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 consolidated financial statements
PHI
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED MARCH 31, 2023 AND 2022
(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 YEAR ENDED JUNE 30, 2022 (AUDITED) AND
THE
QUARTER ENDED MARCH 31, 2023 (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. (n/k/a Philux Global Group Inc) (the “Company” or “PHI”) (www.philuxglobal.com) is primarily
engaged in mergers and acquisitions, advancing PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund”
(“RAIF”) under the laws of Luxembourg, and developing the Asia Diamond Exchange in Vietnam. Besides, the Company provides
corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly
owned subsidiary PHILUX Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcapital.com) and 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 select growth opportunities in the areas of agriculture, renewable energy,
real estate, infrastructure, and the Asia Diamond Exchange in Vietnam.
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 various transactions in connection with 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 by launching Philux Global Select Growth Fund and potentially other
sub-funds for investment in real estate, renewable energy, infrastructure, agriculture, healthcare and 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. The Company has also formed Philux Global Advisors, Inc. to serve as the investment advisor to PHILUX Global
Funds and other potential fund clients in the future.
The
Company had signed agreements to acquire majority equity interests in Kota Construction LLC and Kota Energy Group LLC (“KOTA”)
which are engaged in solar energy business (https://www.kotasolar.com), Tin Thanh Group, a Vietnamese joint stock company (www.tinthanhgroup.vn)
(“TTG”) and Van Phat Dat Joint Stock Company, a Vietnamese joint stock company. Whereas the scheduled closing dates for the
KOTA and TTG transactions already expired, the Company has continued to discuss with these companies and intends to renegotiate an revised
agreement for acquisition with them when the Company successfully closes one or more of the pending financing and investment management
agreements with certain lenders and investor groups. In addition, the Company is in the process of amending the Purchase and Sale Agreement
that was originally signed on January 18, 2022 with Five-Grain Treasure Spirits Co., Ltd., a Chinese baiju distiller, to collaborate
in launching American-made baiju products through Empire Spirits, Inc., a subsidiary of the Company. The Company will also relocate CO2-1-0
(CARBON) Corp., a subsidiary of the Company engaged in carbon emission mitigation using blockchain and crypto technologies, to the United
Arab Emirates. These activities are disclosed in greater detail elsewhere in this report. 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. (a/k/a Philux Global Group, Inc.) and its active wholly
owned subsidiaries: (1) PHILUX Capital Advisors, Inc., a Wyoming corporation (100%),
(2) PHI Luxembourg Development S.A., a Luxembourg corporation (100%),
(3) PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg Reserved Alternative Investment Fund (100%),
(4) PHILUX Global General Partners SA, a Luxembourg corporation (%),
(5) PHI Luxembourg Holding SA, a Luxembourg corporation (100%),
(6) Asia Diamond Exchange, Inc., a Wyoming corporation (100%),
and (7) CO2-1-0 (CARBON) Corp., 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, 2022. 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, 2023 are not necessarily
indicative of the results to be expected for the fiscal year ending June 30, 2023.
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, 2023, the marketable securities were recorded at $420 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, 2023, 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, 2023, 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, 2022, and early adoption is permitted for fiscal years beginning after December 15,
2020. This pronouncement should not affect the accounting for the Company’s debt instruments for the quarter ended March 31, 2023.
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, 2023 consisted of 91 shares of Myson Group, Inc.
(formerly Vanguard Mining Corporation) which are quoted on the OTC Markets (Trading symbols “MYSN”). The fair value of the
shares recorded as of March 31, 2023 was $420.
SCHEDULE OF FAIR VALUE OF INVESTMENTS MARKETABLE EQUITY SECURITIES
| Securities available for sale | |
Level 1 | |
Level 2 | | |
Level 3 | | |
Total | |
| March 31, 2023 | |
None | |
$ | 420 | | |
$ | 0 | | |
$ | 420 | |
| June 30, 2022 | |
None | |
$ | 546 | | |
$ | 0 | | |
$ | 546 | |
NOTE
4 – PROPERTIES AND EQUIPMENT
The
Company did not have any properties or equipment as of March 31, 2023.
NOTE
5 – OTHER ASSETS
Other
Assets comprise of the following as of March 31, 2023 and June 30, 2022
SCHEDULE OF OTHER ASSETS
| | |
March 31, 2023 | | |
June 30, 2022 | |
| Investment in PHILUX Global Funds, SCA, SICAV-RAIF | |
$ | 32,601 | | |
$ | 31,161 | |
| Investment in AQuarius Power, Inc. | |
$ | 5,000 | | |
$ | 5,000 | |
| Total Other Assets | |
$ | 37,601 | | |
$ | 36,161 | |
Other
Assets as of March 31, 2023 consist of a $5,000 investment in AQuarius Power, Inc., a Texas renewable energy technology company, and
$32,601 in PHILUX Global Funds.
For
the investments in PHILUX Global Funds, as of March 31, 2023, 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 $32,601 as of March 31, 2023 based on the prevalent exchange rate at that time.
The
Company has treated all development costs of the Asia Diamond Exchange as expenses and exchanged for common shares in Asia Diamond Exchange,
Inc., a Wyoming corporation.
NOTE
6 – CURRENT LIABILITIES
Current
Liabilities of the Company consist of the followings as of March 31, 2023 and June 30, 2022.
