ITEM
1- CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
PHI
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
UNAUDITED
The
accompanying notes form an integral part of these audited consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF OPERATIONS
UNAUDITED
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 NINE MONTHS ENDED MARCH 31, 2022 AND 2021
(UNAUDITED)
The
accompanying notes form an integral part of these consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE NINE MONTHS ENDED MARCH 31, 2022 (UNAUDITED)
The
accompanying notes form an integral part of these consolidated financial statements.
PHI
GROUP, INC. AND SUBSIDIARIES
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 mergers and acquisitions,
running PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund” (“RAIF”) under the laws
of Luxembourg, and establishing the Asia Diamond Exchange in Vietnam. The Company also engages in merger and acquisition activity as
a principal and provides advisory and consulting services to client companies through our wholly owned subsidiary PHILUX Capital Advisors,
Inc. In addition, the Company invests in selective industries and special situations aiming to potentially create significant long-term
value for our shareholders. PHILUX Global Funds intends to include a number of sub-funds for investment in real estate, renewable energy,
infrastructure, agriculture, healthcare and the Asia Diamond Exchange in Vietnam. Recently, the Company has listed CO2-1-0 (CARBON) CORP.
( www.CO2-1-0.io) on Digifinex Digital Assets Exchange (www.DigiFinex.com) for carbon emission mitigation using blockchain
and crypto technologies and has signed agreements to acquire majority interests in Kota Construction LLC and Kota Energy Group LLC which
are engaged in solar energy business (https://www.kotasolar.com). At the present, the Company is in the process of amending the
Purchase and Sale Agreement signed with Five-Grain Treasure Spirits Co., Ltd., a Chinese baiju distiller, on January 18, 2022 to cooperate
in launching American-made baiju products through Empire Spirits, Inc., a subsidiary of PHI Group, Inc. .
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. In February 2000, the Company
then changed its name to Providential Holdings, Inc. 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 mainly focused on acquisition
and development opportunities in energy and natural resource businesses.
The
Company is currently focused on PHILUX Global Funds, SCA, SICAV-RAIF and in the process of launching a number of sub-funds for investment
in real estate, renewable energy, infrastructure, agriculture and healthcare. At the same time, the Company has been working on the establishment
of 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 U.S. and international companies. Recently, the Company has signed Purchase and Sale Agreements to acquire
fifty-point one percent ownership in Kota Construction LLC, a California limited liability company, and fifty-point one percent ownership
in Kota Energy Group LLC, a California limited liability company, both of which engage in solar energy business. The Company has also
signed an agreement to acquire seventy percent ownership in Five-Grain Treasure Spirits Company, Ltd., a baiju distiller in Jilin Province,
China, and is in the process of amending this agreement to cooperate with Five-Grain to manufacture new baiju products in the U.S. through
Empire Spirits, Inc. a subsidiary of PHI Group. The Company has listed CO2-1-0 (Carbon) Corp., a subsidiary engaged in carbon emission
mitigation using blockchain and crypto technologies (www.co2-1-0.io) on DigiFinex Digital Assets Exchange (www.digifinex.com).
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. and its wholly owned subsidiaries: (1) Vinafilms International,
Inc. (formerly American Pacific Plastics, Inc.), a Wyoming corporation (100%), (2) American Pacific Resources, Inc., a Wyoming corporation
(100%), (3) PHILUX Capital Advisors, Inc., a Wyoming corporation (100%), (4) PHI Luxembourg Development S.A., a Luxembourg corporation
(100%), (5) PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg Reserved Alternative Investment Fund (100%), (6) PHILUX Global General
Partners SA, a Luxembourg corporation (), (7) PHI Luxembourg Holding SA, a Luxembourg corporation (100%), (8) Asia Diamond Exchange,
Inc., a Wyoming corporation (100%), and (9) CO2-1-0 (Carbon) Corp. (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, 2021. 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 and nine months ended March 31, 2022 are not necessarily
indicative of the results to be expected for the fiscal year ending June 30, 2022.
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 March 31, 2022, the marketable securities were recorded at $4,088,905 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. On March 31, 2022, 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 March 31, 2022, 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
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06-Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting
For Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments
by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as
a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify
for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual
and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15,
2020. The Company intends to adopt ASU 2020-06 for the fiscal year ending June 30, 2022.
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 non-public 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 non-public 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 March 31, 2022 consisted of 91 post-split 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 March 31, 2022 was $4,088,905.
SCHEDULE OF FAIR VALUE OF INVESTMENTS MARKETABLE EQUITY SECURITIES
| Securities available for sale | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| March 31, 2022 | |
| None | | |
$ | 205 | | |
$ | 4,088,700 | | |
$ | 4,088,905 | |
| June 30, 2021 | |
| None | | |
$ | 5,792 | | |
$ | 379,665 | | |
$ | 385,457 | |
NOTE
4 – PROPERTIES AND EQUIPMENT
The
Company did not have any properties or equipment as of March 31, 2022.
NOTE
5 – OTHER ASSETS
Other
Assets comprise of the following as of March 31, 2022 and June 30, 2021
SCHEDULE
OF OTHER ASSETS
| | |
March 31, 22 | | |
June 30, 21 | |
| Investment in Asia Diamond Exchange, Inc. | |
$ | 909,225 | | |
$ | 406,427 | |
| Investment in PHILUX Global Funds, SCA, SICAV-RAIF | |
$ | 33,222 | | |
$ | 35,568 | |
| Investment in AQuarius Power, Inc. | |
$ | 5,000 | | |
$ | 5,000 | |
| Total Other Assets | |
$ | 947,447 | | |
$ | 446,995 | |
Other
Assets as of March 31, 2022 consist of a $5,000 investment in AQuarius Power, Inc., a Texas renewable energy technology company, $909,225
in Asia Diamond Exchange, Inc. and $33,222 in PHILUX Global Funds.
For
the investment in PHILUX Global Funds, as of March 31, 2022, PHI Luxembourg Development SA, a Luxembourg corporation and wholly-owned
subsidiary of PHI Group, Inc. held twenty-eight ordinary shares of PHILUX Global Funds valued at EUR 28,000, PHI Luxembourg Holding SA,
a Luxembourg corporation 100% owned by PHI Group, Inc. as the ultimate beneficiary owner (UBO), held one participating share of PHILUX
Global Funds valued at EUR 1,000, and PHILUX Global General Partner SA, a Luxembourg corporation 100% owned by PHI Group, Inc. as the
ultimate beneficiary owner (UBO), held one management share of PHILUX Global Funds valued at EUR 1,000. The total holdings in PHILUX
Global Funds were equivalent to $33,222 as of March 31, 2022 based on the prevalent exchange rate at that time.
NOTE
6 – CURRENT LIABILITIES
Current
Liabilities of the Company consist of the followings as of March 31, 2022 and June 30, 2021.
SCHEDULE
OF CURRENT LIABILITIES
| Current Liabilities | |
March 31, 2022 | | |
June 30, 2021 | |
| | |
| | |
| |
| Accounts payable | |
| 540,358 | | |
| 608,521 | |
| Sub-fund obligations | |
| 1,474,775 | | |
| 1,474,775 | |
| Accrued expenses | |
| 849,754 | | |
| 1,993,478 | |
| Short-term loans and notes | |
| 470,075 | | |
| 325,621 | |
| Convertible promissory notes | |
| 957,500 | | |
| 220,230 | |
| Due to officers | |
| 1,079,916 | | |
| 1,720,322 | |
| Advance from customers | |
| 532,237 | | |
| 582,238 | |
| Derivative liabilities | |
| 334,840 | | |
| - | |
| Total Current Liabilities | |
$ | 6,239,456 | | |
$ | 6,925,185 | |
ACCOUNTS
PAYABLE: As of March 31, 2022, the Company’s owed a total of $540,358 in accounts payable in connection with legal fees, rent expenses,
travel expenses, transfer agent fees, investor relations, and other professional services.
SUB-FUND
OBLIGATIONS: The Company has recorded a total payment of $1,474,775 from certain partners towards the expenses and capitalization for
setting up sub-funds under the master PHILUX Global Funds. This amount is currently recognized as liabilities of the Company until these
sub-funds are set up and activated, at which time the sub-fund participants will receive their respective percentages of shares in the
general partners’ portion of ownership in the relevant sub-funds based on their actual total contributions at that time. This amount
represents total payments so far by these partners that have agreed to participate in PHILUX Global Funds but have not fulfilled their
total capital contribution commitments.
