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, 2016
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
(Exact name of registrant as specified in its charter)
| Nevada | 90-0114535 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer identification Number) |
| 5348 Vegas Drive, Las Vegas, | NV 89128 | |
| (Address of principal executive offices) | (Zip Code) |
| 702-475-5430 |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of class | Name of each exchange on which registered | |
| None | N/A |
Securities registered pursuant to Section 12(g) of the Act:
(Title of class)
(Title of class)
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 [X] No [ ]
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 [X] No [ ]
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 October 12, 2016, there were 16,174,353 shares of the registrant’s $0.001 par value Common Stock issued and outstanding, including 5,673,327 shares reserved for a special dividend distribution, after adjustment for a 1:1,500 reverse split which came into effect March 15, 2012.
TABLE OF CONTENTS
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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).
INTRODUCTION
PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation engaged in mergers and acquisitions as a principal (www.phiglobal.com). The Company has adopted plans to acquire established operating businesses in selective industries and invest in various ventures that may potentially create significant long-term value for our shareholders. In addition, we also provide corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary PHI Capital Holdings, Inc. (www.phicapitalholdings.com). No assurances can be made that the Company will be successful in achieving its plans.
BACKGROUND
Originally incorporated in June 1982 as JR Consulting, Inc., the Company was foremost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based financial services company, the Company changed its name to Providential Securities, Inc. (Nevada) in January 2000. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company and its subsidiaries were engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation - US, and Philand Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and began to mainly focus on acquisition and development opportunities in energy and natural resource businesses. Starting July 2016, the Company has engaged Milost Advisors, Inc., a New York-based investment-banking firm, as its buy-side advisor and begun to seek acquisition opportunities in other industries besides energy and natural resources. In addition, PHI Capital Holdings, Inc., a wholly owned subsidiary of PHI, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services for other companies in a variety of industries.
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BUSINESS STRATEGY
PHI Group Inc.’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. Design and implement best-of-breed management systems; and
4. Build an attractive investment that includes points of exit for investors through capital appreciation or spin-offs of business units.
SUBSIDIARIES:
As of June 30, 2016, the Company owns 100% of PHI Capital Holdings, Inc., a Nevada corporation, 100% of American Pacific Resources, Inc., a Wyoming corporation, and 51% Cornerstone Biomass Corporation, a Florida corporation. Both American Pacific Resources, Inc. and Cornerstone Biomass Corp. are inactive.
PHI CAPITAL HOLDINGS, INC.
PHI Capital Holdings, Inc., a Nevada corporation, was originally incorporated under the name of “Providential Capital, Inc.” in 2004 as a wholly owned subsidiary of the Company to provide merger and acquisition (M&A) advisory services, consulting services, project financing, and capital market services to clients in North America and Asia. In May 2010, Providential Capital, Inc. changed its name to PHI Capital Holdings, Inc. This subsidiary has successfully managed merger plans for several privately held and publicly traded companies and continues to focus on serving the Pacific Rim markets in the foreseeable future.
CORNERSTONE BIOMASS CORPORATION
Cornerstone Biomass Corporation, a Florida corporation, was set up in January 2015 by the Company and the principals of AG Materials, LLC, an Alabama company, to engage in biomass energy. The Company holds 51% and the principals of AG Materials hold 49% of equity ownership in Cornerstone Biomass Corporation. This subsidiary’s plan was to develop and establish a 200,000 MT wood pellet plant adjacent to Klausner Lumber Mill in Live Oak, Florida. In July 2015, the Company purchased a 10-acre parcel of land from Klausner Holding USA Corporation in order to build the wood pellet plant. Due to subsequent changes in market conditions affecting industrial pellet usage in Europe, Cornerstone Biomass Corp. decided not to pursue this project. The Company has written off its initial investment in Cornerstone Biomass Corp. as of June 30, 2016 in the amount of $ 2,550 and is in the process of selling the land parcel for cash.
AMERICAN PACIFIC RESOURCES, INC:
American Pacific Resources, Inc. is a Wyoming corporation established in April 2016 with the intention to serve as a holding company for various natural resource projects in Southeast Asia. As of the date of this report American Pacific Resources, Inc. has not begun any business operation.