SCHEDULE OF CURRENT LIABILITIES
| Current Liabilities | |
31-Mar-23 | | |
30-Jun-22 | |
| Accounts payable | |
$ | 615,405 | | |
$ | 615,805 | |
| Sub-fund obligations and commitments | |
| 1,683,459 | | |
| 1,574,775 | |
| Accrued expenses | |
| 1,261,565 | | |
| 931,417 | |
| Short-term loans and notes payable | |
| 1,044,461 | | |
| 676,888 | |
| Convertible Promissory Notes | |
| 572,500 | | |
| 756,250 | |
| Due to officers | |
| 1,045,210 | | |
| 1,077,218 | |
| Advances from customers | |
| 760,434 | | |
| 665,434 | |
| Derivative liabilities and Note Discount | |
| 1,623,460 | | |
| 715,677 | |
| Total Current Liabilities | |
$ | 8,606,494 | | |
$ | 7,013,465 | |
ACCRUED
EXPENSES: Accrued expenses as of March 31, 2023 totaling $1,261,565 consist of $943,842 in accrued salaries and payroll liabilities and
$308,723 in accrued interest from short-term notes and convertible notes.
NOTES
PAYABLE: As of March 31, 2023, Notes Payable consist of $814,348 in short-term notes payable, $43,750 in PPP loan, $572,500 in convertible
promissory notes and $186,363 in Merchant Cash Advance loans.
ADVANCES
FROM CUSTOMERS AND CLIENT’S DEPOSIT:
As
of March 31, 2023, the Company recorded $660,434
as Advances from Customers for consulting fees previously received from a client plus mutually agreed accrued interest and $100,000 deposit for a financing agreement from another client/partner.
SUB-FUND
OBILGATIONS AND COMMITMENT RETAINER: The Company has recorded a total of $1,586,619 from partners/investors towards the expenses and
capitalization for setting up sub-funds under the master PHILUX Global Funds. These amounts are currently booked as liabilities until
these sub-funds are set up and activated, at which time the sub-fund participants will receive their respective percentages of the general
partners’ portion of ownership in the relevant sub-funds based on their actual total contributions. In addition, the Company recorded
$96,840 as commitment retainer during the quarter ended March 31, 2023 for money received from a client in connection with a project
financing agreement.
NOTE
7 – DUE TO OFFICERS
Due
to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, unsecured and due on demand.
As of March 31, 2023 and June 30, 2022, the balances were $1,045,210 and $1,077,218, respectively.
SCHEDULE OF COMPONENTS OF DUE TO OFFICERS
| Officers/Directors | |
Mar 31, 2023 | | |
Jun 30, 2022 | |
| Henry Fahman | |
| 360,089 | | |
$ | 413,868 | |
| Tam Bui | |
| 663,350 | | |
$ | 663,350 | |
| Total | |
$ | 1,045,210 | | |
$ | 1,077,218 | |
| Duo to Officers | |
$ | 1,045,210 | | |
$ | 1,077,218 | |
NOTE
8 – LOANS AND PROMISSORY NOTES
A.
SHORT TERM NOTES PAYABLE:
In
the course of its business, the Company has obtained short-term loans from individuals and institutional investors.
NOTES
PAYABLE: As of March 31, 2023, Notes Payable consist of $814,348 in short-term notes payable with $284,475 in accrued interest, $43,750
in PPP loan with $1,274 in accrued interest, and $186,363 in Merchant Cash Advance loans.
B.
CONVERTIBLE PROMISSORY NOTES OUTSTANDING AS OF MARCH 31, 2023
As
of March 31, 2023, the Company had a net balance of $572,500 in convertible promissory notes with $21,973 in accrued interest,
NOTE
9 – PAYROLL TAX LIABILITIES
As
of March 31, 2023, payroll tax liabilities were $5,747.
NOTE
10 – BASIC AND DILUTED NET PROFIT (LOSS) PER SHARE
Net
loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No. 128,
basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding
for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock
equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares for the period ended March 31,
2023 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE
11 – STOCKHOLDER’S EQUITY
As
of March 31, 2023, 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, 2023 was 484,767 shares valued at $44,170 according to cost method.
COMMON
STOCK
During
the quarter ended March 31, 2023, the Company issued the following amounts of Common Stock: 1,909,744,449 shares for conversion of convertible
debts, 609,309,245 shares for cash with existing shareholders of the Company and 185,000,000 shares in connection with a financing contractual
obligation.
As
of March 31, 2023, there were 36,349,939,124 shares of the Company’s Common Stock issued and outstanding.
PREFERRED
STOCK
CLASS
B SERIES I PREFERRED STOCK
As
of March 31, 2023, there were 600,000 shares of Class B Series Preferred Stock issued and outstanding.
NOTE
12 – 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 September 30, 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, 2022, the Company adopted the PHI Group 2022 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, 2022, 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, 2023 the Company
has issued a total of 2,407,196,586 shares for consulting services and salaries under the PHI Group 2022 Employee Benefit Plan.
NOTE
13– RELATED PARTY TRANSACTIONS
As
of March 31, 2023, the Company has recognized a total of $815,595 in accrued and unpaid salaries for the President, the Chief Operating
Officer and the Secretary & Treasurer of the Company.