ACCRUED
EXPENSES: Accrued expenses as of March 31, 2022 totaling $849,754 consist of $583,842 in accrued salaries and payroll liabilities and
$265,912 in accrued interest.
SHORT-TERM
LOANS NOTES PAYABLE: As of March 31, 2022, Short-term Loans and Notes Payable totaling $470,075 consist of $246,421 in short-term notes,
$43,750 in PPP loan and $179,904 in short-term loans.
CONVERTIBLE
PROMISSORY NOTES: As of March 31, 2022, the Company had a net balance of $957,500 from convertible promissory notes with total accrued
interest of $34,591.
DUE
TO OFFICERS: Due to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, without
interest, unsecured and due on demand. As of March 31, 2022 and June 30, 2021, the balances were $1,079,916 and $1,720,322, respectively.
SCHEDULE OF COMPONENTS OF DUE TO OFFICERS AND DIRECTORS
| Officers/Directors | |
March 31, 2022 | | |
June 30, 2021 | |
| Henry Fahman | |
| 416,566 | | |
$ | 1,056,972 | |
| Tam Bui | |
| 663,350 | | |
$ | 663,350 | |
| Total | |
$ | 1,079,916 | | |
$ | 1,720,322 | |
ADVANCES
FROM CUSTOMERS:
As
of March 31, 2022, the Company recorded $532,237 as Advances from Customers for consulting fees previously received from a client plus
mutually agreed 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.
DERIVATIVE
LIABILITIES: The Company relies on the results of a professional, independent valuation firm to
record the value of derivative liabilities, discounts, and change in fair value of derivatives in connection with the convertible notes
mentioned above and their warrants, if any, that are related to the convertible notes.
As
of March 31, 2022, the Company recorded $248,614 in derivative liabilities related to outstanding convertible promissory notes and $86,226
in derivatives liabilities related to outstanding warrants.
NOTE
7 – PAYROLL TAX LIABILITIES
As
of March 31, 2022, payroll tax liabilities were $5,747.
NOTE
8 – 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 March 31,
2022 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE
9 - 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 Article 10 of the Articles of Domestication
to authorize Forty Billion (40,000,000,000) shares of Common Stock with a par value of $0.001 per share and Five Hundred Million (500,000,000)
shares of Preferred Stock with a par value of $0.001 per share and to designate Classes A and B and the Series of those classes of Preferred
Stock as following:
I.
CLASS A PREFERRED STOCK
A.
DESIGNATIONS, AMOUNTS AND DIVIDENDS
1.
Class A Series I 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 I Cumulative Convertible Redeemable Preferred Stock
b.
Number of Shares: The number of shares of Class A Series I Preferred Stock authorized shall be fifty million (50,000,000) 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. Two hundred million (200,000,000) 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 two hundred million (200,000,000) 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.
4.
Class A Series IV Cumulative Convertible Redeemable Preferred Stock
a.
Designation. One hundred ninety-nine million (199,000,000) 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 IV Cumulative Convertible Redeemable Preferred Stock (the “Class
A Series IV Preferred Stock”).
b.
Number of Shares. The number of shares of Class A Series III Preferred Stock authorized shall be one hundred ninety-nine million (199,000,000)
shares.
c.
Dividends: To be determined by the Corporation’s Board of Directors.
B.
CONVERSION
1.
Conversion of Series I, Series II and/or Series IV Class A Preferred Stock into Common Stock of PHI Group, Inc.
Each
share of the Class A Preferred Stock, either Series I, Series II or Series IV 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, Series II and/or Series IV 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, Series II and/or Series IV 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. |
C.
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, Series III or Series IV 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.
D.
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.
E.
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.
F.
VOTING RIGHTS
1.
Class A Series I, II, III and IV Preferred Stock of PHI Group, Inc. shall have no voting rights.
G.
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.
H.
MISCELLANEOUS
1.
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.
2.
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.
3.
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.
4.
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.
30
N Gould Street, Suite R
Sheridan,
WY 82801
Facsimile:
702-472-8556
Email:
info@phiglobal.com
If
to the holders of Class Preferred Stock, to the address to be listed in the Corporation’s books and Records.
II.
CLASS B PREFERRED STOCK
1.
Class B Series I Preferred Stock
a.
Designation: One million (1,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per share,
are designated as Class B Series I Preferred Stock.
b.
Number of Shares: The number of shares of Class B Series I Preferred Stock authorized will be one million (1,000,000) 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 (100,000)
votes.
NOTE
10 – STOCKHOLDER’S EQUITY
As
of March 31, 2022, the total number of authorized capital stock of the Company consisted of 60 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 Preferred Stock will be determined by the Board of Directors of the Company.
TREASURY
STOCK
The
balance of treasury stock as of March 31, 2022 was 484,767 post-split shares valued at $44,170 according to cost method.
COMMON
STOCK
During
the quarter ended March 31, 2022, the Company issued a total of 1,103,453,135 shares of its Common Stock for the following purposes:
827,958,704 shares to three holders of convertible promissory notes for conversions of debts, 220,476,431 shares to two noteholders for
exercise of warrants and 55,000,000 shares to two officers of the Company for conversion of accrued and unpaid salaries.
As
of March 31, 2022, there were 29,877,933,513 shares of the Company’s Common Stock issued and outstanding.
PREFERRED
STOCK
CLASS
B SERIES I PREFERRED STOCK
As
of March 31, 2022, there were 600,000 shares Class B Series I Preferred Stock issued and outstanding.
NOTE
11 – STOCK-BASED COMPENSATION PLAN
1.
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, 2022 the Company has not issued any stock in lieu of
cash under this plan.
2.
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:
SCHEDULE OF FAIR VALUE OF STOCK OPTION ASSUMPTIONS
| 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:
SCHEDULE OF FAIR VALUE OF STOCK OPTION ISSUANCE DATE
| 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 | |
3.
On September 9, 2021, the Company adopted the PHI Group 2021 Employee Benefit Plan and set aside 2,600,000,000 shares of its common stock
to provide a means of non-cash remuneration to selected eligible employees and independent contractors (“Eligible Participants”)
of the Company and its subsidiaries. On September 17, 2021, the Company filed Form S-8 Registration Statement under the Securities Act
of 1933 with the Securities and Exchange Commission to register these shares for the above-mentioned plan. As of March 31, 2022 the Company
has issued a total of 2,407,196,586 shares under the PHI Group 2021 Employee Benefit Plan for consulting service and payments to employees.
NOTE
12 – RELATED PARTY TRANSACTIONS
The
Company recognized a total of $90,000 in salaries for the President, the Chief Operating Officer and the Secretary & Treasurer of
the Company during the quarter ended March 31, 2022.
Henry
Fahman, Chairman and Chief Executive Officer, and Tam Bui, a member of the Board of Directors and Chief Operating Officer, of the Company
from time to time lend money to the Company. These loans are without interest and payable upon demand.
As
of March 31, 2022, the Company still owed the following amounts to Related Parties:
SCHEDULE OF RELATED PARTIES
| No. | |
Name: | |
Title: | | |
Amount: | | |
Description: |
| | |
| |
| | |
| | |
|
| 1) | |
Tam Bui | |
Director/COO | | |
$ | 150,000 | | |
Accrued salaries |
| | |
| |
| | |
$ | 663,350 | | |
Loans |
| | |
| |
| | |
| | | |
|
| 2) | |
Henry Fahman | |
Chairman/CEO | | |
$ | 71,796 | | |
Accrued salaries |
| | |
| |
| | |
$ | 416,566 | | |
Loans |
| | |
| |
| | |
| | | |
|
| 3) | |
Tina Phan | |
Secretary/Treasurer | | |
$ | 233,799 | | |
Accrued salaries |
NOTE
13 – CONTRACTS AND COMMITMENTS
1.
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 March 31, 2022. However,
it intends to combine Vinafilms’ operating results when GAAP audits of Vinafilms JSC financial statements are conducted and completed
by a PCAOB-registered auditing firm.
2.
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 March 31, 2022, Tecco Group has paid four billion Vietnam Dong (USD 156,366 net) towards the total agreed amount.
3.
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 March 31, 2022, the Company
has given notice to terminate this agreement with Phat Van Hung Co. due to non-performance.
4.
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 March 31, 2022, the Company has given notice to terminate this agreement with Xuan Quynh LLC due to non-performance.
5.
INVESTMENT AGREEMENTS AND MEMORANDUM OF UNDERSTANDING
In
late 2020, the Company has signed investment agreements and memorandum of understanding with three non-US entities for total investments
of more than one billion U.S. dollars. The Company is still actively working towards the potential closing of a $350 million financing
program with one of the interested investors. 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 it will be successful in obtaining funds from these transactions in the future.