DISCONTINUED OPERATIONS:
The Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited – UK (together with its subsidiaries Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (now known as NS International Corp.), and PHI Energy Corporation since June 30, 2012.
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SPUN-OFF SUBSIDIARIES:
TANS GLOBAL, INC. (Formerly PROVIMEX, INC.)
Provimex, Inc. was originally formed on April 10, 2001 under the name “Providential Imex”, to focus on trade commerce with Vietnam. This division changed its name to Provimex on July 5, 2001. Provimex began to generate revenues from its import and export activities in August 2002 through the fiscal year ended June 30, 2005 and was incorporated as a Nevada corporation on September 23, 2004. The Company distributed a 15% stock dividend of Provimex, Inc. to PHI Group, Inc.’s shareholders of record as of September 15, 2004. On June 3, 2011, Provimex, Inc. signed an agreement to acquire all the issued and outstanding capital stock of Humex Medical Group Corp., a California corporation, (“Humex”) in exchange solely for a certain amount of shares of Provimex’s common stock, par value 0.001, to engage in stem research and therapy in Southeast Asia. On June 13, 2012 this transaction was rescinded in its entirety effective retroactively June 3, 2011. On June 19, 2012, Provimex, Inc. changed its name to HP.ITA Corporation. On July 20, 2012, HP.ITA Corporation (“HPUS”) signed a Corporate Combination Agreement to merge with HP.ITA Joint Stock Company (“HPVN”), a Vietnamese company, in order to go public in the United States but the Corporate Combination Agreement was subsequently rescinded because HPVN was not able to implement its business plan and complete financial audits according to the U.S. Generally Accepted Accounting Principals (“GAAP”). On September 16, 2016 HP.ITA Corp. changed its name to Tans Global, Inc. with the intention to merge with an operating company and file a registration statement with the Securities and Exchange Commission to become a fully reporting public company in the U.S. PHI Group is expected to hold a small portion of stock in Tans Global, Inc. following the contemplated business combination.
OMNI RESOURCES, INC. (Formerly TOUCHLINK COMMUNICATIONS, INC.)
Touchlink Communications was formed on July 7, 2003 as a division of the Company to provide point-of-sale (POS) terminals and prepaid calling cards to retailers, convenient stores and non-profit organizations across the US. This subsidiary was later incorporated as a Nevada corporation in February 2004 under the name of Touchlink Communications, Inc. as a wholly owned subsidiary of the Company to provide long distance services to residential and business customers in the United States. The Company has declared a 15% stock dividend of Touchlink Communications, Inc. to shareholders of record as of September 15, 2004. On November 03, 2008, this subsidiary changed its name to Vietnam Media Group, Inc. with the intent to develop a multi-media business in Vietnam and subsequently resumed the corporate name of Touchlink Communications, Inc. in February 2011. On April 4, 2014, this company changed its name to Asia Green Corporation (“AGC”) and entered into a business combination agreement with Asia Green Limited Liability Company, a Vietnam-based company, to become a holding company for agroforestry and afforestation business in Vietnam and Southeast Asia. On July 28, 2014, AGC changed its corporate name to Omni Resources, Inc. The Company expects to hold about 10% equity interest in Omni Resources, Inc. following Omni’s recapitalization. As of the date of this report Omni Resources, Inc. is inactive and has not implemented any reorganization plan.
STOCK OWNERSHIPS:
CATALYST RESOURCE GROUP, INC. (formerly JEANTEX GROUP, INC.)
As of June 30, 2016, the Company owned 22,535,714 shares of Catalyst Resource Group, Inc. common stock, a Florida corporation, or equivalent to 2.56%. This company has signed an agreement with an inventor in Southeast Asia for the assignment of intellectual property to commercialize biotechnological solutions for the poultry, cattle and fish-farming industries in international markets. As of the date of this report, Catalyst Resource Group has not begun any operation with respect to the new technology.