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, 2023, the Company still owed the following amounts to Related Parties:
SCHEDULE
OF RELATED PARTIES
| No. |
|
Name: |
|
Title: |
|
Amount: |
|
|
Description: |
| |
|
|
|
|
|
|
|
|
|
| 1) |
|
Tam Bui |
|
Director/COO |
|
$ |
300,000 |
|
|
Accrued salaries |
| |
|
|
|
|
|
$ |
663,350 |
|
|
Loans |
| |
|
|
|
|
|
|
|
|
|
|
| 2) |
|
Henry Fahman |
|
Chairman/CEO |
|
$ |
221,796 |
|
|
Accrued salaries |
| |
|
|
|
|
|
$ |
381,860 |
|
|
Loans |
| |
|
|
|
|
|
|
|
|
|
|
| 3) |
|
Tina Phan |
|
Secretary/Treasurer |
|
$ |
293,799 |
|
|
Accrued salaries |
NOTE
14 – CONTRACTS AND COMMITMENTS
1.
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, 2023, Tecco Group has paid a total of $156,366.25 towards the total agreed amount.
2.
INVESTMENT AGREEMENTS AND MEMORANDUM OF UNDERSTANDING
The
Company and its subsidiaries have entered into loan financing agreements, investment management agreements, joint venture agreement,
and memorandum of understanding with six international investor groups for a total six billion three hundred million U.S. dollars, as
reported in various 8-K filings with the Securities and Exchange Commission. The Company has been working regularly with these investor
groups and expects to begin receiving capital through these sources in the near future to support its acquisition and investment programs.
3.
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 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. The Company plans
to establish the first laboratory-grown diamond exchange in Chu Lai in conjunction with several prominent international partners.
On
June 04, 2022 the Company incorporated Asia Diamond Exchange, Inc., a Wyoming corporation, ID number 2022-001010234, as the holding company
for the development of the Asia Diamond Exchange in Vietnam.
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. The Company has submitted a request for 1,000 hectares of 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.
4.
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. The Company has renegotiated with Five-Grain
to revise the Agreement of Purchase and Sale and to cooperate in producing American-made baijiu products through its subsidiary Empire
Spirits, Inc. in the US. The details of the renegotiated transactions will be officially announced upon signing by the two parties.
5.
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 (‘KEG”) and Kota Construction LLC (“KCCO”), 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.
In
the second and latest amendment signed on August 3, 2022 to the Agreements of Purchase and Sale with KOTA, the concerned parties have
agreed that PHI Group, Inc. would pay Fifteen Million Six Hundred Fifty-Five Thousand Two Hundred Forty-Eight U.S. Dollars ($15,655,248)
to Kota Energy Group LLC (“KEG”), in exchange for fifty point one percent (50.10%) of the equity ownership in KEG, and Sixty-Four
Million Five Hundred Four Thousand Seven Hundred Fifty-Two U.S. Dollars ($64,504,752) to KCCO, in exchange for fifty point one percent
(50.10%) of the equity ownership in KCCO.
Whereas
the scheduled closing date for the KOTA transaction already expired, the Company intends to renegotiate an revised agreement for acquisition
when the Company successfully closes one or more of the pending financing and investment management agreements with certain lenders and
investor groups.
6.
JOINT VENTURE AGREEMENT WITH DANANG RUBBER JSC AND TIN THANH GROUP
In
June 2022, the Company signed an joint venture agreement with Danang Rubber Joint Stock Company (DRC) (https://drctire.com/) and Tin
Thanh Group (TTG) (https://tinthanhgroup.vn/en/) to cooperate in increasing DRC’s tire production and executing an innovative sales
and marketing program targeting annual revenues of 5.5 billion dollars by 2025.
The
DRC-TTG truck tire leasing service program with complete multi-function and insurance package is designed to provide the following features
and benefits to the consumers:
| |
1. |
Smart tires with mounted chips to track and manage
journey. |
| |
2. |
Saving of 10-20% compared to buying tires. |
| |
3. |
No cost to change tires. |
| |
4. |
No environmental fees when replacing old tires. |
| |
5. |
No need to pay for periodic tire maintenance checks. |
| |
6. |
No need to pay for buying tires when changing new tires. |
| |
7. |
No need to pay for tire insurance. |
| |
8. |
No increase in fuel or lubricant consumption compared
to before using this service. |
| |
9. |
Tires use clean and renewable energy thus also benefiting
the environment. |
7.
JOINT VENTURE/PARTNERSHIP AGREEMENT (FUND MANAGEMENT MOU) BETWEEN AN INVESTOR IN THE GULF COOPERATION COUNCIL REGION AND PHILUX GLOBAL
GROUP, INC. (A/K/A PHI GROUP, INC.)
On
July 08, 2022, the registrant signed a Joint Venture/Partnership Agreement (Fund Management MOU) with an investor in the Gulf Cooperation
Council region to manage an initial amount of Three Billion United States Dollars (USD 3,000,000,000) for investment in different transactions
chosen and advised by the registrant for a period of ten years. According to the Agreement, after the first twenty four months of investment
implementation, the registrant will be allocated 40% of the net profit from these investments. The Company is currently working with
this investor group to close this transaction as soon as possible.
8.