6.
ISSUANCE OF CONVERTIBLE PROMISSORY NOTES
During
the quarter ended March 31, 2022, the Company has issued the following convertible notes:
a.
On 1/24/2022, the Company issued a Promissory Note to Sixth Street Lending Group, Ltd., a Virginia corporation, in the amount of $53,750
at an interest rate of 8% per annum. This note will mature twelve months from the Issue Date and may be convertible into shares of common
stock of the Company at a 39% discount to the average of the two lowest closing bid prices during the ten trading days immediately prior
to the conversion date or may be prepaid on or prior to the 180th calendar day after the Issue Date at a Prepayment Factor
of 125% to 139% depending on the passage of time from the date of issuance to the date of payment. The Company plans to prepay this note
in cash prior to the 180th calendar day after the Issue Date.
b.
On 2/11/2022, the Company issued a Promissory Note to Sixth Street Lending Group, Ltd., a Virginia corporation, in the amount of $43,750
at an interest rate of 8% per annum. This note will mature twelve months from the Issue Date and may be convertible into shares of common
stock of the Company at a 39% discount to the average of the two lowest closing bid prices during the ten trading days immediately prior
to the conversion date or may be prepaid on or prior to the 180th calendar day after the Issue Date at a Prepayment Factor
of 125% to 139% depending on the passage of time from the date of issuance to the date of payment. The Company plans to prepay this note
in cash prior to the 180th calendar day after the Issue Date.
c.
On 3/1/2022, the Company issued a Convertible Promissory Note to Mast Hill Fund LLC, a Delaware limited liability company, in the amount
of $177,500 at an interest rate of 12% per annum. This note will mature twelve months from the Issue Date and may be convertible into
shares of common stock of the Company at a fixed conversion price of $0.0015 per share or may be prepaid at any time prior to the date
that an Event of Default occurs under this Note in a cash amount equal to the sum of (i) 100% multiplied by the principal amount then
outstanding plus (ii) accrued and unpaid interest on the principal amount to the prepayment date, plus (iii) $750.00 reimbursement for
administrative fees. The Company plans to prepay this note in cash prior to the 180th calendar day after the Issue Date.
d.
On 3/4/2022, the Company issued a Promissory Note to Sixth Street Lending Group, Ltd., a Virginia corporation, in the amount of $43,750
at an interest rate of 8% per annum. This note will mature twelve months from the Issue Date and may be convertible into shares of common
stock of the Company at a 39% discount to the average of the two lowest closing bid prices during the ten trading days immediately prior
to the conversion date or may be prepaid on or prior to the 180th calendar day after the Issue Date at a Prepayment Factor
of 125% to 139% depending on the passage of time from the date of issuance to the date of payment. The Company plans to prepay this note
in cash prior to the 180th calendar day after the Issue Date.
7.
DEVELOPMENT OF THE MULTI-COMMODITIES CENTER, ASIA DIAMOND EXCHANGE AND LOGISTICS CENTER 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
in principle 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.
On
June 04, 2021 the Company incorporated Asia Diamond Exchange, Inc., a Wyoming corporation, ID number 2021-001010234, as the holding company
for the development of the Asia Diamond Exchange in Vietnam.
In
July 2021, the Company conducted an online meeting with the Chairman of Quang Nam Province, the Authority of Chu Lai Open Economic Zone
and the heads of various Provincial Departments to update and plan for the implementation of the Asia Diamond Exchange.
In
addition, 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 approximately
2,600 hectares of land in Bau Can and Tan Hiep Villages, Long Thanh District, Dong Nai Province as a new industrial zone. The Company
has submitted a request for additional land close to the new Long Thanh International Airport to develop the Long Thanh Multi-Commodities
Logistics Center (LMLC) together with the Industrial Zone and is currently working with the Dong Nai Provincial People’s Committee
and the relevant ministries of the Vietnamese central government on this project.
8.
TERMINATION OF INVESTMENT AGREEMENT
On
March 6, 2017, PHI Group, Inc., a Nevada corporation (the “Company”) and Azure Capital, a Massachusetts Corporation (the
“Investor”) entered into an Investment Agreement (the “Investment Agreement”) and a Registration Rights Agreement
(the “Registration Rights Agreement”), each dated March 6, 2017 between the Company and the Investor.
Pursuant
to the Investment Agreement, the Investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth
of the Company’s common stock, over a period of 36 months from the effectiveness of the registration statement registering the
resale of shares purchased by the Investor pursuant to the Investment Agreement. The Company agreed to initially reserve 20,000,000 shares
of its Common Stock for issuance to the Investor pursuant to the Investment Agreement. In the event the Company cannot register a sufficient
number of shares of its Common Stock for issuance pursuant to the Investment Agreement, the Company will use its best efforts to authorize
and reserve for issuance the number of shares required for the Company to perform its obligations in connection with the Investment Agreement
as soon as reasonably practical.
This
Investment Agreement was amended on August 3, 2017 to allow for the reservation of 65,445,000 shares of the Company’s Common Stock
for issuance to the Investor pursuant to the corrected Investment Agreement.
The
Company had filed a S-1 Registration Statement with the Securities and Exchange Commission to include 7,936,600 shares of its Common
Stock for issuance in connection with the first tranche of the Equity Line Facility. The S-1 Registration Statement, as amended, was
declared effective by the Securities and Exchange Commission on January 11, 2018.
On
September 7, 2021 the Company terminated this Investment Agreement with Azure Capital effective retroactively January 11, 2021 and subsequently
submitted a request to the Securities and Exchange Commission on January 14, 2022 to withdraw the Registration Statement on Form S-1
in connection with this offering.
9.
AGREEMENT WITH CHOKY F. SIMANJUNTAK (CYFS Group)
On
August 02, 2021, the Company signed a Letter of Intent with Indonesia-based CYFS Group, headed by Mr. Choky Fernando Simanjuntak, to
sponsor and co-found CO2-1-0 (CARBON) CORP to implement a new disruptive carbon mitigation initiative through environmentally sustainable
projects starting in Indonesia, Vietnam, other ASEAN countries, and worldwide. On September 21, 2021 CO2-1-0 (CARBON) CORP was incorporated
as a Wyoming corporation to manage this program. PHI Group will contribute a major portion of the development budget and will hold 50.1%
shares of CO2-1-0 (CARBON).
According
to the United Nation Framework Convention on Climate Change (UNFCCC), together with the Paris agreement and Kyoto protocol in 2016, where
Indonesia has actively participated and agreed to maintain the earth temperature not to exceed by 1,5 degrees Celsius by 2030. The greenhouse
gases (GHG), mainly CO2, CH4, N2O, SF6, HFCs, PFCs, are the root cause of global climate change, each of which can be calculated as CER
(CO2 Emission Reduction) equivalent. The target for Indonesia is 834 million tonnes of CER by 2030.
CO2-1-0
(CARBON) aims to provide a solution in disruptive decentralized new carbon market system using blockchain technology which will be empowering
environmentally sustainable projects (renewable energy/ waste/ agriculture/ forestry/ etc.) starting in Indonesia, Vietnam, other ASEAN
countries and worldwide. It has a clear and systematic product development roadmap, and the ultimate milestones of the products estimated
to be launched in the near future. The solution, methodology, and improved TACCC (transparent, accurate, consistent, complete, and comparable)
business process originally introduced by CO2-1-0 (CARBON) CORP are expected to bring full impact to better environment and life of millions.
As of the date of this report, CO2-1-0 (CARBON) CORP has launched the carbon emission mitigation program using blockchain and crypto
technologies and listed its digital tokens on Digifinex Digital Assets Exchange (www.digifinex.com). These tokens are not offered
to U.S. investors.
10.
AGREEMENT WITH FIVE-GRAIN TREASURE SPIRITS CO., LTD.
On
January 18, 2022 PHI Group entered into an Agreement of Purchase and Sale with Five Grain Treasure Spirits Co., Ltd. (“FGTS) and
the majority shareholders of FGTS (the “Majority Shareholders”) to acquire seventy percent (70%) of ownership in FGTS for
the total purchase price of one hundred million U.S. dollars, to be paid in three tranches until September 18, 2022. The Company is in
the process of amending the Agreement of Purchase and Sale with Five-Grain to cooperate in producing American-made baijiu products through
its subsidiary Empire Spirits, Inc. in California.
11.