MYSON GROUP, INC. (formerly VANGUARD MINING CORPORATION)
As of June 30, 2016, PHI Group, Inc. and PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, together owned 34,384,106 shares of Common Stock of Myson Group, Inc., a Nevada corporation currently traded on the OTC markets under the symbol “MYSN.”
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SPORTS POUCH BEVERAGE COMPANY, INC.
As of June 30, 2016, 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”.
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.
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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 October 12, 2016, in the aggregate, only hold approximately 27.53% of our outstanding common stock, our Board of Directors is able to decide the rights and terms associated with the Company’s Preferred Stock, which decision may allow the Board of Directors to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.
The price at which investors purchase our common stock may not be indicative of the prevailing market price.
The stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares. Investors may be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.
Since we do not currently meet the requirements for our stock to be quoted on NASDAQ, NYSE MKT LLC or any other senior exchange, the tradability in our securities will be limited under the penny stock regulations.
Under the rules of the Securities and Exchange Commission, if the price of our securities on the OTCQB 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.
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These requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities.
Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly for us.
It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly traded companies to obtain.
Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.
Our future success will depend in substantial part on the continued service of our senior management and founder. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future.
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. |
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.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. DESCRIPTION OF PROPERTIES
As of June 30, 2016, the Company owned and held title to ten acres of land, Parcel Identification Number 09705010180 & 190, in Suwannee County, Florida at historical cost of $82,733. The Company did not have any equipment as of June 30, 2016.
Other than as set forth below, Company is 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.
LEGAL PROCEEDING SETTLED AND UNPAID AS OF JUNE 30, 2016:
QUANG VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.
This case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s counsel and unilaterally reached a settlement without the Company’s prior consent. While the Company was in the process of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations, the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus $4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment for $79,000. In May 2011, the Claimants filed an application for and renewal of judgment for a total of $140,490.78. As of June 30, 2016 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated financial statements.
WILLIAM DAVIDSON VS. DOAN ET AL.
On or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831). Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and the company.
On July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company, reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability associated with the balance of these notes in the accompanying consolidated financial statements as of June 30, 2016.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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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 September 30, 2016 | 0.64 | 0.20 | ||||||
| Per Share Common Stock Prices for the Quarters | High | Low | ||||||
| Ended September 30, 2016 | 2.00 | 0.20 | ||||||
| Ended June 30, 2016 | 1.50 | 0.42 | ||||||
Per Share Common Stock Prices by Quarter;
For the Fiscal Year Ended June 30, 2016
| High | Low | |||||||
| Quarter Ended June 30, 2016 | 1.50 | 0.42 | ||||||
| Quarter Ended March 31, 2016 | 0.55 | 0.25 | ||||||
| Quarter Ended December 31, 2015 | 0.50 | 0.25 | ||||||
| Quarter Ended September 30, 2015 | 0.25 | 0.12 | ||||||
Per Share Common Stock Prices by Quarter;
For the Fiscal Year Ended June 30, 2015
| High | Low | |||||||
| Quarter Ended June 30, 2015 | 0.25 | 0.12 | ||||||
| Quarter Ended March 31, 2015 | 0.40 | 0.10 | ||||||
| Quarter Ended December 31, 2014 | 0.40 | 0.02 | ||||||
| Quarter Ended September 30, 2014 | 0.67 | 0.05 | ||||||
Holders of Common Equity:
There are approximately 1,277 shareholders of record of the Company’s common stock.
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.
