UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: JUNE 30, 2019

 

or

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________________________to _____________________________________

 

Commission File Number: 2-78335-NY

 

 

PHI GROUP, INC.

 

(Exact name of

registrant as specified in its charter)

 

Wyoming   001-38255-NY   90-0114535
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

 

2323 Main Street, Irvine, CA   92614
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 702-475-5430

 

5348 Vegas Drive # 237, Las Vegas, NV 89108 

(Former name or former address, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of exchange on which registered
Common Stock   PHIL   OTC Markets

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes [  ] No [X]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [  ] No [X]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, indefinitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
   
Non-accelerated filer [ ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of March 09, 2021, there were 20,015,531,227 shares of the registrant’s $0.001 par value Common Stock, 10,000,000 shares of Class A Series II Preferred Stock and 180,000 shares of Class B Series I Preferred Stock issued and outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I
     
Item 1. Business Overview 3
Item 1A. Risk Factors 6
Item 1B Unresolved Staff Comments 9
Item 2. Description of Properties 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
     
PART II
   
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 9 
Item 6. Selected Financial Data 10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  16
Item 9A. Controls and Procedures  16
Item 9B. Other Information  18
     
PART III
   
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation  19
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  20
Item 13. Certain Relationships and Related Transactions  20
Item 14. Principal Accountant Fees and Services  20
     
PART IV
     
Item15. Exhibits and Financial Statement Schedules  21
     
  SIGNATURES  24

 

CERTIFICATIONS

 

2

 

 

The statements contained in this annual report that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business, which can be identified by the use of forward-looking terminology, such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. All forward-looking statements are based largely on current expectations and beliefs concerning future events that are subject to substantial risks and uncertainties. Actual results may differ materially from the results suggested herein. Factors that may cause or contribute to such differences include, but are not limited to, the company’s ability to develop and successfully market the products and services described in this report (and the costs associated therewith); their acceptance in the marketplace; technical difficulties or errors in the products and/or services; the company’s customer and active prospect base containing a substantially lower number of interested customers than the company anticipates; the failure to consummate the pending acquisitions, joint ventures and/or strategic alliances at all (or on a timely basis) due to various reasons; difficulty integrating or managing multiple companies from technology, operational and marketing aspects; the success (and cost) of new marketing strategies as a result of mergers and acquisitions; unfavorable critical reviews; increased competition (including product and price competition); entrance of new competitors into the market; timing and significance of additional new product and service introductions by the company and its competitors; general economic and market factors, including changes in securities and financial markets; technology obsolescence, the adequacy of working capital, cash flows and available financing to fund the company’s business model and the proposed acquisitions or investments ; and other risks and uncertainties indicated throughout this report and from time to time in the company’s releases and filings including without limitation filings with the Securities and Exchange Commission. As used in this report, the terms “we,” “us,” “our,” the “company” and “PHI” mean PHI Group, Inc. and the term “common stock” means PHI Group, Inc.’s common stock, $.001 par value per share (unless context indicates a different meaning).

 

PART I

 

ITEM 1. BUSINESS OVERVIEW

 

INTRODUCTION

 

PHI Group, Inc. (the “Company” or “PHI”) (www.phiglobal.com) is primarily engaged in the operations of PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund” (“RAIF”) under the laws of Luxembourg, and the development of the Asia Diamond Exchange in Vietnam. Besides, the Company provides corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary PHILUX Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcap.com) and invests in selective industries as well as special situations that may potentially create significant long-term value for shareholders. PHILUX Global Funds will include a number of sub-funds for investment in 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. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company and its subsidiaries were engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation - US, and Philand Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and mainly focused on acquisition and development opportunities in energy and natural resource businesses.

 

The Company is currently focused on operating PHILUX Global Funds, SCA, SICAV-RAIF by setting up a number of sub-funds for investment in real estate, renewable energy, infrastructure, agriculture and healthcare as well as developing and establishing the Asia Diamond Exchange in Vietnam. In addition, PHILUX Capital Advisors, Inc. (formerly Capital Holdings, Inc.), a wholly owned subsidiary of the Company, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services for other client companies. No assurances can be made that the Company will be successful in achieving its plans.

 

BUSINESS STRATEGY

 

PHI’s strategy is to:

 

1. Identify, build, acquire, commit and deploy valuable resources with distinctive competitive advantages;

 

2. Identify, evaluate, acquire, participate and compete in attractive businesses that have large, growing market potential;

 

3. Build an attractive investment that includes points of exit for investors through capital appreciation or spin-offs of business units.

 

3

 

 

SUBSIDIARIES:

 

As of June 30, 2019, the Company owned the following subsidiaries: (1) American Pacific Plastics, Inc., a Wyoming corporation (100%), (2) American Pacific Resources, Inc., a Wyoming corporation (100%), (3) ComMatrix, Inc., a Wyoming corporation dissolved on August 09, 2019 (100%), (4) PHI Capital Holdings, Inc. (name changed to PHILUX Capital Advisors, Inc. on June 03, 2020), a Wyoming corporation (100%), (5) PHI Vietnam Investment and Development Company Ltd., a Vietnamese limited liability company (100%), (6) Phivitae Corporation, a Wyoming corporation – name changed to “Phivitae Healthcare, Inc.” on March 17, 2020 (100%), and (7) PHI Luxembourg Development S.A., a Luxembourg corporation (100%).

 

PHI CAPITAL HOLDINGS, INC. (NKA “PHILUX CAPITAL ADVISORS, INC.”

 

PHI Capital Holdings, 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. This subsidiary has successfully managed merger plans for several privately held and publicly traded companies and continues to focus on serving the Pacific Rim markets in the foreseeable future. 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 currently serves as the investment advisor to “PHILUX Global Funds SCA, SICAV-RAIF,” a Luxembourg Reserved Alternative Investment Fund established by PHI Luxembourg Development S.A.

 

AMERICAN PACIFIC RESOURCES, INC.

