2/24/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
135,896,680
|
|
|
Note conversion
|
2/26/21
|
|
EMA FINANCIAL LLC
|
|
|
850,000,000
|
|
|
Note conversion
|
3/04/21
|
|
EMA FINANCIAL LLC
|
|
|
800,000,000
|
|
|
Note conversion
|
3/11/21
|
|
EMA FINANCIAL LLC
|
|
|
900,000,000
|
|
|
Note conversion
|
3/17/21
|
|
EMA FINANCIAL LLC
|
|
|
624,233,000
|
|
|
Note conversion
|
3/19/21
|
|
JSJ INVESTMENTS, INC.
|
|
|
3,417,442
|
|
|
Note conversion
|
3/22/21
|
|
LG CAPITAL FUNDING, LLC.
|
|
|
952,056,400
|
|
|
Note conversion
|
3/31/21
|
|
EMA FINANCIAL LLC
|
|
|
750,000,000
|
|
|
Note conversion
|
4/07/21
|
|
EMA FINANCIAL LLC
|
|
|
750,000,000
|
|
|
Note conversion
|
2.
ESTABLISHMENT AND ACTIVATION OF PHILUX GLOBAL FUNDS SCA, SICAV-RAIF
On
June 11, 2020, the Company received the approval from the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) and
successfully established and activated PHILUX GLOBAL FUNDS SCA, SICAV-RAIF (the “Fund”), Registration No. B244952,
a Luxembourg bank fund organized as a Reserved Alternative Investment Fund in accordance with the Luxembourg Law of July 23, 2016
relative to reserved alternative investment funds, Law of August 23, 2016 relative to commercial companies, and Modified Law of
July 12, 2013 relative to alternative investment fund managers.
The
following entities have been engaged to support the Fund’s operations: a) Custodian Bank: Hauck & Aufhauser Privatbankiers
AG, b) Administrative Registrar & Transfer Agent: Hauck & Aufhauser Alternative Investment Services S.A., c) Fund Manager:
Hauck & Aufhauser Fund Services S.A., d) Fund Attorneys: DLP Law Firm SARL and VCI Legal, e) Investment Advisor: PHILUX Capital
Advisors, Inc., f) Fund Auditors: E&Y Luxembourg and E&Y Vietnam, g) Fund Tax Advisor: ATOZ Tax Management, Luxembourg,
h) Fund Independent Asset Valuator: Cushman & Wakefield, Vietnam.
The
Fund is an umbrella fund containing one or more sub-fund compartments intended to invest in real estate, renewable energy, agriculture,
healthcare and especially the Asia Diamond Exchange and the International Financial Center in Vietnam.
3.
DEVELOPMENT OF THE ASIA DIAMOND EXCHANGE IN VIETNAM
Along
with the establishment of PHILUX Global Funds, since March 2018 the Company has worked closely with the Authority of Chu Lai Open
Economic Zone and the Provincial Government of Quang Nam, Vietnam to develop the Asia Diamond Exchange. Quang Nam Provincial Government
has agreed to allocate more than 200 hectares in the sanctioned Free-Trade Zone near Chu Lai Airport, Nui Thanh District, Quang
Nam Province in Central Vietnam for us to set up a multi-commodities center which would include the Asia Diamond Exchange. Recently,
another opportunity has arisen with the start of construction of the new international airport in Long Thanh District, Dong Nai
Province near Ho Chi Minh City in Southern Vietnam. In December 2020, the Vietnamese central government designated 1,200 hectares
of land in Bau Can village, Long Thanh District, Dong Nai Province as a new industrial zone. We are in the process of applying
for 600 hectares close to the Long Thanh International Airport to develop Long Thanh Multi-Commodities Logistics Center (LMLC)
which would house the proposed International Financial Center, an Urban Area and other hi-tech industrial operations.
4.
AGREEMENTS
A.
CONSULTING SERVICE AGREEMENT WITH GLINK APPS JSC
On
December 23, 2019, PHI Capital Holdings, Inc., a subsidiary of the Company, (name changed to PHILUX Capital Advisors, Inc. effective
June 03, 2020) signed a Consulting Service Agreement to provide consulting service to Glink Apps JSC, a Wyoming corporation, and
assist the latter to become a publicly traded company in the U.S. According to the agreement, Glink Apps JSC will pay PHI Capital
Holdings, Inc. $88,500 in cash and five million (5,000,000) shares of its common stock for the consulting service to be rendered.
B.
BUSINESS COOPERATION AGREEMENT WITH NATURAL WELL TECHNICAL LTD.
On
April 27, 2020, the Company signed a Business Cooperation Agreement with Natural Well Technical Ltd. (“NWTL”), a company
organized and existing under the laws of Republic of China and engaged in research and development of innovative biotechnologies
that may have significant applications for healthcare, beauty supply, agriculture and industry.
NWTL
and the Company agree to jointly cooperate in the research and development activities of pertinent technologies that have been
initiated and continue to be carried out by NWTL and applying them to produce commercial products and services in the fields of
healthcare, beauty supply, agriculture and industry, as the case may be, as well as any other business activities deemed mutually
beneficial.