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ITEM 6. SELECTED FINANCIAL DATA
| JUNE 30, | 2016 | 2015 | 2014 | 2013* | 2012* | |||||||||||||||
| Net revenues | $ | 332,050 | $ | 127,178 | $ | 77,439 | $ | - | $ | 570,000 | ||||||||||
| Income (loss) from operations | $ | (132,871 | ) | $ | (305,912 | ) | $ | (304,043 | ) | $ | (403,311 | ) | $ | 88,491 | ||||||
| Net other income (expense) | $ | 124,873 | $ | (1,063,003 | ) | $ | 48,048 | $ | (480,737 | ) | $ | (5,261,708 | ) | |||||||
| Net income (loss ) | $ | (7,998 | ) | $ | (1,368,915 | ) | $ | (255,994 | ) | $ | (884,047 | ) | $ | (5,153,603 | ) | |||||
| Net income ( loss ) per share | $ | - | $ | (0.21 | ) | $ | (0.04 | ) | $ | (6.36 | ) | $ | (33.80 | ) | ||||||
| Total assets | $ | 753,990 | $ | 448,780 | $ | 444,100 | $ | 459,845 | $ | 604,676 | ||||||||||
| Total liabilities | $ | 7,755,950 | $ | 9,430,260 | $ | 9,585,282 | $ | 10,371,750 | $ | 10,631,358 |
* Note: Net loss per share adjusted for 1:1,500 reverse split of shares issued and outstanding.
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, 2016 AND JUNE 30, 2015
Revenues:
The Company generated $332,050 in revenues from consulting, advisory and management services during the fiscal year ended June 30, 2016, as compared to $127,178 in revenue for the year ended June 30, 2015.
| 11 |
Operating Expenses:
The Company incurred total operating expenses of $464,921 for the year ended June 30, 2016 as compared to $433,090 for the year ended June 30, 2014. This represents an increase of $31,831 or 7.35 % in total operating expenses from the prior year. The increase was primarily due to a decrease of $8,559 in professional services and an increase of $38,947 in general and administrative expenses. The Company spent more on advertising expenses during the current year relative to the previous fiscal year.
Income (loss) from operations:
The Company had a loss from operations of $132,871 for the fiscal year ended June 30, 2016 as compared to a loss from operations of $305,912 for the year ended June 30, 2015. This represents a decrease of $173,041 or – 56.57% in loss from operations during the current year as compared to that of the precious year. This was mainly due to the fact that the Company generated $204,872 more in revenues while incurring $31,831 more in total operating expenses during the fiscal year ended June 30, 2016 as compared to the corresponding items during the fiscal year ended June 30, 2015.
Other income (expense)
The Company had a net other income of $124,873 for the year ended June 30, 2016 as compared to net other expenses of $1,063,003 for the prior year. This was primarily due to the fact the Company had an interest expense of $267,577, a gain on sale of marketable securities in the amount of $137,017, and other income in the amount of $255,433 comprising of a reversal of impairment of assets in the amount of $270,000, a write-off of loans receivable of $9,840, a loss of $2,550 in minority interest, and a miscellaneous expense of $2,000. For the fiscal year ended June 30, 2015 it had an interest expense of $319,315, a loss on sale of marketable securities of $45,176, a loss of $25,845 from settlement of debts, and other expense in the amount of $672,667.
Net income (loss):
The Company had a net loss of $7,998 for the year ended June 30, 2016 as compared to a net loss of $1,368,915 for the year ended June 30, 2015, representing a 99.42% reduction in losses between the two corresponding fiscal years. The net income (loss) per share based on the basic and diluted weighted average number of common shares outstanding for the year ended June 30, 2016 was $(0.00) as compared to $(0.21) for the year ended June 30, 2015.
CASH FLOWS
We had $2,482 in cash and cash equivalents of as of June 30, 2016, as compared to $10,645 in cash and cash equivalents as of June 30, 2015, respectively.
Net cash used in our operating activities was $1,849,010 for the fiscal year ended June 30, 2016 as compared to net cash used in operating activities of $1,609,353 for the fiscal year ended June 30, 2015, respectively. The underlying reasons for the increase in net cash used in operating activities between the two periods were mainly due to a decrease of $1,360,917 in net loss from operations, a reduction of $16,134 in the increase in other assets and prepaid expenses, and a decrease of $1,616,798 in accounts payable and accrued expenses between the current fiscal year and the previous fiscal year.
Net cash used in investing activities was $146,959 for the fiscal year ended June 30, 2016 as compared to cash provided by investing activities of $65,557 for the year ended June 30, 2015, respectively. The underlying reasons for the change in net cash provided by (used in) investing activities between the two fiscal years were primarily due to a deposit of $66,776 for acquisition, a purchase of land for $82,733, and a write-off of $2,550 from investment in joint venture in the current fiscal year, as compared to a write-off of $73,043 in receivable from discontinued operations, a net deposit of $4,936 for acquisition, and investment in the amount of $2,550 in a joint venture during the year ended June 30, 2015, respectively.