 

American Pacific Resources, Inc. (“APR”) is a Wyoming corporation established in April 2016 to serve as a holding company for various natural resource projects. On September 2, 2017, APR entered into an Agreement of Purchase and Sale with Rush Gold Royalty, Inc. (“RGR”), a Wyoming corporation, to acquire a 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A., in exchange for a total purchase price of twenty-five million U.S. Dollars ($US 25,000,000) to be paid in a combination of cash, convertible demand promissory note and PHI Group, Inc.’s Class A Series II Convertible Cumulative Redeemable Preferred Stock (“Preferred Stock”). This transaction was closed effective October 3, 2017. Following the first amendment dated April 19, 2018 and the second amendment dated September 29, 2018 retroactively effective April 20, 2018, to the afore-mentioned Agreement of Purchase and Sale, PHI Group, Inc. paid ten million shares of its Class A Series II Convertible Cumulative Redeemable Preferred Stock, a convertible demand promissory note and cash totaling $25,000,000 to Rush Gold Royalty, Inc. As of June 30, 2019, the Company only 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.

 

SPECIAL STOCK DIVIDEND FROM AMERICAN PACIFIC RESOURCES, INC. SUBSIDIARY

 

On April 23, 2018, the Company’s Board of Directors passed a resolution to declare a twenty percent (20%) special stock dividend from its holdings of Common Stock in American Pacific Resources, Inc., a subsidiary of the Company, to shareholders of Common Stock of the Company as follows: (a) Declaration date: April 23, 2018; (b) Record date: May 31, 2018; (c) Payment date: October 31, 2018; (d) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the Record date shall be entitled to receive two (2) shares of Common Stock of American Pacific Resources, Inc. for every ten (10) shares of Common Stock of PHI Group, Inc. held by such shareholders as of the referenced Record date. The payment date was rescheduled for March 29, 2019.

 

Most recently, on December 28, 2020, the Board of Directors of PHI Group, Inc., adopted a resolution to further extend the Record Date to June 30, 2021 and state the provisions for the afore-mentioned stock dividend as follows: (a) Eligible shareholders: In order to be eligible for the above-mentioned special stock dividend, the minimum amount of Common Stock of PHI Group, Inc. each shareholder must hold as of June 30, 2021 (the New Record Date) is twenty (20) shares; (b) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the new Record Date will be entitled to receive one (1) share of Common Stock of American Pacific Resources, Inc. for every twenty (20) shares of Common Stock of PHI Group, Inc. held by such shareholders as of the new Record date; and (c) Payment Date: the Payment Date for the distribution of the special stock dividend to be ten (10) business days after a registration statement for said special stock dividend shares is declared effective by the Securities and Exchange Commission.

 

4

 

 

PHIVITAE CORPORATION (NKA “PHIVITAE HEALTHCARE, INC.”)

 

PHIVITAE CORPORATION, a Wyoming corporation, is a wholly-owned subsidiary of PHI Group established on July 07, 2017 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”), 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 the case may be, as well as any other business activities deemed mutually beneficial.

 

In particular, NWTL and PHI Group will initially focus on the following activities:

 

1. Developing and implementing a comprehensive plan to increase the production, marketing and sale of the “Super Green” High Energy Drop Drink and “Mistyrious” Fine Mist Spray products on a large scale worldwide;

 

2. Developing and implementing a plan to increase the production, marketing and sale of “Super Cassava” and “Uni-Wash” Engine Booster products as well as other products related to the fields of agriculture and energy that have been studied and developed by NWTL;

 

3. Continuing to conduct research and accumulate clinical data for NWTL’s biotechnologies in order to obtain U.S. FDA’s approval of cancer treatments and other healthcare products. In addition, both parties also develop, produce and market beauty supply products.

 

4. Designing a financial plan and providing the required funding for NWTL to execute its business plan.

 

Both companies intend to conduct the activities mentioned in 1. and 3. above through PHIVITAE HEALTHCARE, INC. or a subsidiary under it.

 

LUXEMBOURG RESERVED ALTERNATIVE INVESTMENT FUNDS

 

In November 2017, the Company engaged a professional structuring agency and a leading Luxembourg law firm to assist the Company with respect to the establishment of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”), together with a number of initial sub-funds for agricultural, energy and real estate projects and investments, and the proposed Asia Diamond Exchange to be established in Vietnam. On December 03, 2018, the Company formed PHI Luxembourg Development S.A. as the mother holding company for PHILUX Global Funds, which was activated on June 11, 2020, Registration No. B244952.

 

DISCONTINUED OPERATIONS:

 

The Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited – UK (together with its subsidiaries Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation and PHI Energy Corporation since June 30, 2012 and has written off the contingency liabilities of $1,255,037 in connection with these discontinued operations as of June 30, 2019.

 

STOCK OWNERSHIPS:

 

MYSON GROUP, INC. (formerly VANGUARD MINING CORPORATION)

 

As of June 30, 2019, PHI Group, Inc. and PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, together owned 33,805,106 shares of Common Stock of Myson Group, Inc., a Nevada corporation currently traded on the OTC markets under the symbol “MYSN.” The Company wrote off 32,900,106 shares of MYSN stock held in certificate form as worthless as of June 30, 2019.

 

5

 

 

SPORTS POUCH BEVERAGE COMPANY, INC.

 

As of June 30, 2019, the Company through PHI Capital Holdings, Inc. owned 292,050,000 shares of Sports Pouch Beverage Company, Inc., a Nevada corporation traded on the OTC Markets under the symbol “SPBV”.

 

ITEM 1A. RISK FACTORS

 

RISK FACTORS

 

Investment in our securities is subject to various risks, including risks and uncertainties inherent in our business. The following sets forth factors related to our business, operations, financial position or future financial performance or cash flows which could cause an investment in our securities to decline and result in a loss.

 

General Risks Related to Our Business

 

Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.

 

Our future success will depend in substantial part on the continued service of our senior management. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future.

 

Our strategy in mergers and acquisitions involves a number of risks and we have a limited history of successful acquisitions. Even when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive as management may have projected.

 

The Company is in the process of evaluating various opportunities and negotiating to acquire other companies, assets and technologies. Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion of management’s attention from other business concerns, amortization of acquired intangible assets and potential loss of key employees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the Company’s ability to integrate successfully any operations, personnel, services or products that have been acquired or might be acquired in the future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the Company’s business, financial condition and operating results.