AGREEMENT WITH TIN THANH GROUP
Effective
August 13, 2022, the Company signed a Stock Transfer Agreement with Tin Thanh Group Joint Stock Company, a joint stock company organized
and existing by virtue of the laws of Socialist Republic of Vietnam, with principal business address at 71 Pho Quang Street, Ward 2,
Tan Binh District, Ho Chi Minh City, Vietnam, hereinafter referred to as “TTG” and Mr. Tran Dinh Quyen, the holder of at
least fifty-one percent (51.00%) of equity ownership in TTG (the “Majority Shareholder”), hereinafter referred to as “Seller,”
to acquire Twenty-Two Million Thirty-Two Thousand (22,032,000) Shares of Ordinary Stock of TTG, which is equivalent to Fifty-One Percent
(51.00%) of all the issued and outstanding Ordinary Stock of TTG for a total purchase price of Sixty Million U.S. Dollars ($US 60,000,000)
in cash.
The
closing date of this transaction would be the date on which the closing actually occurs, which was last extended to March 15, 2023 based
on the fifth amendment to the Stock Transfer Agreement signed by both parties on February 14, 2023. On March 20, 2023 Tin Thanh Group
sent a notice to terminate this Stock Transfer Agreement. However, both companies have continued discussing and agreed to renegotiate
an revised agreement whereby the Company will co-invest in Tin Thanh’s Smart-tire program in South Carolina, USA and cooperate
in other the business activities in Vietnam and abroad when the Company successfully closes one or more of the pending financing and
investment management agreements with certain lenders and investor groups.
9.
AGREEMENT WITH VAN PHAT DAT JOINT STOCK COMPANY
Effective
August 16, 2022, PHI Group, Inc. (a/k/a PHILUX GLOBAL GROUP INC.) (“the Registrant”) signed an Agreement of Purchase and
Sale with Van Phat Dat Export Joint Stock Company, a joint stock company organized and existing by virtue of the laws of Socialist Republic
of Vietnam, with principal business address at 316 Le Van Sy Street, Ward 1, Tan Binh District, Ho Chi Minh City, Vietnam, hereinafter
referred to as “VPD,” and the holder of at least fifty-one percent (51.00%) of equity ownership in VPD, hereinafter referred
to as “Seller,” to acquire Five Million One Hundred Thousand (5,100,000) Shares of Ordinary Stock of VPD, which is equivalent
to Fifty-One percent (51.00%) of all the issued and outstanding Ordinary Stock of VPD for a total purchase price of Six Million One Hundred
Twenty-Seven Thousand Eight Hundred Ninety-Five U.S. Dollars ($US 6,127,895) in form of a convertible promissory note to be issued by
Philux Global Trade Inc., a Wyoming corporation and wholly-owned subsidiary of the Registrant. The closing date of this transaction shall
be the date on which the closing actually occurs, which is expected to happen as soon as possible within sixty days following the signing
of the Agreement of Purchase and Sale, unless extended in writing by the Parties to said Agreement.
The
convertible promissory note, which will be guaranteed by Philux Global Group Inc. and carries no interest, will be due and payable 180
days commencing the date of issuance and may be converted into common stock of Philux Global Trade Inc. any time after this subsidiary
becomes a publicly traded company in the United States. The conversion price will be 50% of the average closing price during the ten
trading-day period ending one trading day prior to the date of conversion.
On
September 30, 2022 PHI Group, Inc. entered into a Closing Memorandum for the Agreement of Purchase and Sale dated August 16, 2022 with
and among Van Phat Dat Export Joint Stock Company and Mr. Huynh Ngoc Vu, an individual and the majority shareholder of VPD.
10.
STRATEGIC BUSINESS COOPERATION WITH TIN THANH GROUP AND PETROVIETNAM MARINE SHIPYARD JSC
On
September 03, 2022, the Company signed a strategic business cooperation with Tin Thanh Group (www.tinthanhgroup.vn/en/) and PetroVietnam
Marine Shipyard JSC (https://www.pvshipyard.com.vn/) whereby PetroVietnam Marine Shipyard (“PVMS”) will increase charter
capital to allow Tin Thanh Group and Philux Global Group to become its strategic and majority shareholders. The companies will deploy
their collective resources to expand PVMS’s scope of business and undertake major offshore and onshore, domestic and international
projects that may be substantially beneficial for all parties, including but not limited to ship-building, yacht-building, drilling rigs,
refineries and petrochemical plants, power plants, wind farms, ship dismantlement, Tin Thanh Group’s waste-to-energy plants and
multiple processing facilities as well as Philux Global Group’s Asia Diamond Exchange project, industrial logistic zone and multi-commodities
center in Vietnam.
Founded
in 2007, PVMS has been providing (EPC) Engineering, Procurement, Fabrication, Construction and Commissioning for drilling units, floating
facilities, modules and steel structures as well as up-grading, repair and maintenance services for MODU. Its onshore projects include
steel fabrication, erection and commissioning for power plants, petrochemical plants, fertilizers plants, gas terminals and particularly
onshore E-House, process module design, estimation & construction.
11.
ISSUANCES OF SHORT-TERM CONVERTIBLE NOTES
On
March 3, 2023, the Company issued a Convertible Promissory Note to 1800 Diagonal Lending LLC, a Virginia limited liability company, for
$55,000.00, with interest rate of eight percent (8%) per annum. Any Principal Amount or interest on this Note which is not paid when
due shall bear interest at the rate of twenty two percent (22%) from the due date thereof until the same is paid (“Default Interest”).