Net cash provided by financing activities was $1,987,517 for the fiscal year ended June 30, 2016 as compared to cash provided by financing activities of $1,523,827 for the fiscal year ended June 30, 2015, respectively. The underlying reasons for the increase in cash provided by financing activities during the current fiscal year were mainly due to an increase of $2,085,799 in proceeds from common stock between the current and the previous fiscal years, offset by a change in accumulative other comprehensive income (loss) of ($69,078) and a change in accumulated deficit in the amount of ($87,108) in the current fiscal year, as compared to the prior fiscal year.
| 12 |
HISTORICAL FINANCING ARRANGEMENTS:
SHORT TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK: In the course of its business, the Company has obtained short-term loans from individuals and institutional investors and from time to time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. As of June 30, 2016 and 2015, the Company had short-term notes payable amounting to $673,660 and $1,342,618 with accrued interest of $2,879,655 and $3,031,152, respectively. These notes bear interest rates ranging from 0% to 36% per annum. During the years ended June 30, 2016 and 2015, the Company paid $ 652,041 and $31,500 of principal and $77,850 and $4,956 of interest on the short-term notes, respectively.
DUE TO PREFERRED STOCKHOLDERS: The Company classified $215,000 of preferred stock previously subscribed in one of its long discontinued subsidiaries as a current liability payable to holders of preferred stock in this subsidiary due to deficiencies in connection with previous preferred share subscription agreements. This amount was past due as of June 30, 2016.
The interest payable to holders of preferred stock of the above-mentioned discontinued subsidiary in the amounts of $413,255 and $387,455 has been included in accrued interest included in account payable and accrued expenses on the balance sheet as of June 30, 2016 and June 30, 2015.
COMPANY’S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS
We will continue to pursue our merger and acquisition program by acquiring all or controlling interests in target companies in a number of industries, including but not limited to conventional energy, renewables, natural resources, agribusiness, technology, transportation, education, distribution, mining, oil & gas, financial Services, healthcare, and pharmaceuticals.
We have entered into agreements to acquire majority interests in two liquefied petroleum gas (LPG) companies in Southeast Asia and have signed letters of intent to acquire a number of target companies in the U.S. and abroad. We intend to continue seeking other acquisition opportunities in the next twelve months and close those transactions that are feasible in order to build a critical mass and uplist to a senior national exchange as soon as practical. In addition, we will continue to provide advisory and consulting services to international clients through our wholly owned subsidiary PHI Capital Holdings, Inc.
FINANCIAL PLANS
MATERIAL CASH REQUIREMENTS: We must raise substantial amounts of capital to fulfill our plan of acquiring energy-related and natural resource assets as part of our scope of business. We intend to use equity, debt and project financing to meet our capital needs for acquisitions.
Management has taken action and formulated plans to strengthen the Company’s working capital position and generate sufficient cash to meet its operating needs through June 30, 2017 and beyond. The working capital cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities and additional financing. The Company plans to generate revenues from its consulting services, merger and acquisition advisory services, and acquisitions of target companies with cash flows.
AVAILABLE FUTURE FINANCING ARRANGEMENTS: In September 2016 the Company signed an agreement with Milost Global, Inc., a U.S. private equity firm, for a commitment of up to $100 million to finance the Company’s future acquisitions and provide for working capital needs. Investment in the amount of USD 50 million will be as equity and USD 50 million as loans. In addition, the Company may use other sources of funds, including short-term loans and long-term debt and equity financing, as may be needed. The Company believes it will be able to secure the required capital to implement its business plan; however, no assurances could be made that management would be successful in achieving its plan.
| 13 |
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 majority of our income is paid with the marketable securities, the value of our assets may fluctuate significantly depending on the market value of the securities we hold.
| 14 |
PHI GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
| 15 |
 |
DAVE
BANERJEE, CPA An Accountancy Corporation – Member AICPA and PCAOB |
| 21860 Burbank Blvd., Suite 150, Woodland Hills, CA 91367 ● (818) 657-0288 ● FAX (818) 657-0299 ● (818) 312-3283 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of PHI Group Inc.