 

Acquisitions involve a number of special risks, including:

 

failure of the acquired business to achieve expected results;
diversion of management’s attention;
failure to retain key personnel of the acquired business;
additional financing, if necessary and available, could increase leverage, dilute equity, or both;
the potential negative effect on our financial statements from the increase in goodwill and other intangibles; and
the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

 

These risks could have a material adverse effect on our business, results of operations and financial condition since the values of the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved in acquisition. In addition, our ability to further expand our operations through acquisitions may be dependent on our ability to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both. There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

 

6

 

 

As some of our business activities are currently involved with Southeast Asia, any adverse change to the economy or business environment in these countries could significantly affect our operations, which would lead to lower revenues and reduced profitability.

 

Some of our business activities are currently involved with Southeast Asia. Because of this presence in specific geographic locations, we are susceptible to fluctuations in our business caused by adverse economic or other conditions in this region, including stock market fluctuation. A stagnant or depressed economy in these countries generally, or in any of the other markets that we serve, could adversely affect our business, results of operations and financial condition.

 

Risks associated with energy business

 

As part of our core business involves acquisitions of energy assets as well as production and trading of energy commodities, our profitability will depend on the prices we receive for energy commodities such as coal and wood pellets. These prices are dependent upon factors beyond our control, including: the strength of the global economy; the demand for electricity; the global supply of thermal coal and biomass products; weather patterns and natural disasters; competition within our industry and the availability and price of alternatives, including natural gas; the proximity, capacity and cost of transportation; coal industry capacity; domestic and foreign governmental regulations and taxes, including those establishing air emission standards for coal-fueled power plants or mandating increased use of electricity from renewable energy sources; regulatory, administrative and judicial decisions, including those affecting future mining permits; and technological developments, including those intended to convert coal-to-liquids or gas and those aimed at capturing and storing carbon dioxide.

 

Risks Related to Our Securities

 

Insiders have substantial control over the company, and they could delay or prevent a change in our corporate control, even if our other stockholders wanted such a change to occur.

 

Though our executive officers and directors as of the date of this report, in the aggregate, only hold a small portion of our outstanding common stock, we have the majority voting rights associated with the Company’s Class B Series I Preferred Stock, which decision may allow the Board of Directors to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.

 

The price at which investors purchase our common stock may not be indicative of the prevailing market price.

 

The stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares. Investors may be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.

 

Since we do not currently meet the requirements for our stock to be quoted on NASDAQ, NYSE MKT LLC or any other senior exchange, the tradability in our securities will be limited under the penny stock regulations.

 

Under the rules of the Securities and Exchange Commission, as the price of our securities on the OTCQB or OTC Markets is below $5.00 per share, our securities are within the definition of a “penny stock.” As a result, it is possible that our securities may be subject to the “penny stock” rules and regulations. Broker-dealers who sell penny stocks to certain types of investors are required to comply with the Commission’s regulations concerning the transfer of penny stock. These regulations require broker-dealers to:

 

*Make a suitability determination prior to selling penny stock to the purchaser;

 

*Receive the purchaser’s written consent to the transaction; and

 

*Provide certain written disclosures to the purchaser.

 

These requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities.

 

7

 

 

Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly for us.

 

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly traded companies to obtain.

 

Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.

 

Our future success will depend in substantial part on the continued service of our senior management and founder. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future.

 

Our service strategy in merger and acquisition involves a number of risks and we have a limited history of successful acquisitions. Even when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive as management may have projected.

 

The Company is in the process of evaluating various opportunities and negotiating to acquire other companies and technologies. Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion of management’s attention from other business concerns, amortization of acquired intangible assets and potential loss of key employees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the Company’s ability to integrate successfully any operations, personnel, services or products that have been acquired or might be acquired in the future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the Company’s business, financial condition and operating results.

 

Acquisitions involve a number of special risks, including:

 

  failure of the acquired business to achieve expected results;
     
  diversion of management’s attention;
     
  failure to retain key personnel of the acquired business;
     
  additional financing, if necessary and available, could increase leverage, dilute equity, or both;
     
  the potential negative effect on our financial statements from the increase in goodwill and other intangibles; and
     
  the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

 

8

 

 

These risks could have a material adverse effect on our business, results of operations and financial condition since the values of the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved in acquisition. In addition, our ability to further expand our operations through acquisitions may be dependent on our ability to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both. There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS.

 

None.

 

ITEM 2. DESCRIPTION OF PROPERTIES

 

As of June 30, 2019, the Company did not own any realty or equipment.

 

ITEM 3. LEGAL PROCEEDINGS

 

The Company is currently not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against Company has been threatened.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

The Company’s Common Stock is currently trading on the OTC Markets under the symbol “PHIL”. The following sets forth the high and low prices of the Company’s Common Stock in the US for the most recent month, two most recent quarters and each quarter during the preceding two fiscal years.

 

The prices for the Company’s common stock quoted by brokers are not necessarily a reliable indication of the value of the Company’s common stock.

 

Per Share Common Stock Prices for the Month   High     Low  
Ended February 2021     0.0146       0.0008  

 

Per Share Common Stock Prices for the Quarters   High     Low  
Ended December 31, 2020     0.0007       0.0000  
Ended September 30, 2020     0.0002       0.0000  

 

Per Share Common Stock Prices by Quarter;

For the Fiscal Year Ended June 30, 2020

 

    High     Low  
             
Quarter Ended June 30, 2020     0.0002       0.0000  
Quarter Ended March 31, 2020     0.0002       0.0000  
Quarter Ended December 31, 2019     0.0002       0.0000  
Quarter Ended September 30, 2019     0.0002       0.0000  

 

9

 

 

Per Share Common Stock Prices by Quarter;

For the Fiscal Year Ended June 30, 2019

 

    High     Low  
Quarter Ended June 30, 2019     0.0002       0.00001  
Quarter Ended March 31, 2019     0.0017       0.0001  
Quarter Ended December 31, 2018     0.0309       0.00115  
Quarter Ended September 30, 2018     0.04381       0.00714  

 

Holders of Common Equity:

 

As of March 09, 2021, there are approximately 1,577 shareholders of record of the Company’s common stock, of which 1,280 are active.

 

Dividends:

 

Cash dividend: The Company has not declared or paid a cash dividend to common stock shareholders since the Company’s inception. The Board of Directors presently intends to retain any earnings to finance company operations and does not expect to authorize cash dividends to common shareholders in the foreseeable future. Any payment of cash dividends in the future will depend upon Company’s earnings, capital requirements and other factors.