SERVICES AGREEMENTS FOR DEVELOPMENT OF ADE TOKENS USING BLOCKCHAIN AND CRYPTO TECHNOLOGIES
On
September 21, 2021, the Company signed Services Agreements with Johnny Park (“JP”) and Whankuk Je (“WJ”), collectively
(“the Consultants”), to form an “Asia Diamond Exchange Blockchain Task Force” to develop “ADE Tokens”
in connection with the Asia Diamond Exchange to be established in Vietnam. The Consultants will be totally responsible for planning,
organizing, designing, structuring, configuring, programming and implementing the necessary systems, architecture, and platform for launching
a most optimum ADE Token possible in connection with the Asia Diamond Exchange using advanced crypto and blockchain technologies to finance
the development and implementation of the Asia Diamond Exchange project. As of March 31, 2022, the Company has issued One Billion One
Hundred Fifty Million (1,150,000,000) shares of Common Stock of PHI Group, Inc. to JP and One Billion One Hundred Fifty Million (1,150,000,000)
shares of Common Stock of PHI Group, Inc. to WJ from the 2021 Employee Benefit Plan of PHI Group, Inc. as filed with the Securities and
Exchange Commission on September 17, 2021.
12.
FINANCING CONTRACT AGREEMENT WITH HAJ FINANCE GROUP
Effective
October 17, 2021 the Company signed a contract agreement with Haj Finance Group, a corporation registered in Oman, Hatat House Ground
Floor, Ruwi, Muscat, Sultanate of Oman, for a financing program in the amount of $1,500,000,000 which carries an interest rate of 2.5%
per annum for thirty-five years with a three-year grace period. The closing of this transaction is to occur after the registration of
a Special Purpose Vehicle (SPV) within United Arab Emirates, the signing of the closing documents and the approval of the transfer of
funds by the Central Bank of United Arab Emirates (CBUAE). The Company intends to use the funds for the establishment of the Asia Diamond
Exchange and the Multi-Commodities Center in Vietnam, for financing selective projects in the areas of real estate, renewable energy,
healthcare, and for other investment opportunities in connection with PHILUX Global Funds SCA, SICA-RAIF, a group of Luxembourg bank
funds sponsored by the Company.
The
Company has satisfied certain international legal and administrative requirements, set up a Special Purpose Vehicle in United Arab Emirates
under the name of PHILUX DUBAI GLOBAL LLC FZCO, Formation No. DAFZA-FZCO-CF-1095, License No. DAFZA-FZC-CF-1095.22, and is in the process
of completing the Hawala Global Certification process with the Central Bank of United Arab Emirates and the Anti-Graft Clearance Certificate
by the Gulf Cooperation Council towards the expected release of the financing proceeds.
13.
BUSINESS COOPERATION AGREEMENT WITH DIGITAL SOLUTIONS COMPANY LTD.
On
November 1, 2021, the Company signed an Business Cooperation Agreement with Digital Solutions Company Limited, a Vietnamese company,
to cooperate in developing technical solutions for a variety of industries, including real estate, energy, agriculture and healthcare
using digital, blockchain and crypto technologies.
Digital
Solutions currently assists CO2-1-0 (CARBON) CORP, a subsidiary of PHI Group, Inc., to launch the new disruptive carbon mitigation initiative
and will also support PHI Group with technological solutions for the Asia Diamond Exchange to be established in Vietnam, as well as jointly
advance a number of special projects for the benefits of both companies.
14.
LOAN AGREEMENT DEED WITH NEOK FINANCIAL INCORPORATED
On
November 14, 2021 the Company signed a Loan Agreement Deed with Neok Financial Incorporated, a corporation organized and existing under
the laws of United Arab Emirates, with office address located at Trade Center Road, Bur Dubai, Dubai, United Arab Emirates, for a financing
program in the amount of $2,000,000,000
which carries an rate of fixed interest of 2.00%
per annum for the term of thirty-five (35)
years. The closing of this transaction would be subject to the registration of a Special Purpose Vehicle (SPV) within United Arab
Emirates, the signing of the closing documents and the approval of the transfer of funds by the appropriate oversight authorities. The
Company intends to use the funds for the establishment of the Asia Diamond Exchange and the Multi-Commodities Center in Vietnam, for
financing selective projects in the areas of real estate, infrastructure, renewable energy, healthcare, and for other investment opportunities
in connection with PHILUX Global Funds SCA, SICA-RAIF, a group of Luxembourg bank funds sponsored by the Company.
This
event was reported to the Securities and Exchange Commission on Form 8-K filed on November 22, 2021. Due to the lack of meaningful progress
with this transaction, the Company has unilaterally terminated this agreement as of the date of this report.
15.
LOAN APPROVAL LETTER AND TERM SHEET WITH GEZA HOLDING AG
On
December 10, 2021, the registrant received a Loan Approval Letter from Geza Holding AG, a Swiss company located at Bleicherweg 18, 8002,
Zurich, Switzerland for a USD 1.5 billion project financing loan program and on December 15, 2021 the registrant signed a Term Sheet
with Geza Holding AG for the proposed financing. According to the Loan Approval Letter and the Term Sheet, the term of the loan will
be fifteen years and the interest rate will be 3.5% per annum, with a one-year grace period.
The
Company intended to use the funds from this loan program for a variety of investment opportunities, including but not limited to the
Asia Diamond Exchange, the Multi-Commodities Center, selective projects in the areas of real estate, infrastructure, renewable energy,
healthcare, agriculture and special opportunities.
The
closing of this transaction would be subject to having met certain administrative and legal requirements, including operational
due diligence, technical and financial due diligence and evaluation work, approval of management and board of directors, execution of
a definitive agreement and the incorporation of a Special Purpose Company (SPV), which are customary and reasonable for a transaction
of this type.
This
event was reported to the Securities and Exchange Commission on Form 8-K filed on December 20, 2021. Due to the protracted delays in
the due diligence process, the Company has unilaterally terminated this transaction as of the date of this report.
16.
AGREEMENT WITH CAT TUONG AGRICULTURAL PROCESSING AND PRODUCTION COMPANY LIMITED
On
December 17, 2021, the Company signed a consulting agreement with Cat Tuong Agricultural and Production Company Ltd. (“CAT TUONG”),
a Vietnamese company, to assist CAT TUONG to list its stock on the Nasdaq Stock Market and obtain long-term financing for growth and
expansion . According to the agreement, PHI Group will receive $1,000,000 in cash and stock in the new public company. As of the date
of this report, PHI Group has not received payment from CAT TUONG.
17.
Extension of Record Date for the Spin-off of Common Stock of American Pacific Resources, Inc.
On
December 27, 2021, the Board of Directors of PHI Group, Inc., a corporation originally incorporated in the State of Nevada on June 08,
1982 and redomiciled in the State of Wyoming on September 20, 2017 (the “Company”), adopted the following resolutions in
lieu of a meeting:
WHEREAS,
due to the continued adverse effects of the coronavirus pandemic and other factors that have affected the development of APR, it
deems necessary for the Company to further extend the Record Date of the APR special stock dividend to June 30, 2022 in order to allow
APR additional time to reach certain milestones that would make the spin-off of APR and this special stock dividend distribution economically
beneficial for the Company’s shareholders;
NOW,
THEREFORE, BE IT RESOLVED, that the Company further extend the Record Date to June 30, 2022 and amend the provisions for the afore-mentioned
stock dividend as follows: (a) Eligible shareholders: In order to be eligible for the above-mentioned special stock dividend, the minimum
amount of Common Stock of PHI Group, Inc. each shareholder must hold as of June 30, 2022 (the New Record Date) is two thousand (2,000)
shares; (b) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the new Record Date will be entitled to receive
one (1) share of Common Stock of American Pacific Resources, Inc. for every two thousand (2,000) shares of Common Stock of PHI Group,
Inc. held by such shareholders as of the new Record date; and (c) Payment Date: the Payment Date for the distribution of the special
stock dividend to be ten (10) business days after a registration statement for said special stock dividend shares is declared effective
by the Securities and Exchange Commission.
This
event was reported with the Securities and Exchange Commission in Form 8-K filed on December 30, 2021.
18. INCORPORATION OF
PHILUX GLOBAL ENERGY, INC.
On
January 3, 2022, the Company filed “Profit Corporation Articles of Incorporation” with the Wyoming Secretary of State to
incorporate “PHILUX GLOBAL ENERGY, INC.” – Original ID: 2020-001066221, as a wholly-owned subsidiary of the Company
to serve as the holding company for the contemplated acquisition of fifty-point one percent (50.10%) ownership in both Kota Energy Group
LLC and Kota Construction LLC, both of which are California limited liability companies.