We have audited the accompanying consolidated balance sheets of PHI Group Inc., (“Company”) as of June 30, 2016, and 2015, and the related statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two year period ended June 30, 2016.
PHI Group, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PHI Group, Inc., as of June 30, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two year period ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 21, the Company has accumulated deficit of $37,774,842 and total liabilities and stockholders’ deficit of $753,990 as of June 30, 2016, and a negative cash flow from operations amounting to $7,998 for the year ended June 30, 2016. These factors as discussed in Note 21 of the consolidated financial statements raise substantial doubt about the Company’s ability to continue as a going concern. Managements’ plan in regard to these matters are also described in Note 21. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| Dave Banerjee CPA |
| An Accountancy Corporation |
| Woodland Hills, CA 91367 |
| October 11, 2016 |
| F-1 |
PHI GROUP, INC. AND SUBSIDIARIES
(AUDITED)
| June 30, 2016 | June 30, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,482 | $ | 10,654 | ||||
| Marketable securities | 481,120 | 350,556 | ||||||
| Loans receivable | 2,282 | 9,841 | ||||||
| Other current assets | 43,417 | 0 | ||||||
| Total current assets | $ | 529,302 | $ | 371,051 | ||||
| Fixed assets: | ||||||||
| Land | 82,733 | |||||||
| Total fixed assets | 82,733 | |||||||
| Other assets: | ||||||||
| Deposit for acquisition | 75,000 | 77,729 | ||||||
| Other Receivable | 66,955 | - | ||||||
| Total other assets | 141,955 | 77,729 | ||||||
| Total Assets | $ | 753,990 | $ | 448,780 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 144,212 | $ | 131,454 | ||||
| Accrued expenses | 4,342,783 | 4,253,280 | ||||||
| Short-term notes payable | 673,660 | 1,342,618 | ||||||
| Due to officers | 899,674 | 1,879,458 | ||||||
| Due to preferred stockholders | 215,000 | 215,000 | ||||||
| Advances from customers | 288,219 | 563,219 | ||||||
| Other current payable | 97,350 | - | ||||||
| Unearned revenues | 40,000 | - | ||||||
| Client deposits | 9,821 | - | ||||||
| Liabilities from discontinued operations | 1,045,232 | 1,045,232 | ||||||
| Total current liabilities | $ | 7,755,950 | $ | 9,430,260 | ||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, $.001 par value, 100,000,000 shares authorized; none issued and outstanding | - | - | ||||||
| Common stock, $.001 par value; 300,000,000 shares authorized; 15,370,825 issued and 9,697,498 outstanding on 06/30/2016, and 9,584,675 issued and 3,911,348 outstanding on 6/30/2015, respectively, adjusted for 1 for 1,500 reverse split effective March 15, 2012. | 243,234 | 237,447 | ||||||
| Treasury stock: 67,271 and 3,289 shares as of 06/30/2016 and 6/30/2015, cost method. | (21,823 | ) | (3,801 | ) | ||||
| Paid-in capital | 30,521,209 | 28,365,269 | ||||||
| Acc. other comprehensive gain (loss) | 30,263 | 99,341 | ||||||
| Accumulated deficit | (37,774,842 | ) | (37,679,736 | ) | ||||
| Total stockholders’ deficit | $ | (7,001,960 | ) | $ | (8,981,480 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 753,990 | $ | 448,780 | ||||
The accompanying notes form an integral part of these audited consolidated financial statements
| F-2 |
PHI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
AUDITED
| 2016 | 2015 | |||||||
| Net revenues | ||||||||
| Consulting, advisory and management services | $ | 332,050 | $ | 127,178 | ||||
| Operating expenses: | ||||||||
| Salaries and wages | 241,000 | 239,558 | ||||||
| Professional services, including non-cash compensation | 66,838 | 75,398 | ||||||