 

Share dividend: On March 12, 2012 the Board of Directors of the Company declared a special stock dividend to shareholders of Common Stock of the Company with the following stipulations: (a) Declaration date: March 16, 2012; (b) Record date: June 15, 2012; (c) Payment date: September 17, 2012; (d) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the Record date shall receive three new shares of Common Stock of the Company for each share held by such shareholders as of the referenced record date. The purpose of this special stock dividend was to partially mitigate the impact of the dilution in connection with the 1-for-1,500 reverse split of the Common Stock on the Company’s long-term shareholders and reward them for staying with the Company. On June 6, 2012, the Company’s Board of Directors passed a resolution to change the record date for the special stock dividend to July 31, 2012 and the distribution date to November 30, 2012. The Company has reserved a total of 5,673,327 shares of Common Stock for this special dividend distribution and will reset a new distribution date when a registration statement for the dividend shares is declared effective by the Securities and Exchange Commission.

 

ITEM 6. SELECTED FINANCIAL DATA

 

JUNE 30,   2019     2018     2017  
Net revenues   $ -     $ 1,672,659     $ 113,500  
Income (loss) from operations.   $ (2,410,213 )   $ (230,307 )   $ (556,958  
Net other income (expense).   $ (519,448 )   $ (1,796,013 )   $ (1,003,760  
Net income (loss )   $ (2,929,661 )   $ (2,026,320 )   $ (1,560,718  
Net income ( loss ) per share.   $ 0.00     $ (0.03 )   $ (0.10  
Total assets   $ 1,084,095     $ 27,424,139     $ 674,064  
Total liabilities   $ 7,086,819     $ 32,268,886     $ 8,187,545  

 

10

 

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except for the audited historical information contained herein, this report specifies forward-looking statements of management of the Company within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 (“forward-looking statements”) including, without limitation, forward-looking statements regarding the Company’s expectations, beliefs, intentions and future strategies. Forward-looking statements are statements that estimate the happening of future events and are not based on historical facts. Forward- looking statements may be identified by the use of forward-looking terminology, such as “could”, “may”, “will”, “expect”, “shall”, “estimate”, “anticipate”, “probable”, “possible”, “should”, “continue”, “intend” or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in this report have been compiled by management of the Company on the basis of assumptions made by management and considered by management to be reasonable. Future operating results of the Company, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in this report represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In addition, those forward-looking statements have been compiled as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this report. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in this report are accurate and the Company assumes no obligation to update any such forward-looking statements.

 

RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2019 AND JUNE 30, 2018

 

Revenues:

 

The Company received $800,000 from European Plastic Joint Stock Company and $466,634 from Saigon Pho Palace Joint Stock Company, totaling $1,266,634, during the fiscal year ended June 30, 2019 for participation in the energy and real estate compartments of our Philux Global Funds, respectively; however, we did not recognize these amounts as revenues but recorded as sub-fund obligations until these compartments are activated, as compared to $1,672,659 in total revenues for the year ended June 30, 2018.

 

Operating Expenses:

 

The Company incurred total operating expenses of $2,410,213 for the year ended June 30, 2019, as compared to $$1,902,966 for the year ended June 30, 2018. The increase of $507,247 includes the recognition of $462,000 as R&D expenses in connection with the Granite mining claims of American Pacific Resources, Inc., an increase of $6,928 in travel expenses, an increase of $14,156 in advertising, and an increase of $25,315 in filing fees between the two fiscal periods.

 

Income (loss) from operations:

 

The Company had a loss from operations of $2,410,213 for the fiscal year ended June 30, 2019 as compared to a loss from operations of $230,307 for the fiscal year ended June 30, 2018. This represents an increase of $2,179,906 in loss from operations during the current fiscal year as compared to that of the precious year. This was mainly due to the fact that the Company did not recognize any revenues from sub-fund participation partners while simultaneously incurring comparably more expenses during the fiscal year ended June 30, 2019.

 

Other income (expense)

 

The Company had a net other expense of $519,448 for the fiscal year ended June 30, 2019 as compared to a net other expense of $1,796,013 for the prior year. This was primarily due to the fact the Company recognized a total of $2,514,700 as other income as a result of reduction of $61,939 in derivative liabilities in connection with convertible promissory notes, derecognition of other liabilities in the amount of $1,742,891 due to inactivity and statutory limits, and adjustment of discount on convertible notes and correction of value of common stock issued in the amount of $709,870 while incurring $1,897,979 in interest expense and $1,136,169 in other expenses during the current fiscal year.

 

11

 

 

Net income (loss):

 

The Company had a net loss of $2,929,661 for the fiscal year ended June 30, 2019, as compared to a net loss of $2,026,320 for the prior year, representing an increase of $903,341 in net loss between the two fiscal years. The net loss per share based on the basic and diluted weighted average number of common shares outstanding for the fiscal year ended June 30, 2019 was $(0.00) as compared to $(0.03) for the fiscal year ended June 30, 2018.

 

CASH FLOWS

 

We had in cash and cash equivalents of $71,768 as of June 30, 2019, as compared to $13,937 in cash and cash equivalents as of June 30, 2018, respectively.

 

Net cash used in our operating activities was $244,324 for the fiscal year ended June 30, 2019 as compared to that of $2,653,481 for the fiscal year ended June 30, 2018, respectively. The underlying reasons for the decrease in net cash used operating activities between the two periods were mainly due to a total decrease in other assets and prepaid expenses in the amount of $2,011,062, an increase of liabilities in the amount of $385,640 and a net loss from operations of $2,929,661 in the current fiscal year as compared to that of $2,2026,320 the previous fiscal year.

 

There was no cash provided by or used in investing activities during the fiscal year ended June 30, 2019 as compared to a combination of cash and promissory note used investing activities of $25,005,000 for the fiscal year ended June 30, 2018, respectively.

 

Net cash provided by financing activities was $302,154 for the fiscal year ended June 30, 2019 as compared to cash provided by financing activities of $27,634,050 for the fiscal year ended June 30, 2018, respectively. The net cash provided by financing activities for the current fiscal year came from loans from officers and directors in the amount of $298,420 and $3,734 from stock issuance for cash.

 

HISTORICAL FINANCING ARRANGEMENTS

 

SHORT TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK

 

In the course of its business, the Company has obtained short-term loans from individuals and institutional investors and from time to time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. These notes bear interest rates ranging from 0% to 36% per annum. (Notes 11 & 15).