19.
Memorandum of Understanding/Loan
Agreement between Al Aqel and Partners Investment LLC and PHI Group, Inc.
On
January 17, 2022, the registrant signed a Memorandum of Understanding/Loan Agreement with Al Aqel and Partners Investment LLC, an Oman
company with address at Muscat Governorate Bousher 119 Alamarat, Muscat. P.O. BOX: 2393 Sultanate
of Oman, for a project financing loan program of One Billion U.S. dollars. The term of the loan will be ten years and the interest
rate will be 3.00% per annum, with a two-year grace period.
The
closing of this transaction is subject to having met certain administrative, legal and financial requirements, including a collateral
for the loan to be secured by a surety bond of 1% of the total loan amount to deducted from the proceeds of the loan.
The
Company intends to use the funds from this loan program for acquisition and development of operating business targets, as well as investment
in selective projects in the areas of real estate, infrastructure, renewable energy, healthcare, agriculture and special opportunities.
This
event was reported with the Securities and Exchange Commission on Form 8-K filed on January 31, 2022.
20.
Loan Agreement between
Arab League Investment Group and PHI Group, Inc.
On
January 17, 2022, the registrant signed a Loan Agreement with Arab League Investment Group, an Egyptian company with address at Arab
League Tahrir Square, Downtown Business District, Cairo, Egypt, for acquisition financing loan program of Two Hundred Million
U.S. dollars. The term of the loan will be fifteen years and the interest rate will be 2.5% per annum, with a three-year grace period.
The
closing of this transaction is subject to having met certain administrative, legal and financial requirements, including an acceptable
and satisfactory collateral for the loan.
The
Company intends to use the funds from this loan program for the acquisition of two target companies and further business development
of the acquirees.
This
event was reported on Form 8-K as filed with the Securities and Exchange Commission on January 31, 2022.
21.
AGREEMENT OF PURCHASE AND SALE WITH KOTA CONSTRUCTION LLC AND KOTA ENERGY GROUP LLC
Effective
January 26, 2022, PHI Group, Inc. signed Agreements of Purchase and Sale with KOTA Construction LLC and KOTA Energy Group LLC, both of
which are California limited liability companies (collectively referred to as “KOTA”), to acquire 50.10% of Kota Energy Group
LLC for $12,524,469 and 50.10% of Kota Construction LLC for $51,600,531, totaling $64,125,000, to be paid in cash. The closing date of
these transactions shall be the date on which the closing actually occurs, which is expected to happen as soon as possible and no later
than forty-five days from the effective day.
KOTA,
operating under two legal entities as Kota Energy Group LLC and Kota Construction LLC, provides solutions for solar energy to residential
and commercial customers, with unique competitive advantages. As one of the fastest growing sales and installation engines in the country,
KOTA prioritizes itself to have the best employee and customer experience possible, through its high standard of installation quality,
its industry leading technology platforms, which enable increased sales volume, while maintaining fast, and transparent project timelines.
It’s strategic partnerships with key players in the solar industry, have increased margins, while delivering top tier products
to customers, without sacrificing quality. KOTA’s guiding core values of “Become, Create, Give” have been the driving
factor in decision making that have led it to become the most highly sought-after solar company to work with in the solar industry. Website:
KOTA Energy Group: https://www.kotasolar.com.
KOTA
management has agreed to extend the closing date as the Company is currently working with several lenders to arrange the necessary financing
and expecting to be able to close this transaction as soon as possible.
22.
OFFERING STATEMENT ON FORM 1-A
On
February 9, 2022, the Company filed a Form 1-A with the Securities and Exchange Commission to offer up to 3,750,000,000 shares of its
Common Stock, par value of $0.001 per share, under Tier 2 - Regulation A to raise up to $75,000,000. The Company intends to use the proceeds
from this offering to pay for acquisitions, business development and working capital. However due to recent market conditions, the Company
may consider withdrawing this offering memorandum.
23.
AGREEMENT WITH SIENNALYN GOLD MINING CORPORATION
On
February 22, 2022, the Company entered into a Business Cooperation Agreement with Siennalyn Gold Mining Corporation, a Philippine company
with principal address at 19 Quezon Street, Del Rey Ville 1, Baesa, Quezon City, Philippines (“SGMC”), represented by Ms.
Fe Melchora B. Alam, its Chairman, President and Chief Executive Officer, in order to cooperate with other to finance, develop, mine
and process the mineral assets under the Mineral Production Sharing Agreement (MPSA) denominated as 076-97-IX granted by the Philippine
Government through the Department of Environment and Natural Resources (DENR) – Mines and Geosciences Bureau (MGB) to Siennalyn
Gold Mining Corporation, which covers 4,116 hectares contract area situated in the Municipalities of RT Lim, Ipil and Tinay of the Province
of Zamboanga Sibugay, Republic of Philippines.
PHI
Group, Inc. agrees to provide assistance to SGMC in the execution of its business plan, including but not limited to corporate governance,
financial, technical and other pertinent matters as needed and will assist SGMC in its future listing on an international stock exchange
such as New York Stock Exchange or the Nasdaq Stock Markets.
American
Pacific Resources, Inc., a wholly-owned subsidiary of PHI Group, Inc. will be entitled to thirty percent (30%) profit sharing in SGMC
for a period of twenty-five years or based on the lifespan of the MPSA, upon the success of the financing arrangement mentioned herein.
This
Business Cooperation Agreement became effective upon signing and will terminate after a period of one year from the date of signing unless
extended in writing by the Parties.
24.
EQUITY LINE OF CREDIT WITH INSTITUTIONAL INVESTOR
On
March 01, 2022, the Company entered into an equity purchase agreement with an institutional investor (“The Investor”) as
follows:
The
Investor will provide an equity line of up to $10,000,000 to the Company, pursuant to which the Company has the right, but not the obligation,
during the 24 months after an effective registration of the underlying shares, to issue a notice to the Investor (each a “Drawdown
Notice”) which shall specify the amount of registered shares of common stock of the Company (the “Put Shares”) that
the Company elects to sell to the Investor, from time to time, up to an aggregate amount equal to $10,000,000.
The
pricing period of each put will be the 7 trading days immediately following receipt of the Put Shares (the “Pricing Period”).
The
purchase price per share shall mean 90% of the average of the 2 lowest volume-weighted average prices of the Common Stock during the
Pricing Period, less clearing fees, brokerage fees, other legal, and transfer agent fees incurred in the deposit (the “Net Purchase
Amount”). The Investor shall pay the Net Purchase Amount to the Company by wire for each Drawdown Notice within 2 business days
of the end of the Pricing Period.
The
put amount in each Drawdown Notice shall not be less than $50,000 and shall not exceed the lesser of (i) $500,000 or (ii) 200% of the
average dollar trading volume of the Common Stock during the 7 trading days immediately before the Put Date, subject to Beneficial Ownership
cap.
There
shall be a 7 trading day period between the receipt of the Put Shares and the next put.
The
Company intends to file an S-1 Registration Statement with the Securities and Exchange Commission for this Equity Line of Credit.
NOTE
14 – GOING CONCERN UNCERTAINTY
As
shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $69,167,693 as of March 31, 2022
and total stockholders’ deficit of $946,420. For the quarter ended March 31, 2022, the Company incurred a net loss of $2,052,354
as compared to a net loss in the amount of $691,495 during the same period ended March 31, 2021. 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, 2022 and beyond.
NOTE
15 – SUBSEQUENT EVENT
These
financial statements were approved by management and available for issuance on or about May 23, 2022. Subsequent events have been evaluated
through this date.
1.
ISSUANCES OF CONVERTIBLE PROMISSORY NOTES
From
April 1, 2022 to the dated date of the report, the Company issued the following convertible promissory notes:
a.
On 4/4/2022, the Company issued a Convertible Promissory Note to Mast Hill Fund LLC, a Delaware limited liability company, in the amount
of $150,000 at an interest rate of 12% per annum. This note will mature twelve months from the Issue Date and may be convertible into
shares of common stock of the Company at a fixed conversion price of $0.001 per share or may be prepaid at any time prior to the date
that an Event of Default occurs under this Note in a cash amount equal to the sum of (i) 100% multiplied by the principal amount then
outstanding plus (ii) accrued and unpaid interest on the principal amount to the prepayment date, plus (iii) $750.00 reimbursement for
administrative fees. The Company plans to prepay this note in cash prior to the 180th calendar day after the Issue Date.
b.