The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible
into shares of Common Stock hereunder (the “Conversion Price”) shall equal $0.001 during the one hundred eighty days following
the issuance date, or 61% multiplied by the market price any time after the first one hundred eighty days. Market price is defined as
the average of the two lowest trading prices for the Company’s Common Stock during the ten trading day period ending on the latest
trading day prior to the conversion date.
On
March 14, 2023, the Company issued a Convertible Promissory Note to Mast Hill Fund, L.P., a De a Delaware limited partnership, for $185,000.00,
with interest rate of twelve percent (12%) per annum. Any Principal Amount or interest on this Note which is not paid when due shall
bear interest at the rate of the lesser of (i) sixteen percent (16%) per annum and (ii) the maximum amount permitted by law from the
due date thereof until the same is paid (“Default Interest”). The per share conversion price into which Principal Amount
and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion
Price”) shall equal $0.001, subject to adjustment as provided in this Note.
12.
AGREEMENT FOR COMPREHENSIVE COOPERATION WITH DR. TRI VIET DO
On
February 10, 2023, the Company signed an agreement for comprehensive cooperation with Dr. Tri Viet Do, a German-trained expert in electromagnetic
energy and quantum physics, to jointly cooperate in the development and commercialization of a number of key products using proprietary
intellectual properties already developed by him. The scope of study and development includes: 1) Producing generators using electromagnetic
and quantum fields extracted from the energy absorbed from the earth; 2) Producing engines (spaceships, airplanes, ships, cars, trains,
motorcycles, etc.) powered by electromagnetic and quantum energy; 3) Machines to kill harmful bacteria and viruses, including covid-19
and variants; 4) Medicines to treat 25 types of infectious diseases and cancers using atomic nuclear energy, super-matter and antimatter;
5) Desalination of seawater, separating minerals, medicines and rare metals from sea water; 6) Environmental technology for treating
and sterilizing wastewater to become clean water; 7) Waste treatment by automatic classification of wastes into various categories; 8)
Clean agriculture with electromagnetic and quantum fields for use in farming; and 9) Aquatic poultry farming by treating the rearing
environment with electromagnetic and quantum fields and providing food energy for poultry and aquatic products.
13.
TERMINATION OF AGREEMENT FOR PARTICIPATION IN INFRASTRUCTURE FUND WITH THANH NAM LONG CONSTRUCTION COMPANY
On
February 09, 2023, the Company sent a notice to Thanh Nam Long Construction Co., Ltd. (“TNLC”), a Vietnam limited company,
with its main address at Lot C10-18, street No. 5, Tay Bac urban area, Vinh Quang Ward, Rach Gia City, Kien Giang Province, Vietnam,
to terminate the Agreement for Participation in PHILUX Infrastructure Fund dated February 02, 2023 due to TNLC’s failure to fulfill
its obligations as agreed in Article 2 of said Agreement.
14. Investment
Commitment Agreement WITH Saigon Silicon City JSC
On
February 21, 2023, Philux Global Group Inc. (a/k/a PHI Group, Inc.) and its subsidiaries Philux Global Funds SCA, SICAV-RAIF and Philux
Global Vietnam Investment and Development Company, Ltd., (collectively referred to as “the Investor”) signed an Investment
Commitment Agreement with Saigon Silicon City Joint Stock Company (the “Company”) whereby the Investor is committed to providing
or causing to be provided a total of five hundred million U.S. dollars (USD 500,000,000) for investment in Saigon Silicon City for the
first phase of construction and subsequent additional capital as needed to complete the Company’s entire development and investment
program over a 52-hectare of land at Lot I6 & I7, Road D1, Saigon High Technology Park, Long Thanh My Ward, District 9, Ho Chi Minh
City, Vietnam.
According
to the Investment Commitment Agreement, within thirty days of the signing of this Agreement, the Investor will provide or cause to be
provided fifty million U.S. dollars (USD 50,000,000) for the Company to resume the implementation of its building plan. Additional tranches
of fifty million U.S. dollars (USD 50,000,000) will be released to the Company at regular intervals as needed to ensure uninterrupted
construction progress. Both Parties shall determine and stipulate the terms and conditions for the Investment Commitment in writing prior
to the release of funds to the Company. Upon the signing of this Agreement, the Company shall make a deposit of Five Hundred Thousand
U.S. Dollars (USD 500,000) with the Investor as earnest money for legal, administrative and processing fees in connection with the Investment
Commitment Agreement. This amount will be fully refundable to the Company if the Investor fails to fulfill its commitment as mentioned
in the Agreement. The Investor intends to use a portion of the USD 4,500,000,000 financing commitments from certain international institutional
and ultra-high net worth investors which are expected to be released during the first quarter of 2023 for investment in Saigon Silicon
City and select projects in Vietnam and elsewhere.
Effective
March 21, 2023, the Company and Saigon Silicon City JSC signed an amendment to amend Article 2 of the afore-mentioned Investment Commitment
Agreement as follows: “Time frame. Due to additional administrative and legal requirements in connection with the Investor’s
release of funds, within thirty days of the signing of this Amendment, the Investor will provide or cause to be provided fifty million
U.S. dollars (USD 50,000,000) for the Company to resume the implementation of its building plan. Additional amounts of capital will be
provided to the Company by the Investor at various intervals as needed to ensure uninterrupted construction until the completion of the
project.”