 

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%. (Note 11)

 

COMPANY’S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS

 

In the next twelve months the Company’s goals are to create a number of sub-funds under PHILUX Global Funds SCA, SICAV-RAIF for investment in real estate, renewable energy, agriculture, infrastructure, and healthcare, as well as develop the Asia Diamond Exchange in Vietnam. In addition, the Company will continue to carry out its merger and acquisition program by acquiring target companies for roll-up strategy and also invest in special situations. Moreover, we will provide advisory and consulting services to international clients through our wholly owned subsidiary PHILUX Capital Advisors, Inc. (formerly known as PHI Capital Holdings, Inc.)

 

12

 

 

FINANCIAL PLANS

 

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, 2021 and beyond. The working capital cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities and additional financing. The Company plans to generate revenues from its consulting services, merger and acquisition advisory services, and acquisitions of target companies with cash flows.

 

AVAILABLE FUTURE FINANCING ARRANGEMENTS: The Company may use various sources of funds, including short-term loans, long-term debt, equity capital, and project financing as may be necessary. The Company believes it will be able to secure the required capital to implement its business plan.

 

EQUITY LINE FACILITY

 

On March 6, 2017, PHI Group, Inc., a Nevada corporation (the “Company”) and Azure Capital, a Massachusetts Corporation (the “Investor”) entered into an Investment Agreement (the “Investment Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”), each dated March 6, 2017 between the Company and the Investor.

 

Pursuant to the Investment Agreement, the Investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth of the Company’s common stock, over a period of 36 months from the effectiveness of the registration statement registering the resale of shares purchased by the Investor pursuant to the Investment Agreement. The Company agreed to initially reserve 20,000,000 shares of its Common Stock for issuance to the Investor pursuant to the Investment Agreement. In the event the Company cannot register a sufficient number of shares of its Common Stock for issuance pursuant to the Investment Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of shares required for the Company to perform its obligations in connection with the Investment Agreement as soon as reasonable practical.

 

The Company may in its discretion draw on the facility from time to time, as and when the Company determines appropriate in accordance with the terms and conditions of the Investment Agreement. The maximum number of shares that the Company is entitled to put to the Investor in any one draw down notice shall not exceed shares with a purchase price of $250,000 or 200% of the average daily volume (U.S. market only) of the Company’s Common Stock for the three (3) Trading Days prior to the applicable put notice date multiplied by the average of the three (3) daily closing prices immediately preceding the put date, calculated in accordance with the Investment Agreement. The Company may deliver a notice for a subsequent put from time to time, after the pricing period for the prior put has been completed.

 

The purchase price shall be set at ninety-four percent (94%) of the lowest daily volume weighted average price (VWAP) of the Company’s common stock during the five (5) consecutive trading days immediately following the put notice date. On each put notice submitted to the Investor by the Company, the Company shall specify a suspension price for that put. In the event the price of Company’s Common Stock falls below the suspension price, the put shall be temporarily suspended. The put shall resume at such time the price of the Company’s Common Stock is above the suspension price, provided the dates for the pricing period for that particular put are still valid. In the event the pricing period has been complete, any shares above the suspension price due to the Investor shall be sold to the Investor by the Company at the suspension price under the terms of the Investment Agreement. The suspension price for a put may not be changed by the Company once submitted to the Investor.

 

13

 

 

There are put restrictions applied on days between the draw down notice date and the closing date with respect to that particular put. During such time, the Company shall not be entitled to deliver another draw down notice. In addition, the Investor will not be obligated to purchase shares if the Investor’s total number of shares beneficially held at that time would exceed 4.99% of the number of shares of the Company’s common stock as determined in accordance with Rule 13d-1(j) of the Securities Exchange Act of 1934, as amended. In addition, the Company is not permitted to draw on the facility unless there is an effective registration statement to cover the resale of the shares.

 

The Investment Agreement also contains customary representations and warranties of each of the parties. The assertions embodied in those representations and warranties were made for purposes of the Investment Agreement and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Investment Agreement. The Investment Agreement further provides that the Company and the Investor are each entitled to customary indemnification from the other for, among other things, any losses or liabilities they may suffer as a result of any breach by the other party of any provisions of the Investment Agreement or Registration Rights Agreement (as defined below). Investor should read the Investment Agreement together with the other information concerning the Company that the Company publicly files in reports and statements with the Securities and Exchange Commission (the “SEC”).

 

Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file one or more registrations statements with the SEC within twenty-one (21) days after the date of the Registration Rights Agreement to register the resale by the Investor of the shares of common stock issued or issuable under the Investment Agreement. In addition, the Company is obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after the registration statement is filed.

 

This Investment Agreement was amended on August 3, 2017 to allow for the reservation of 65,445,000 shares of the Company’s Common Stock for issuance to the Investor pursuant to the corrected Investment Agreement.

 

The Company has filed a S-1 Registration Statement with the Securities and Exchange Commission to include 7,936,600 shares of its Common Stock for issuance in connection with the first tranche of the Equity Line Facility. The S-1 Registration Statement, as amended, was declared effective by the Securities and Exchange Commission on January 11, 2018. As of the day of this report, the Company has not accessed the Equity Line Facility for funding.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The following discussion about PHI Group Inc.’s market risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.

 

Currency Fluctuations and Foreign Currency Risk

 

Some of our acquisition targets and partner companies are located outside of the United States and use currencies other than the U.S. dollar as the official currencies of those countries. The fluctuations of exchange rates in these countries may affect the value of our business.

 

Interest Rate Risk

 

We do not have significant interest rate risk, as most of our debt obligations are primarily short-term in nature to individuals, with fixed interest rates.

 

Valuation of Securities Risk

 

Since some of our income in the past was paid with the marketable securities, the value of our assets may fluctuate significantly depending on the market value of the securities we hold.

 

14

 

 

ITEM 8. FINANCIAL STATEMENTS

 

PHI GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm F-1
   
Balance Sheet as of June 30, 2019 and June 30, 2018 F-2
   
Statement of Operations the years ended June 30, 2019 and June 30, 2018 F-3
   
Statement of Cash Flows for the years ended June 30, 2019 and June 30, 2018 F-4
   
Statement of Stockholders’ Equity (Deficit) for the years ended June 30, 2019 and June 30, 2018 F-5
   
Notes to Financial Statements F-6

 

15

 

 

AUDITORS’ REPORT

 

MS Madhava Rao

18115 Topham St., Tarzana, CA 91335

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders

PHI Group Inc.