On 4/192022, the Company issued a Promissory Note to Sixth Street Lending Group, Ltd., a Virginia corporation, in the amount of $53,750
at an interest rate of 8% per annum. This note will mature twelve months from the Issue Date and may be convertible into shares of common
stock of the Company at a fixed price of $0.001 per share within the first 180 days commencing the Issue Date or at 39% discount to the
average of the two lowest closing bid prices during the ten trading days immediately prior to the conversion date after the 180th
day, or may be prepaid on or prior to the 180th calendar day after the Issue Date at a Prepayment Factor of 125% to
139% depending on the passage of time from the date of issuance to the date of payment. The Company plans to prepay this note in cash
prior to the 180th calendar day after the Issue Date.
2.
EXTENSION OF REPURCHASE DATE FOR COMMON STOCK OF THE COMPANY
On
April 7, 2022, the Company’s Board of Directors passed a corporate resolution to extend the time period for the repurchase of its
own shares of common stock from the open market from time to time in accordance with the terms mentioned below and subject to liquidity
conditions, satisfaction of certain open contractual obligations and the judgment of the Company’s Board of Directors and Management
with respect to optimal use of potentially available funds in the future.
| A. |
Purpose
of Repurchase: To enhance future shareholder returns. |
| B. |
Details
of Repurchase: |
| |
a. |
Class
of shares to be repurchased: Common Stock of PHI Group, Inc. |
| |
b. |
Amount
of repurchasable shares: As many as economically conducive and optimal for the Company. |
| |
c. |
Total
repurchase dollar amount: To be determined by prevalent market prices at times of transaction. |
| |
d. |
Methods
of repurchase: Open market purchase and/or negotiated transactions. |
| |
e. |
Repurchase
period: As soon as practical until June 30, 2023. |
| |
f. |
The
Company intends to fund the proposed share repurchase program with proceeds from long-term financing programs, future earnings, disposition
of non-core assets and other potential sources, subject to liquidity, availability of funds, comparative judgment of optimal use of available
cash in the future , and satisfaction of certain open contractual obligations. |
| |
g. |
The
share repurchase program will be in full compliance with state and federal laws and certain covenants with the Company’s creditors
and may be terminated at any time based on future circumstances and judgment of the Company. |
This
extension was report on Form 8-K with Securities and Exchange Commission on April 11, 2022.
3.
STRATEGIC AGREEMENT WITH VIETNAM International Entrepreneur
Networking Club
On
April 29, 2022, PHI Group, Inc. signed a strategic agreement with Vietnam – International Entrepreneur Networking Club (“VIENC”)
to assist Vietnam-based enterprises to access international capital sources and other resources to develop and improve corporate advantages
for sustainable growth and expansion in domestic and international markets.
According
to the Agreement, PHI Group will assist VIENC with respect to the following priorities:
| |
a. |
Assist
VIENC to set up a Emerging Growth Fund as a sub-fund under the umbrella of Luxembourg-based PHILUX Global Funds to raise capital
for VIENC’s members. |
| |
|
|
| |
b. |
Support
VIENC via training programs and seminars to enhance leadership and management capabilities for VIENC’s members. |
| |
|
|
| |
c. |
Assist
VIENC’s members in to list their stock in certain international stock exchanges, particularly in the U.S and Europe. |
| |
|
|
| |
d. |
Assist
VIENC to participate in the building of the Asia Diamond Exchange in Vietnam. |
PHI
Group believes it may help a number of qualified member companies of VIENC to list on the Nasdaq Stock Markets, New York Stock Exchange
and the OTC Markets in the U.S. in the near future.
4.
CRYPTO LOAN AGREEMENT
PHILUX
Capital Advisors, Inc., a subsidiary of the Company, (“Borrower”) has signed a Crypto Loan Agreement effective May 24, 2022
with Mr. William Hogarty, an individual, (“Lender”) for a crypto loan facility in the aggregate amount of $17,000,000 worth
of Bitcoins. According to the Loan Agreement, Borrower will receive funds from Lender after the signing of the afore-mentioned Crypto
Loan Agreement and the activation of its investment wallet with 3.2 worth of Bitcoins.
The
loan bears a simple interest of 6% per annum and will mature on May 23, 2026 at which time it will be repaid in U.S. dollars based on
the market price of Bitcoins when received by Borrower.
The
Company intends to use the proceeds of this loan program to fund part of its pending acquisitions and/or to finance a business venture
development.
ITEM
2. 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.
PHI
Group, Inc. (the “Company” or “PHI”) (www.phiglobal.com) is primarily engaged in mergers and acquisitions,
running PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund” (“RAIF”) under the laws
of Luxembourg, and establishing the Asia Diamond Exchange in Vietnam. The Company also engages in merger and acquisition activity as
a principal and provides advisory and consulting services to client companies through our wholly owned subsidiary PHILUX Capital Advisors,
Inc. In addition, the Company invests in selective industries and special situations aiming to potentially create significant long-term
value for our shareholders. PHILUX Global Funds intends to include a number of sub-funds for investment in real estate, renewable energy,
infrastructure, agriculture, healthcare and the Asia Diamond Exchange in Vietnam. Recently, the Company has listed CO2-1-0 (CARBON) CORP.
( www.CO2-1-0.io) on Digifinex Digital Assets Exchange (www.DigiFinex.com) for carbon emission mitigation using blockchain
and crypto technologies and has signed agreements to acquire majority interests in Kota Construction LLC and Kota Energy Group LLC which
are engaged in solar energy business (https://www.kotasolar.com). At the present, the Company is in the process of amending the
Purchase and Sale Agreement signed with Five-Grain Treasure Spirits Co., Ltd., a Chinese baiju distiller, on January 18, 2022 to cooperate
in launching American-made baiju products through Empire Spirits, Inc., a subsidiary of PHI Group, Inc. .
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. In February 2000, the Company
then changed its name to Providential Holdings, Inc. 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 mainly focused on acquisition
and development opportunities in energy and natural resource businesses.
The
Company is currently focused on PHILUX Global Funds, SCA, SICAV-RAIF and in the process of launching a number of sub-funds for investment
in real estate, renewable energy, infrastructure, agriculture and healthcare. At the same time, the Company has been working on the establishment
of 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 U.S. and international companies. Recently, the Company has signed Purchase and Sale Agreements to acquire
fifty-point one percent ownership in Kota Construction LLC, a California limited liability company, and fifty-point one percent ownership
in Kota Energy Group LLC, a California limited liability company, both of which engage in solar energy business. The Company has also
signed an agreement to acquire seventy percent ownership in Five-Grain Treasure Spirits Company, Ltd., a baiju distiller in Jilin Province,
China, and is in the process of amending this agreement to cooperate with Five-Grain to manufacture new baiju products in the U.S. through
Empire Spirits, Inc. a subsidiary of PHI Group. The Company has listed CO2-1-0 (Carbon) Corp., a subsidiary engaged in carbon emission
mitigation using blockchain and crypto technologies (www.co2-1-0.io) on DigiFinex Digital Assets Exchange (www.digifinex.com).
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.
SUBSIDIARIES:
As
of March 31, 2022, the Company owned the following subsidiaries:
(1)
Asia Diamond Exchange, Inc., a Wyoming corporation (100%), (2) Empire Spirits, Inc., a Nevada corporation (85% - formerly Provimex, Inc.),(3)
PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg Reserved Alternative Investment Fund (100%) (4) PHILUX Capital Advisors, Inc., a Wyoming
corporation (100%), (5) PHI Luxembourg Development S.A., a Luxembourg corporation (100%), (6) PHILUX Global General Partners SA, a Luxembourg
corporation (100%), (7) PHI Luxembourg Holding SA, a Luxembourg corporation (100% (8) CO2-1-0 (CARBON) CORP., a Wyoming corporation (100%),
(9) PHI Vietnam Investment and Development Company Ltd., a Vietnamese limited liability company (100%), (10) Phivitae Healthcare, Inc.
(100%), (11) Vinafilms International, Inc., a Wyoming corporation (100%), (12) American Pacific Resources, Inc., a Wyoming corporation
(100%) and (13) PHILUX Global Energy, Inc., a Wyoming corporation (100%).
ASIA
DIAMOND EXCHANGE, INC. AND THE DEVELOPMENT OF 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 2,600 hectares of land in Bau Can and Tan Hiep
Villages, Long Thanh District, Dong Nai Province as a new industrial zone. We are in the process of applying for this entire area to
develop the Long Thanh Multi-Commodities Logistics Center (LMLC) together with the Industrial Zone. On June 04, 2021, the Company incorporated
Asia Diamond Exchange, Inc., a Wyoming corporation, ID number 2021-001010234, as the holding company for the Asia Diamond Exchange project.