On
April 21, 2023, both parties signed an amendment to extend the delivery of the first investment tranche to Saigon Silicon City JSC within
forty-five days commencing April 21, 2023.
15. Termination of Agreement for Participation in Philux Global Real Estate Fund with AZ Holdings Joint Stock Company
On
March 24, 2023, the Company sent a notice to AZ Holdings Investment Joint Stock Company, a Vietnamese joint stock company (“AZHC”),
with principal address at No. 36, Sub-alley 3, Alley 83, Nguyen Khang Street, Yen Hoa Ward, Cau Giay District, Hanoi, Vietnam, to terminate
the Agreement for Participation in Philux Global Real Estate Fund dated July 18, 2022 due to AZHC’s failure to fulfill its obligations
as agreed in Article 2 of said Agreement.
16.
COMMON STOCK TO BE ISSUED
During
the quarter ended March 31, 2023 the Company recorded $396,000 as Common Stock to be issued for cash amounts that the Company has received
from four current shareholders of the Company in connection with stock purchase agreements under Rule 144.
NOTE
15 - GOING CONCERN UNCERTAINTY
As
shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $75,932,642 as of March 31, 2023
and total stockholders’ deficit of $8,286,628. For the quarter ended March 31, 2023, the Company incurred a net loss of $1,778,713
as compared to a net loss of $2,052,354 during the same period ended March 31, 2022. 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, 2023 and beyond.
NOTE
16 – SUBSEQUENT EVENT
These
financial statements were approved by management and available for issuance on or about May 22, 2023. Subsequent events have been evaluated
through this date.
ISSUANCE OF
COMMON SHARES FOR CONVERSION OF PROMISSORY NOTE
On April 24, 2023 the Company issued
709,353,966 shares of Common Stock to Mast Hill Fund L.P. for the conversion of a convertible promissory that was issued to this investor
on April 4, 2022.
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.
NATURE
OF BUSINESS
PHI
Group, Inc. (n/k/a Philux Global Group Inc) (the “Company” or “PHI”) (www.philuxglobal.com) is primarily
engaged in mergers and acquisitions, advancing PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund”
(“RAIF”) under the laws of Luxembourg, and developing the Asia Diamond Exchange in Vietnam. Besides, the Company provides
corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly
owned subsidiary PHILUX Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcapital.com) and 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 select growth opportunities in the areas of agriculture, renewable energy,
real estate, infrastructure, and the Asia Diamond Exchange in Vietnam.
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 various transactions in connection with 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 by launching Philux Global Select Growth Fund and potentially other
sub-funds for investment in real estate, renewable energy, infrastructure, agriculture, healthcare and 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. The Company has also formed Philux Global Advisors, Inc. to serve as the investment advisor to PHILUX Global
Funds and other potential fund clients in the future.
The
Company had signed agreements to acquire majority equity interests in Kota Construction LLC and Kota Energy Group LLC (“KOTA”)
which are engaged in solar energy business (https://www.kotasolar.com), Tin Thanh Group, a Vietnamese joint stock company (www.tinthanhgroup.vn)
(“TTG”) and Van Phat Dat Joint Stock Company, a Vietnamese joint stock company. Whereas the scheduled closing dates for the
KOTA and TTG transactions already expired, the Company has continued to discuss with these companies and intends to renegotiate an revised
agreement for acquisition with them when the Company successfully closes one or more of the pending financing and investment management
agreements with certain lenders and investor groups. In addition, the Company is in the process of amending the Purchase and Sale Agreement
that was originally signed on January 18, 2022 with Five-Grain Treasure Spirits Co., Ltd., a Chinese baiju distiller, to collaborate
in launching American-made baiju products through Empire Spirits, Inc., a subsidiary of the Company. The Company will also relocate CO2-1-0
(CARBON) Corp., a subsidiary of the Company engaged in carbon emission mitigation using blockchain and crypto technologies, to the United
Arab Emirates. These activities are disclosed in greater detail elsewhere in this report. 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, 2023, 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) Philux Global Vietnam Investment and Development Company Ltd., a Vietnamese limited liability company (100%),
(9) Phivitae Healthcare, Inc. (100%), (10) American Pacific Resources, Inc., a Wyoming corporation (100%), (11) Philux Fidelity Global
Group, a Wyoming corporation, (12) and Philux Global Trade Inc., a Wyoming corporation.
ASIA
DIAMOND EXCHANGE AND THE DEVELOPMENT OF MULTI-COMMODITIES AND LOGISTICS CENTER IN VIETNAM
Along
with the establishment of PHILUX Global Funds, since March 2018 the Company has worked 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. The Company plans
to establish the first laboratory-grown diamond exchange in Chu Lai in conjunction with several prominent international partners.
On
June 04, 2022 the Company incorporated Asia Diamond Exchange, Inc., a Wyoming corporation, ID number 2022-001010234, as the holding company
for the development of the Asia Diamond Exchange in Vietnam.
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. The Company has submitted a request for 1,000 hectares of 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.
EMPIRE
SPIRITS, INC. (FORMERLY PROVIMEX, INC.)