2323 Main Street,

Irvine, CA 92614

 

Opinion on the Financial Statements

 

We have audited the accompanying Consolidated balance sheet of PHI Group, Inc. (the “Company”) as of June 30, 2019, the related statements of operations, changes in shareholders’ deficit and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019, and the results of its operations and its cash flows for the period June 30, 2019, in conformity with accounting principles generally accepted in the United States of America.   

 

 Consideration of the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 22 to the financial statements, the Company has incurred losses since inception, has accumulated a significant deficit, has negative cash flows from operations, and currently has no revenues. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 22. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ M. S. Madhava Rao  
M.S. Madhava Rao  
Chartered Accountant  
Bangalore, India  
March 10, 2021  

 

F-1

 

 

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (AUDITED)

 

    June 30,     June 30,  
    2019     2018  
ASSETS                
                 
Current Assets                
Cash and cash equivalents     71,768       13,937  
Marketable securities     213,485       1,100,483  
Accounts receivable     -       432,000  
Other current assets     793,842       174,877  
Total current assets     $ 1,079,095     $ 1,721,297  
Other assets:                
Investments     5,000       25,005,000  
Contract assets     -       697,841  
Total other assets       5,000       25,702,841  
Total Assets   $ 1,084,095     $ 27,424,139  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
Current Liabilities                
Accounts payable     189,152       116,063  
Sub-fund obligations     1,266,634       -  
Accrued expenses     2,389,111       392,205  
Short-term notes payable (net)     331,700       1,336,552  
Convertible Promissory Notes (net)     273,903     $ -  
Due to officers     890,897       233,577  
Advances from customers     438,000     $ -  
Other current payable     -       92,781  
Contract liabilities     -       697,841  
Derivative liabilities     1,307,421       738,814  
Total current liabilities   $ 7,086,819     $ 3,607,833  
                 
Long-Term Liabilities                
Accrued expenses     -       1,063,481  
Accrued interest     -       2,005,815  
Advances from customers     -       288,219  
Demand promissory note     -       24,048,500  
Liabilities from Discontinued Operations     -       1,040,037  
Preferred stock liabilities - Discont. Operations     -       215,000  
Total Long-Term Liabilities   $ -     $ 28,661,052  
Total Liabilities   $ 7,086,819     $ 32,268,885  
                 
Stockholders’ deficit:                
Preferred Stock, $0.001 par value; 100,000,000 shares authorized. 10,000,000 shares Class A Series II issued and outstanding as of 6/30/2018 and 6/30/2019, respectively. Par value:     10,000       10,000  
APIC - Class A Series II Preferred Stock     -       304,100  
120,000 shares Class B Series I issued and outstanding as of 06/30/2019. Par value:     120       -  
Common stock, $0.001 par value; 30.5 billion shares authorized; 10,009,756,808 shares issued and outstanding on 06/30/2019; 1.9 billion shares authorized and 135,893,815 shares issued and outstanding on 6/30/2018, respectively, adjusted for 1 for 1,500 reverse split effective March 15, 2012. Par value:     10,009,757       382,920  
APIC - Common Stock     26,745,616       33,887,240  
Common Stock to be cancelled     (35,500 )     (33,000 )
Treasury stock: 484,767 shares as of 6/30/19 and 6/30/18, respectively - cost method.     (44,170 )     (44,170 )
Common Stock of subsidiary to be issued - American Pacific Resources, Inc.   $ -       447,500  
Acc. Other comprehensive gain (loss)   $ -       751,962  
Accumulated deficit     (42,688,547 )     (40,551,299 )
Total stockholders’ deficit   $ (6,002,724 )   $ (4,844,747 )
Total liabilities and stockholders’ deficit   $ 1,084,095     $ 27,424,139  

 

The accompanying notes form an integral part of these audited consolidated financial statements

 

F-2

 

 

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS (AUDITED)

FOR THE YEARS ENDED

 

    JUNE 30,  
    2019     2018  
Net revenues                
Consulting, advisory and management services     -       1,240,659  
Sales     -       432,000  
Total revenues       -       1,672,659  
Operating expenses:                
Salaries and wages     247,500       238,165  
Professional services, including non-cash compensation     1,468,468       1,508,811  
General and administrative     694,245       155,990  
Total operating expenses   $ 2,410,213     $ 1,902,966  
                 
Income (loss) from operations   $ (2,410,213 )   $ (230,307 )
                 
Other income and expenses                
                 
Interest expense       (1,897,979 )     (1,352,736 )
Loss on loan/note conversion     -       (94,539 )
Other income        2,514,700       (348,739 )
Other expenses     (1,136,169 )        
Net other income (expenses)   $ (519,448 )   $ (1,796,013 )
                 
Net income (loss)   $ (2,929,661 )   $ (2,026,320 )
Other comprehensive income (loss)                
Accumulated other comprehensive gain (loss)     -       751,962  
Comprehensive income (loss)   $ (2,929,661 )   $ (1,274,359 )
                 
Net loss per share:                
Basic     $ (0.00 )   $ (0.03 )
Diluted   $ (0.00 )   $ (0.03 )
                 
Weighted average number of shares outstanding:                
Basic        2,813,015,265       72,797,797  
Diluted       2,813,015,265       72,797,797  

 

The accompanying notes form an integral part of these audited consolidated financial statements

 

F-3

 

 

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

AUDITED

 

    2019     2018  
Cash flows from operating activities:                
Net income (loss) from operations   $ (2,929,661 )   $ (2,026,320 )
R&D Expenses   $ 462,000     $ -  
Provision for bad debt   $ 432,000     $ -  
Write-off of financing costs   $ 26,477     $ -  
Reversal of dividends payable from preferred stock   $ (4,681 )   $ -  
Adjustments to reconcile net income to net cash used in operating activities:                
(Increase) decrease in assets and prepaid expenses                
Marketable securities     886,998       -  
Prepaid rent     33,841       -  
Deposit for Luxembourg bank fund setup     (679,283 )     -  
Total (increase) decrease in assets and prepaid expenses     241,556       (1,769,506 )
Increase (decrease) in accounts payable and accrued expenses                
Acoounts payable     73,089       -  
Sub-fund obligations     1,266,634       -  
Accrued expenses     (65,416 )     -  
Notes payable     (178,322 )     -  
Loans from Directors/Officers     375,000       -  
Advances from customers     57,000       -  
Total increase (decrease) in accounts payable and accrued expenses     1,527,985       1,142,345  
Net cash provided by (used in) operating activities   $ (244,324 )   $ (2,653,481 )
                 