In
particular, NWTL and the Company will initially focus on the following activities:
a.
Developing and implementing a comprehensive plan to increase the production, marketing and sale of the “Super Green”
High Energy Drop Drink and “Mistyrious” Fine Mist Spray products on a large scale worldwide;
b.
Developing and implementing a plan to increase the production, marketing and sale of “Super Cassava” and “Uni-Wash”
Engine Booster products as well as other products related to the fields of agriculture and energy that have been studied and developed
by NWTL;
c.
Continuing to conduct research and accumulate clinical data for NWTL’s biotechnologies in order to obtain U.S. FDA’s
approval of cancer treatments and other healthcare products. In addition, both parties also develop, produce and market beauty
supply products.
d.
Designing a financial plan and providing the required funding for NWTL to execute its business plan.
C.
INVESTMENT ADVISORY AGREEMENT AMONG PHILUX CAPITAL ADVISORS, INC., HAUCK & AUFHAUSER FUND SERVICES S.A. AND PHILUX GLOBAL
FUNDS SCA, SICAV-RAIF
On
June 11, 2020, PHILUX CAPITAL ADVISORS, INC. (the “Investment Advisor”) signed an Investment Advisory Agreement among
Hauck & Aufhauser Fund Services S.A.(the “AIFM”) and PHILUX Global Funds SCA, SICAV-RAIF an umbrella-fund composed
of one or more sub-funds (the “Fund”) to serve as the Investment Advisor for PHILUX Global Funds. According to the
Agreement, the Investment Advisor will cooperate in the definition of the investment strategy and its implementation in an advisory
capacity, develop proposals for specific investment policy of the Fund, advise and support the AIFM in the selection of the investments
and to make investment recommendations, carry out due diligence process, present suitable investments selected in consideration
of the investment policy and investment restrictions of the Fund, provide support in the conclusion of purchase and sale transactions,
observe and analyze relevant markets and potential investments, provide advice and support to the AIFM and give recommendations
in the event of a sale of investments, support investors of the Fund in onboarding management, granting information on Fund-relevant
issues, as well as channeling and answering all investor questions, support the AIFM in its performance of risk control and with
the completion of subscription agreements. The Investment Advisor shall receive from the General Partner of the Fund a remuneration
as stated in the fees annex to the Investment Advisory Agreement.
D.
AGREEMENT WITH TECCO GROUP FOR PARTICIPATION IN PHILUX INFRASTRUCTURE FUND COMPARTMENT OF PHILUX GLOBAL FUNDS
On
August 10, 2020, Tecco Group, a Vietnamese company, signed an agreement with PHI Luxembourg Development SA, a subsidiary of the
Company, to participate in the proposed infrastructure fund compartment of PHILUX Global Funds SCA, SICAV-RAIF. According to the
agreement, Tecco Group will contribute $2,000,000 for 49% ownership of the general partners’ portion of said infrastructure
fund compartment. As of April 05, 2021, Tecco Group has paid four billion Vietnam Dong (VND) towards the total agreed amount.
E.
AGREEMENT WITH PHAT VAN HUNG CO. LTD. FOR PARTICIPATION IN PHILUX REAL ESTATE FUND COMPARTMENT OF PHILUX GLOBAL FUNDS
On
November 09, 2020, Phat Van Hung Co. Ltd. signed an agreement with PHI Luxembourg Development SA, a subsidiary of the Company,
to participate in the real estate fund compartment of PHILUX Global Funds SCA, SICAV-RAIF. According to the agreement, Phat Van
Hung Co. Ltd. will contribute $2,000,000 for 49% ownership of the general partners’ portion of said real estate fund compartment.
As of April 05, 2021, Phat Van Hung has not made any payment towards the agreed amount.
F.
AGREEMENT WITH XUAN QUYNH LLC FOR PARTICIPATION IN PHILUX INFRASTRUCTURE FUND COMPARTMENT OF PHILUX GLOBAL FUNDS
On
November 20, 2020, Xuan Quynh LLC, a Vietnamese company, signed an agreement with PHI Luxembourg Development SA, a subsidiary
of the Company, to participate in the proposed infrastructure fund compartment of PHILUX Global Funds SCA, SICAV-RAIF. According
to the agreement, Xuan Quynh LLC will contribute $2,000,000 for 49% ownership of the general partners’ portion said infrastructure
fund compartment. As of April 05, 2021, Xuan Quynh LLC has not made any payment towards the agreed amount.
G.
INVESTMENT AGREEMENTS AND MEMORANDUM OF UNDERSTANDING
From
August 24, 2020 to November 11, 2020, the Company through its Luxembourg bank fund mother holding company PHI Luxembourg Development
SA and PHILUX Global Funds SCA, SICAV-RAIF has signed investment agreements and memorandum of understanding with three non-US
entities for total investments of more than one billion U.S. dollars. However, as of the date of this report, the Company has
not received any money from these investment agreements and there is no guarantee that any money will be received from these agreements
and memorandum of understanding in the future.