Provimex,
Inc. was originally incorporated as a Nevada corporation on September 23, 2004, Entity Number C25551-4, as a subsidiary of the Company
to engage in international trade. On 9/26/2022, Provimex, Inc. changed its name to Empire Spirits, Inc. as the holding company for the
acquisition of a majority ownership in Five-Grain Treasure Spirits Company, Ltd., a baiju distiller in Jilin Province. The Company is
in the process of amending the Purchase and Sale Agreement that was originally signed on January 18, 2022 with Five-Grain Treasure Spirits
Co. Ltd., to collaborate in launching American-made baiju products through Empire Spirits, Inc.
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
following entities had been engaged to support the Fund’s operations: a) Custodian Bank: Hauck & Aufhauser Privatbankiers AG,
b) Administrative Registrar & Transfer Agent: Hauck & Aufhauser Alternative Investment Services S.A., c) Fund Manager: Hauck
& Aufhauser Fund Services S.A., d) Fund Attorneys: DLP Law Firm SARL and VCI Legal, e) Investment Advisor: PHILUX Capital Advisors,
Inc., f) Fund Auditors: E&Y Luxembourg and E&Y Vietnam, g) Fund Tax Advisor: ATOZ Tax Management, Luxembourg, h) Fund Independent
Asset Valuator: Cushman & Wakefield, Vietnam. Currently the Fund is in the process of changing the custodian bank, administrative
registrar & transfer agent, investment advisor and the fund manager.
The
Fund is an umbrella fund intended to contain one or more sub-fund compartments for investing in select opportunities in the areas of
real estate, infrastructure, renewable energy, agriculture, healthcare and especially the Asia Diamond Exchange and Multi-Commodities
and Logistics Center in Vietnam.
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. Website: www.philuxfunds.com.
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 a number of privately held
and publicly traded companies and continues to focus on serving the Pacific Rim markets in the foreseeable future. This subsidiary also
arranges debt financing for international clients. Website: www.philuxcapital.com.
CO2-1-0
(CARBON) CORP
In
August 2022, PHI Group 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, 2022 CO2-1-0 (CARBON) CORP was incorporated as
a Wyoming corporation to manage this program. During the fiscal year ended June 30, 2022, PHI Group, Inc. has contributed a major portion
of the development budget for CO2-1-0 (CARBON) CORP) and hold 50.1% shares of CO2-1-0 (CARBON). The Company is in the process of relocating
CO2-1-0 (CARBON) CORP to the United Arab Emirates.
AMERICAN
PACIFIC RESOURCES, INC.
American
Pacific Resources, Inc. (“APR”) is a Wyoming corporation established in April 2016 as a subsidiary of the Company 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 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.
The
Company has passed several resolutions with respect to the declaration of a twenty percent (20%) special stock dividend in American Pacific
Resources, Inc. to shareholders of Common Stock of the Company. Due to the continued adverse effects of the coronavirus pandemic and
other factors that have delayed the development of APR, it deems necessary for the Company to suspend the distribution of the APR special
stock dividend until later on 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. The Company will provide an update
regarding the new Record Date for this special dividend when certain conditions are met.
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. On April 27, 2020, PHI Group, Inc. signed a business cooperation agreement with Natural Well Technical
Ltd. (“NWTL”), a Taiwanese company, to jointly cooperate in the research and development activities of pertinent technologies
that have been initiated and continue to be carried out by NWTL and applying them to produce commercial products and services in the
fields of healthcare, beauty supply, agriculture and industry as well as any other business activities deemed mutually beneficial. PHIVITAE
is in the process of entering into a strategic alliance with a Vietnam-based medical supply company.
On
February 13, 2023, the Company incorporated a new company under the name of “Philux Global Healthcare Inc.” with the State
of Wyoming to consolidate all of its healthcare-related businesses under this entity.
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.
PHILUX
FIDELITY GLOBAL GROUP
PHILUX
FIDELITY GLOBAL GROUP, a Wyoming corporation, was incorporated on June 30, 2022 with the intention to serve as the holding company for
business cooperation between Tin Thanh Group (www.tinthanhgroup.vn) and the Company.
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, 2023, 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, 2023 and
2022, our financial condition on March 31, 2023 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, 2023 compared to the three months ended March 31, 2022
Total
Revenues:
During
the quarter ended March 31, 2023, the Company primarily focused on developing the Asia Diamond Exchange and working with several investor
groups to complete the requirements in order to close the pending financing and investment management agreements. The Company did not
generate any revenues from consulting services for the quarter ended March 31, 2023 as compared to $5,000 of revenues from consulting
services for the corresponding quarter ended March 31, 2022.
Total
Operating Expenses:
Total
operating expenses were $307,065 and $294,542 for the three months ended March 31, 2023, and 2022, respectively. An increase of $12,523
in total operating expenses between the two periods was mainly due to an increase of $35,461 in general and administrative expenses,
offset by a decrease of $22,938 in professional services.
Loss
from Operations:
Loss
from operations for the quarter ended March 31, 2023 was $307,065, as compared to loss from operations of $289,542 for the corresponding
period ended March 31, 2022. An increase of $12,523 in total operating expenses between the two periods was mainly due to an increase
of $35,461 in general and administrative expenses, offset by a decrease of $22,938 in professional services as mentioned above.
Other
Income and Expenses:
The
Company had a net other expenses of $1,471,647 for the three months ended March 31, 2023, as compared to net other expenses of $1,762,812
for the three months ended March 31, 2022. The decrease in other expenses of $291,165 between the two periods was mainly due to an increase
in interest expense of $288,007 and a decrease in other expenses with no loss on warrant exercise for the current period whereas there
was a loss on warrant exercise in the amount of $877,484 for the previous corresponding period. Also there was a decrease in loss due
to issuance of stock with $233,065 for the current period as compared to $371,152 for the previous corresponding period. ended March
31, 2022.