Cash flows from investing activities:                
Investment in mineral assets - Oregon mining claims     -       (25,000,000 )
Investment in Aquarius Power, Inc.     -       (5,000 )
Net cash provided by (used in) investing activities   $ -     $ (25,005,000 ) 
                 
Cash flows from financing activities:                
Loans from Directors/Officers     298,420       2,563,453  
Common Stock (net)     3,734       2,563,453  
Preferred Stock     -       314,100  
Common Stock of Subsidiary     -       447,500  
Accum. other comprehensive income (loss)     -       598,488  
Retained Earnings     -       774,775  
Treasury stock     -       (3,262 )
Short-term and long-term liabilities     -       (1,109,503 )
Demand promissory note     -       24,048,500  
Net cash provided by (used in) financing activities   $ 302,154     $ 27,634,050  
Net decrease in cash and cash equivalents     57,831       (3,609,981 )
Cash and cash equivalents, beginning of period     13,937       38,369  
Cash and cash equivalents, end of period   $ 71,768     $ (3,571,613 )

 

The accompanying notes form an integral part of these audited consolidated financial statements

 

F-4

 

 

PHI GROUP, INC. AND SUBSIDIARIES

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

(Audited)

 

                                                        Common     Subsidiary    
      Common Stock     Preferred     Stock     Treasury Stock     Additional     Other         Stock to     Stock to   Total  
      Shares     Amount     Shares     Amount     Shares     Amount     Paid-in Capital     Comprehensive Income/(loss)     Accumulated (Deficit)     be cancelled     be
issued
  Stockholders’
(Deficit)
 