EMPIRE
SPIRITS, INC. (FORMERLY PROVIMEX, INC.)
Provimex,
Inc. was originally incorporated as a Nevada corporation on September 23, 2004, Entity Number C25551-4, to engage in international trade.
On 9/26/2021, the company changed its name to Empire Spirits, Inc. as the holding company to cooperate with Five-Grain Treasure Spirits
Company, Ltd., a baiju distiller in Jilin Province, China to produce American-based baijiu products in the United States.
Baijiu
is a white spirit distilled from sorghum. It is similar to vodka but with a fragrant aroma and taste. It is currently the most consumed
spirit in the world. Mainly consumed in China, it is gaining popularity in the rest of the world.
Five-Grain
specializes in the production and sales of spirits and the development of proprietary spirit production processes. It also possesses
a patented technology to grow red sorghum for baiju manufacturing. The patented grain produces superior yield and quality. Five-Grain
is a reputable bulk alcohol supplier to some of the largest spirits companies in the world.
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
Fund is an umbrella fund with one or more sub-fund compartments intended to invest in real estate, infrastructure, renewable energy,
agriculture, healthcare and especially the Multi-Commodities Center (MCC) in Vietnam which will include the Asia Diamond Exchange and
potentially the proposed International Financial Center.
Other
subsidiaries of the Company that are established in conjunction with PHILUX Global Funds include PHI Luxembourg Development S.A., PHILUX
Global General Partners SA, and PHI Luxembourg Holding SA.
PHILUX
CAPITAL ADVISORS, INC.
PHILUX
Capital Advisors, Inc. was originally incorporated under the name of “Providential Capital, Inc.” in 2004 as a Nevada corporation
and 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. It was re-domiciled as a Wyoming corporation on September 20, 2017 and changed its name to “PHILUX
Capital Advisors, Inc.” on June 03, 2020. 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.
CO2-1-0
(CARBON) CORP
Headed
by Mr. Choky Fernando Simanjuntak, CO2-1-0 (CARBON) CORP ( www.CO2-1-0.io), a subsidiary of PHI Group, Inc., is incorporated as
a Wyoming corporation to implement a new disruptive carbon mitigation initiative through environmentally sustainable projects starting
in Indonesia, Vietnam, other ASEAN countries, and worldwide. PHI Group has contributed a major portion of the development budget and
holds 50.1% shares of CO2-1-0 (CARBON), which is currently listed on Digifinex Digital Assets Exchange (www.DigiFinex.com).
According
to the United Nation Framework Convention on Climate Change (UNFCCC), together with the Paris agreement and Kyoto protocol in 2016, where
Indonesia has actively participated and agreed to maintain the earth temperature not to exceed by 1,5 degrees Celsius by 2030. The greenhouse
gases (GHG), mainly CO2, CH4, N2O, SF6, HFCs, PFCs, are the root cause of global climate change, each of which can be calculated as CER
(CO2 Emission Reduction) equivalent. The target for Indonesia is 834 million tonnes of CER by 2030.
Currently,
CER is being tediously registered, validated, and certified centrally under UNFCCC methodology by a few independent institutions, mostly
in the US and Europe, where the CER later can be traded (as carbon credits) voluntarily. For the past 5 years, the market for carbon
credits is nearly zero, and due to complexity of the processes, many companies/ projects have less appetite to be engaged into the carbon
credit opportunity. Many environmentally sustainable projects (renewable energy/ waste/ agriculture/forestry/ etc.) have failed to get
financial support especially at the initial/ development stage, due to the above reasons, causing less economic value of the project
or delays.
Though
the carbon market is still on hibernate stage, CER value is estimated to rise to US$ 100/ ton CER by 2030, while crypto currency is just
starting and has attracted many millennials and gen-Z who are more aware to green environment and sustainability (recent survey result,
Indonesian college students, 12-13 July 2021). It is believed that from year 2022 onward the world will witness the boom of renewable
energy projects/ sustainability initiatives that are related to Carbon Credits, with an enormous market size of 23 Giga tones of CO2
emission to be reduced in 2030. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), sponsored by the Institute of International
Finance (IIF) with knowledge support from McKinsey, estimates that demand for carbon credits could increase by a factor of 15 or more
by 2030 and by a factor of up to 100 by 2050. Overall, the market for carbon credits could be worth upward of $50 billion in 2030.
CO2-1-0
(CARBON) aims to provide a solution in disruptive decentralized new carbon market system using blockchain technology which will be empowering
environmentally sustainable projects (renewable energy/ waste/ agriculture/ forestry/ etc.) starting in Indonesia, Vietnam, other ASEAN
countries and worldwide. It has a clear and systematic product development roadmap, and the ultimate milestones of the products estimated
to be launched in the near future. The solution, methodology, and improved TACCC (transparent, accurate, consistent, complete, and comparable)
business process originally introduced by CO2-1-0 (CARBON) will bring full impact to better environment and life of millions.
CO2-1-0
(CARBON) will continue to engage more clean energy companies to participate as project owners that contribute carbon credits to the carbon
emission mitigation program.
AMERICAN
PACIFIC RESOURCES, INC.
American
Pacific Resources, Inc. (“APR”) is a Wyoming corporation established in April 2016 to serve as a holding company for various
natural resource projects. On September 2, 2017, APR entered into an Agreement of Purchase and Sale with Rush Gold Royalty, Inc. (“RGR”),
a Wyoming corporation, to acquire a 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining
District, Grant County, Oregon, U.S.A., in exchange for a total purchase price of twenty-five million U.S. Dollars ($US 25,000,000) to
be paid in a combination of cash, convertible demand promissory note and PHI Group, Inc.’s Class A Series II Convertible Cumulative
Redeemable Preferred Stock (“Preferred Stock”). This transaction was closed effective October 3, 2017. Following the first
amendment dated April 19, 2018 and the second amendment dated September 29, 2018 retroactively effective April 20, 2018, to the afore-mentioned
Agreement of Purchase and Sale, PHI Group, Inc. paid ten million shares of its Class A Series II Convertible Cumulative Redeemable Preferred
Stock, a convertible demand promissory note and cash totaling $25,000,000 to Rush Gold Royalty, Inc. As of June 30, 2020, the Company
recorded $462,000 paid for this transaction as expenses for research and development in connection with the Granite Mining Claims project.
The value of these mining claims is expected to be adjusted later after a new valuation of these mining assets is conducted by an independent
third-party valuator.
On
December 27, 2021, the Board of Directors of PHI Group, Inc., adopted a resolution to further extend the Record Date to June 30, 2022
for the afore-mentioned stock dividend as follows: (a) Eligible shareholders: In order to be eligible for the above-mentioned special
stock dividend, the minimum amount of Common Stock of PHI Group, Inc. each shareholder must hold as of June 30, 2022 (the New Record
Date) is two thousand (2,000) shares; (b) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the new Record
Date will be entitled to receive one (1) share of Common Stock of American Pacific Resources, Inc. for every two thousand (2,000) shares
of Common Stock of PHI Group, Inc. held by such shareholders as of the new Record date; and (c) Payment Date: the Payment Date for the
distribution of the special stock dividend to be ten (10) business days after a registration statement for said special stock dividend
shares is declared effective by the Securities and Exchange Commission.
PHIVITAE
HEALTHCARE, INC.
PHIVITAE
HEALTHCARE, INC., a Wyoming corporation, is a wholly-owned subsidiary of PHI Group established on July 07, 2017 under the name of “PHIVATAE
Corporation, Inc.” with the intention to acquire a pharmaceutical and medical equipment distribution company in Romania and to
manage distribution of medical equipment and pharmaceutical products to emerging markets. This subsidiary changed its name to PHIVITAE
HEALTHCARE, INC. on March 17, 2020. PHIVITAE is in the process of entering into a strategic alliance with a Vietnam-based medical supply
company.
SPORTS
POUCH BEVERAGE COMPANY, INC.
As
of March 31, 2022, the Company through PHILUX Capital Advisors, Inc. owned 292,050,000 shares of Sports Pouch Beverage Company, Inc.,
a Nevada corporation traded on the OTC Markets under the symbol “SPBV”. On March 19, 2021 this company signed a Business
Combination Agreement with Glink Apps International, Inc. and has changed the name to Glink Arts Global Group, Inc.