Net
Income (Loss):
Net
loss for the three months ended March 31, 2023 was $1,778,713 , as compared to a net loss of $2,052,354 for the same period in 2022,
which is equivalent to ($0.00) per share for the current period and ($0.00) per share for the corresponding period ended March 31, 2022,
based on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period.
Nine
months ended March 31, 2023 compared to the nine months ended March 31, 2022
Total
Revenues:
The
Company generated $25,000 from consulting services for the nine months ended March 31, 2023 as compared to $30,000 in revenues from consulting
services for the same period ended March 31, 2022. 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 $809,045 and $15,496,610 for the nine months ended March 31, 2023, and 2022, respectively. A decrease of $14,687,565
in total operating expenses between the two periods was mainly due to a decrease in professional services of $14,678,401 related to the
costs for the development of the blockchain and crypto platform for digital assets paid by the issuance of the Company’s stock
in lieu of cash, and a decrease in general and administrative expenses of $6,124 between the two periods.
Loss
from Operations:
Loss
from operations for the nine months ended March 31, 2023 was $784,045, as compared to loss from operations of $15,466,610 for the corresponding
period ended March 31, 2022. A decrease of 14,682,565 in the loss from operations between the two nine-month periods was mainly due to
a decrease in professional services of $14,678,401 related to the costs for the development of the blockchain and crypto platform for
digital assets paid by the issuance of the Company’s stock in lieu of cash, and a decrease in general and administrative expenses
of $6,124 between the two periods as mentioned above.
Other
Income and Expenses:
The
Company had a net other expenses of $3,432,624 for the nine months ended March 31, 2023, as compared to net other expenses of $3,137,553
for the nine months ended March 31, 2022. The increase in other expenses of $295,071 between the two nine-month periods was mainly due
to an increase of $514,108 in connection with the costs to process the financing and investment management agreements, offset by a decrease
of $219,038 in interest expenses.
Net
Income (Loss):
Net
loss for the nine months ended March 31, 2023 was $4,216,669 as compared to net loss of $18,604,163 for the same period in 2022, which
is equivalent to ($0.00) per share for the current period and ($0.00) per share for the corresponding period ended March 31, 2022, 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 $39,424 and $23,592 as of March 31, 2023 and March 31, 2022, respectively.
Net
cash used in the Company’s operating activities during the nine months ended March 31, 2023 was $1,357,190, as compared to net
cash used in operating activities of $554,878 during the corresponding period ended March 31, 2022. This represents a variance of $802,312
in net cash used in operating activities between the two periods. The underlying reasons for the variance were primarily due to a decrease
of $14,387,494 in loss from operations, a difference in negative impact from derivatives and mark-to-market of $1,082,731, offset by
a decrease in stock issuance for service and cancellation of debts in the amount of $14,626,172, an increase in deferred financing cost
of $113,400, a decrease in accounts payable in the amount of $67,763, an increase in accrued expenses of $74,710, an increase in subfund
obligations and contingency commitments of $108,684, and an increase in advance from customer in the mount of $145,000.
Net
cash used in investing activities during the nine months ended March 31, 2023 was $0.00 as compared with net cash used in investing activities
of $502,798 in the development of Asia Diamond Exchange that was recognized as such during the corresponding period ended March 31, 2022.
Cash
provided by financing activities was $1,328,719 for the nine months ended March 31, 2023, as compared to cash provided by financing activities
in the amount of $985,924 for the same period ended March 31, 2022. The primary reasons for an increase of $342,795 in cash provided
by financing activities between the two corresponding periods were due to an increase in Common Stock issuance for cash in the amount
of $251,800, and increase in Common Stock to be issued in the amount of $396,000, a decrease in loans and notes of $205,005 and the absence
of cash received from CO2-1-0 (Carbon) Corp tokens during the current period as compared to $100,000 received from the previous corresponding
nine-month period ended March 31, 2022.
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, including merchant
cash advances, 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 5% 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 advance the Philux Global Select Growth Fund under PHILUX Global Funds SCA, SICAV-RAIF,
develop the Asia Diamond Exchange in Vietnam as well as consummate and integrate some pending acquisitions that should add critical mass
to the Company. The Company has been intensely focused on closing the pending financing and investment management agreements, which are
expected to provide substantial amounts of capital for the Company to fulfill its business plan. At the same time, 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.
We will also continue to provide advisory and consulting services to international clients through our wholly owned subsidiary PHILUX
Capital Advisors, Inc. (formerly known as PHI Capital Holdings, 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, debt and project financing to meet our capital needs for acquisitions and investments.
Management
has taken action and formulated plans to meet the Company’s operating needs through June 30, 2023 and beyond. The working capital
cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities and additional financing.
The Company plans to generate revenues from its consulting services, merger and acquisition advisory services, and acquisitions of target
companies with cash flows.
AVAILABLE
FUTURE FINANCING ARRANGEMENTS: The Company may use various sources of funds, including short-term loans, long-term debt, equity capital,
project financing and investment management contracts as may be necessary. The Company believes it will be able to secure the required
capital to implement its business plan.