Balance at June 30, 2017       16,109,036     $ 249,645                       -321,569     $ (40,908 )   $ 31,424,061     $ 153,474     $ (38,524,979 )               $ (7,513,481 )
Power Up Lending Group - shares issued for conversion of note (7/5/17)       740,741       741                               -     $ 9,544       -       -                   10,285  
Auctus Fund, LLC - shares issued for conversion of note (7/11/17)       800,000       800                               -       4,352       -       -                   5,152  
Power Up Lending Group - shares issued for conversion of note (7/17/17)       880,000       880                               -       7,262       -       -                   8,142  
Power Up Lending Group - shares issued for conversion of note (7/21/17)       1,019,872       1,020                               -       7,118       -       -                   8,138  
Henry Fahman - shares issued for conversion of loans (7/25/17)       20,000,000       20,000                               -       420,000       -       -                   440,000  
Steve Truong - shares issued for cash (7/25/17)       1,333,333       1,333                               -       18,667       -       -                   20,000  
Andreas Held - shares issued for cash (7/25/17)       200,000       200                               -       2,800       -       -                   3,000  
Power Up Lending Group - shares issued for conversion of note (10/17/17)       434,783       435                               -       26,286       -       -                   26,721  
JSJ Investments Inc. - shares issued for conversion of note (10/19/17)       371,057       371                               -       28,813       -       -                   29,184  
Power Up Lending Group - shares issued for conversion of note (10/23/17)       622,407       622                               -       32,278       -       -                   32,900  
EMA Financial LLC - shares issued for conversion of note (10/24/17)       250,000       250                               -       8,563       -       -                   8,813  
Power Up Lending Group - shares issued for conversion of note (10/31/17)       419,212       419                               -       15,479       -       -                   15,898  
EMA Financial LLC - shares issued for conversion of note (11/07/17)       600,000       600                               -       5,518       -       -                   6,118  
Auctus Fund, LLC - shares issued for conversion of note (11/08/17)       2,154,700       2,155                               -       50,783       -       -                   52,938  
Andreas Held - shares issued for cash (11/16/17)       80,000       80                               -       1,120       -       -                   1,200  
EMA Financial LLC - shares issued for conversion of note (11/21/17)       1,000,000       1,000                               -       10,938       -       -                   11,938  
Auctus Fund, LLC - shares issued for conversion of note (12/01/17)       2,346,000       2,346                               -       33,489       -       -                   35,835  
JSJ Investments Inc. - shares issued for conversion of note (12/05/17)       1,385,677       1,386                               -       23,884       -       -                   25,270  
EMA Financial LLC - shares issued for conversion of note (12/12/17)       2,000,000       2,000                               -       11,857       -       -                   13,857  
JSJ Investments Inc. - shares issued for conversion of note (12/13/17)       2,250,821       2,251                               -       23,639       -       -                   25,890  
Auctus Fund, LLC - shares issued for conversion of note (12/14/17)       2,744,300       2,744                               -       20,514       -       -                   23,258  
Steve Truong - shares issued for cash (12/14/17)       1,724,138       1,724                               -       8,276       -       -                   10,000  
EMA Financial LLC - shares issued for conversion of note (12/19/17)       2,500,000       2,500                               -       14,917       -       -                   17,417  
JSJ Investments Inc. - shares issued for conversion of note (12/20/17)       2,913,837       2,914                               -       30,592       -       -                   33,506  
EMA Financial LLC - shares issued for conversion of note (12/29/17)       2,500,000       2,500                               -       15,103       -       -                   17,603  
Crown Bridge Partners LLC - shares issued for conversion of note (12/29/17)       2,300,000       2,300                               -       14,854       -       -                   17,154  
Auctus Fund, LLC - shares issued for conversion of note (01/08/18)       1,835,795       1,836                               -       13,620       -       -                   15,456  
JSJ Investments Inc. - shares issued for conversion of note (01/09/18)       2,601,957       2,602                               -       24,295       -       -                   26,897  
Crown Bridge Partners LLC - shares issued for conversion of note (01/11/18)       2,900,000       2,900                               -       29,060       -       -                   31,960  
EMA Financial LLC - shares issued for conversion of note (01/25/18)       2,500,000       2,500                               -       17,921       -       -                   20,421  
Crown Bridge Partners LLC - shares issued for conversion of note (01/29/18)       2,500,000       2,500                               -       110,475       -       -                   112,975  
EMA Financial LLC - shares issued for conversion of note (01/29/18)       3,812,188       3,812                               -       24,282       -       -                   28,094  
Andreas Held - shares issued for cash (01/30/18)       100,000       100                               -       881       -       -                   981  
Cuong Tran - shares issued for service (01/30/18)       100,000       100                               -       881       -       -                   981  
Crown Bridge Partners LLC - shares issued for conversion of note (02/08/18)       2,509,693       2,510                               -       20,319       -       -                   22,829  
Henry Fahman - shares issued for accrued salaries (02/08/18))       4,746,084       4,746                               -       145,254       -       -                   150,000  
Tina Phan - shares issued for accrued salaries (02/08/18)       1,898,434       1,898                               -       58,102       -       -                   60,000  
Crown Bridge Partners LLC - shares issued for exercise of warrants (02/28/18)       4,744,007       4,744                               -       163,846       -       -                   168,590  
Crown Bridge Partners LLC - shares issued for exercise of warrants (04/13/18)       4,653,954       4,654                               -       69,143       -       -                   73,797  
Power Up Lending Group - shares issued for conversion of note (4/19/18)       1,169,591       1,170                               -       39,902       -       -                   41,072  
Power Up Lending Group - shares issued for conversion of note (4/23/18)       1,127,820       1,128                               -       29,513       -       -                   30,641  
Power Up Lending Group - shares issued for conversion of note (4/24/18)       295,156       295                               -       4,544       -       -                   4,839  
Crown Bridge Partners LLC - shares issued for conversion of note (05/25/18)       3,159,521       3,160                               -       86,302       -       -                   89,462  
Henry Fahman - shares issued for accrued salaries (04/27/18))       11,574,074       11,574                               -       288,426       -       -                   300,000  
Tina Phan - shares issued for accrued salaries (04/27/18)       4,629,630       4,630                               -       115,370       -       -                   120,000  
Einstein Investments LLC - shares issued for conversion of note (06/04/18)       3,149,607       3,150                               -       46,850       -       -                   50,000  
Crown Bridge Partners LLC - shares issued for exercise of warrants (06/21/18)       6,048,786       6,049                               -       290,318       -       -                   296,367  
Buu Chung - shares issued for conversion of note (06/26/18)       157,604       158                               -       2,842       -       -                   3,000  
Net income (loss) for the year ended June 30, 2018                                                                     $ (2,026,320 )                 (2,026,320 )
Balance at June 30, 2018       135,893,815     $ 382,920       10,000,000     $ 314,100       -484,767     $ (44,170 )   $ 33,887,240     $ 751,962       40,551,299     $ (33,000 )   $447,500   $ (4,844,747 )
Crown Bridge Partners (01/15/2019) *       23,000,000       23,000                                       (7,330 )                                 15,670  
Power Up Lending Group (01/15/2019) *       22,310,345       22,310                                       (189 )                                 22,121  
Auctus Fund, LLC (01/15/2019) *       25,000,000       25,000                                       (5,982 )                                 19,018  
Power Up Lending Group (01/17/2019) *       22,316,327       22,316                                       (3,694 )                                 18,622  
Power Up Lending Group (01/22/2019) *       22,304,348       22,304                                       (4,938 )                                 17,366  
Power Up Lending Group (01/23/2019) *       33,341,463       33,341                                       (10,215 )                                 23,126  
JSJ Investments, Inc. (01/24/2019) *       31,658,523       31,659                                       (6,394 )                                 25,265  
Power Up Lending Group (01/24/2019) *       33,342,857       33,343                                       (13,623 )                                 19,720  
Auctus Fund, LLC (01/28/2019) *       33,000,000       33,000                                       (24,293 )                                 8,707  
EMA Financial LLC (01/28/2019) *       39,370,000       39,370                                       (26,444 )                                 12,926  
Power Up Lending Group (01/28/2019) *       34,844,828       34,845                                       (19,774 )                                 15,071  
JSJ Investments, Inc. (01/29/2019) *       38,663,736       38,664                                       (19,371 )                                 19,293  
Auctus Fund, LLC (02/04/2019) *       39,373,800       39,374                                       (27,551 )                                 11,823  
JSJ Investments, Inc. (02/04/2019) *       45,811,785       45,812                                       (27,246 )                                 18,566  
ONE44 Capital LLC (02/04/2019) *       45,955,682       45,956                                       (27,891 )                                 18,065  
EMA Financial LLC (02/07/2019) *       53,000,000       53,000                                       (38,802 )                                 14,198  
Auctus Fund, LLC (02/08/2019) *       37,070,000       37,070                                       (25,998 )                                 11,072  
JSJ Investments, Inc. (02/08/2019) *       52,237,707       52,238                                       (31,134 )                                 21,104  
Power Up Lending Group (02/20/2019) *       60,264,706       60,265                                       (22,999 )                                 37,266  
Auctus Fund, LLC (02/21/2019) *       63,000,000       63,000                                       (53,518 )                                 9,482  
EMA Financial LLC (02/21/2019) *       63,300,000       63,300                                       (50,434 )                                 12,866  
Power Up Lending Group (02/21/2019) *       60,235,294       60,235                                       (41,994 )                                 18,241  
Power Up Lending Group (02/25/2019) *       72,588,235       72,588                                       (50,683 )                                 21,905  
Andreas Held (2/25/2019) - issued for cash       9,722,222       9,722                                       (6,222 )                                 3,500  
JSJ Investments, Inc. (02/26/2019) *       65,250,756       65,251                                       (45,186 )                                 20,065  
Auctus Fund, LLC (02/27/2019) *       79,900,000       79,900                                       (67,616 )                                 12,284  
Power Up Lending Group (02/28/2019) *       55,791,667       55,792                                       (45,113 )                                 10,679  
EMA Financial LLC (02/28/2019) *       79,900,000       79,900                                       (69,277 )                                 10,623  
ONE44 Capital LLC (02/28/2019) *       80,924,545       80,925                                       (64,848 )                                 16,077  
JSJ Investments, Inc. (02/28/2019) *       78,534,484       78,534                                       (62,940 )                                 15,594  
Crown Bridge Partners (3/04/2019) *       90,000,000       90,000