CRITICAL
ACCOUNTING POLICIES
The
Company’s financial statements and related public financial information are based on the application of accounting principles generally
accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations
of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also
affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk
and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and
conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout
the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application
of judgment include acquisitions, valuation of long-lived and intangible assets, recoverability of deferred tax and the valuation of
shares issued for services. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.
Valuation
of Long-Lived and Intangible Assets
The
recoverability of long-lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or
circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules
as required by SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of” as amended
by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the
intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus,
the recoverability of the asset.
Income
Taxes
We
recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases
of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon
historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of
March 31, 2022, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.
RESULTS
OF OPERATIONS
The
following is a discussion and analysis of our results of operations for the three-month and nine-month periods ended March 31, 2022 and
2021, our financial condition on March 31, 2022 and factors that we believe could affect our future financial condition and results of
operations. Historical results may not be indicative of future performance.
This
discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere
in this Form 10-Q. Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in
the United States (“GAAP”). All references to dollar amounts in this section are in United States dollars.
Three
months ended March 31, 2022 compared to the three months ended March 31, 2021
Total
Revenues:
The
Company primarily focused on developing the Asia Diamond Exchange and launching PHILUX Global Funds and only generated $5,000 in revenues
from consulting services for the quarter ended March 31, 2022 as compared to the same amount of revenues from consulting services for
the quarter ended March 31, 2021.
Total
Operating Expenses:
Total
operating expenses were $294,542 and $126,234 for the three months ended March 31, 2022, and 2021, respectively. An increase of $168,308
in total operating expenses between the two periods was mainly due to an increase of $162,021 in professional services related to the
development of the Asia Diamond Exchange project, an increase of 37,500 in salaries and wages, offset by a decrease of $31,213 in general
and administrative expenses.
Loss
from Operations:
Loss
from operations for the quarter ended March 31, 2022 was $289,542, as compared to loss from operations of $121,234 for the corresponding
period ended March 31, 2021. An increase of $168,308 in the loss from operations between the two periods was mainly due to an increase
of $162,021 in professional services related to the development of the Asia Diamond Exchange project, an increase of 37,500 in salaries
and wages, offset by a decrease of $31,213 in general and administrative expenses, as mentioned above.
Other
Income and Expenses:
The
Company had a net other expenses of $1,762,812 for the three months ended March 31, 2022, as compared to net other expenses of $570,261
for the three months ended March 31, 2021. The increase in other expenses of $1,192,551 between the two periods was mainly due to an
increase in financing costs of $172,455, an increase in loss on conversion of stock in the amount of $1,023,763, an increase in prepayment
premium of $17,762, an increase in loss on issuance of stock in the amount of $21,148, a decrease of $18,341 from loss in derivatives,
and a decrease in penalties of $86,382. Interest expenses were $89,002 and $30,462 for the three months ended March 31, 2022 and 2021,
respectively.
Net
Income (Loss):
Net
loss for the three months ended March 31, 2022 was $2,052,354 , as compared to a net loss of $691,495 for the same period in 2021, which
is equivalent to ($0.00) per share for the current period and ($0.00) per share for the corresponding period ended March 31, 2021, based
on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period.
Nine
months ended March 31, 2022 compared to the nine months ended March 31, 2021
Total
Revenues:
The
Company generated $30,000 from consulting services for the nine months ended March 31, 2022 as compared to $23,000 in revenues from consulting
services for the same period ended March 31, 2021. During these periods the Company primarily focused on the launching of PHILUX Global
Funds SCA, SICAV-RAIF and the development of Asia Diamond Exchange and did not generate any significant revenues from advisory and consulting
services.
Total
Operating Expenses:
Total
operating expenses were $15,496,610 and $553,149 for the nine months ended March 31, 2022, and 2021, respectively. An increase of $14,943,461
in total operating expenses between the two periods was mainly due to an increase of salaries in the amount of $115,540, an increase
in professional services of $14,866,929 due to the costs for the development of the blockchain and crypto platform for digital assets
that were paid for by issuance of the Company’s stock in lieu of cash, offset by a decrease in general and administrative expenses
of $39,008.
Loss
from Operations:
Loss
from operations for the nine months ended March 31, 2022 was $15,466,610, as compared to loss from operations of $$530,149 for the corresponding
period ended March 31, 2021. An increase of 14,936,461 in the loss from operations between the two nine-month periods was mainly due
to an increase of salaries in the amount of $115,540, an increase in professional services of $14,866,929 due to the costs for the development
of the blockchain and crypto platform for digital assets that were paid for by issuance of the Company’s stock in lieu of cash,
offset by a decrease in general and administrative expenses of $39,008 as mentioned above.
Other
Income and Expenses:
The
Company had a net other expenses of $3,137,553 for the nine months ended March 31, 2022, as compared to net other expenses of $710,477
for the nine months ended March 31, 2021. The increase in other expenses of $2,427,076 between the two nine-month periods was mainly
due to an increase of $660,614 from gain on settlement of debts and exchange rates, an increase in loss from derivatives of $427,704,
an increase in loss from issuance of stock in the amount of $237,879, an increase in financing costs of $296,320, an increase in loss
from conversion of notes in the amount of $1,594,806, offset by a decrease in loss on note discounts of $$375,244 and a decrease in penalties
of $90,298.
Net
Income (Loss):
Net
loss for the nine months ended March 31, 2022 was $18,604,163 as compared to net loss of $1,240,626 for the same period in 2021, which
is equivalent to ($0.00) per share for the current period and ($0.00) per share for the corresponding period ended March 31, 2020, 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 $23,592 and $108,388 as of March 31, 2022 and March 31, 2021, respectively.
Net
cash used in the Company’s operating activities during the nine months ended March 31, 2022 was $554,878, as compared to net cash
used in operating activities of $115,811 during the corresponding period ended March 31, 2021. This represents a variance of $439,067
in net cash used in operating activities between the two periods. The underlying reasons for the variance were primarily due to an increase
of $17,363,537 in loss from operations, an increase in loss from derivatives of $953,932, offset by stock issuance for services and cancellation
of debts in the amount of $18,419,645, change in accounts payable of $131,860, decrease in accrued expenses of $65,332, decrease in subfund
obligations of $208,141, and a decrease in advance from customer in the mount of $135,910.
Net
cash used in investing activities during the nine months ended March 31, 2022 was $502,798 as compared with net cash used in investing
activities of $265,373 during the corresponding period ended March 31, 2021, due to recognition of investments in the development of
Asia Diamond Exchange.
Cash
provided by financing activities was $985,924 for the nine months ended March 31, 2022, as compared to cash provided by financing activities
in the amount of $$264,191 for the same period ended March 31, 2021. The primary reasons for an increase of $721,733 in cash provided
by financing activities between the two corresponding periods were due to a decrease in Common Stock of $75,250, an increase in notes
and loans in the amount of $696,983 and an increase in cash received from CO2-1-0 (Carbon) Corp tokens of $100,000.
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. These notes bear interest rates ranging
from 0% to 36% per annum.
CONVERTIBLE
PROMISSORY NOTES
The
Company has also from time to time issued convertible promissory notes to various private investment funds for short-term working capital
and special projects. Typically these notes bear interest rates from 6% to 12% per annum, mature within one year, are convertible to
common stock of the Company at a discount ranging from 42% to 50%, and may be repaid within 180 days at a prepayment premium ranging
from 130% to 150%.
COMPANY’S
PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS
In
the next twelve months the Company’s goals are to create a number of sub-funds under PHILUX Global Funds SCA, SICAV-RAIF for investment
in real estate, renewable energy, agriculture, infrastructure, and healthcare, as well as develop the Asia Diamond Exchange in Vietnam.
In addition, the Company will continue to carry out its merger and acquisition program by acquiring target companies for a roll-up strategy
and also invest in special situations. Moreover, we will continue to provide advisory and consulting services to international clients
through our wholly owned subsidiary PHILUX Capital Advisors, Inc.
MATERIAL
CASH REQUIREMENTS: We must raise substantial amounts of capital to fulfill our plans for PHILUX Global Funds and for acquisitions. We
intend to use equity, long-term loans, other debt instruments and project financing to meet our capital needs for investments, acquisitions
and other requirements and plans.
Management
has taken action and formulated plans to meet the Company’s operating needs through June 30, 2022 and beyond. The working capital
cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities, sale of common
stock and debt 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 debts, equity capital,
and project financing as may be necessary. Recently, the Company has filed an offering statement under Regulation A. However, we may
withdraw this offering statement due to recent market conditions. The Company believes it will be able to secure the required capital
to implement its business plan.