| General and administrative | 157,083 | 118,135 | ||||||
| Total operating expenses | $ | 464,921 | $ | 433,090 | ||||
| Income (loss) from operations | $ | (132,871 | ) | $ | (305,912 | ) | ||
| Other income and expenses | ||||||||
| Interest expense | (267,577 | ) | (319,315 | ) | ||||
| Gain (loss) on sale of marketable securities | 137,017 | (45,176 | ) | |||||
| Gain (loss) on settlement of debts | - | (25,845 | ) | |||||
| Other income (expense) | 255,433 | (672,667 | ) | |||||
| Net other income (expenses) | $ | 124,873 | $ | (1,063,003 | ) | |||
| Net income (loss) | $ | (7,998 | ) | $ | (1,368,915 | ) | ||
| Other comprehensive income (loss) | ||||||||
| Accumulated other comprehensive gain (loss) | 30,263 | 99,341 | ||||||
| Comprehensive income (loss) | $ | 22,265 | $ | (1,269,574 | ) | |||
| Net loss per share: | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.21 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.21 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic | 5,324,120 | 6,573,093 | ||||||
| Diluted | 5,324,120 | 6,573,093 | ||||||
The accompanying notes form an integral part of these audited consolidated financial statements
| F-3 |
PHI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
AUDITED
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) from operations | $ | (7,998 | ) | $ | (1,368,915 | ) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in other assets and prepaid expenses | (69,072 | ) | (85,206 | ) | ||||
| Increase (decrease) in accounts payable and accrued expenses | (1,772,030 | ) | (155,232 | ) | ||||
| Net cash provided by (used in) operating activities | (1,849,100 | ) | (1,609,353 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Receivable from discontinued operations | - | 73,043 | ||||||
| Deposit for acquisition | (66,776 | ) | (4,936 | ) | ||||
| Land purchase | (82,733 | ) | ||||||
| Investment in joint venture | 2,550 | (2,550 | ) | |||||
| Net cash provided by (used in) investing activities | (146,959 | ) | 65,557 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from common stock | 2,161,726 | 75,927 | ||||||
| Change in Accum. other comprehensive income (loss) | (69,078 | ) | 808,524 | |||||
| Change in Accumulated deficit | (87,108 | ) | 639,376 | |||||
| Change in treasury stock | (18,022 | ) | - | |||||
| Net cash provided by (used in) financing activities | 1,987,517 | 1,523,827 | ||||||
| Net decrease in cash and cash equivalents | (8,542 | ) | (19,969 | ) | ||||
| Cash and cash equivalents, beginning of period | 11,024 | 30,623 | ||||||
| Cash and cash equivalents, end of period | $ | 2,482 | $ | 10,654 | ||||
The accompanying notes form an integral part of these audited consolidated financial statements
| F-4 |
PHI GROUP, INC. AND SUBSIDIARIES
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
(AUDITED)
| Additional | Shares | Other | Total | |||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in | to be | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | issued | Income/(loss) | (Deficit) | (Deficit) | ||||||||||||||||||||||||||||
| Balance at June 30, 2012 | 180,689 | $ | 233,719 | (887 | ) | $ | (1 | ) | $ | 26,756,379 | $ | 57,000 | $ | (554,619 | ) | $ | (35,814,954 | ) | $ | (9,322,477 | ) | |||||||||||||||
| 2,365,208 | $ | 2,365 | $ | 1,156,303 | $ | (57,000 | ) | $ | 1,101,668 | |||||||||||||||||||||||||||
| Shares issued for consulting | 44,763 | $ | 45 | $ | 45 | |||||||||||||||||||||||||||||||
| Shares issued for investment | 3,288,443 | $ | 3,288 | $ | 3,288 | |||||||||||||||||||||||||||||||
| Shares issued for sale | 100,887 | $ | 101 | $ | 39,899 | $ | 40,000 | |||||||||||||||||||||||||||||
| Purchase of Treasury Stock | (2,100 | ) | $ | (3,801 | ) | $ | (3,801 | ) | ||||||||||||||||||||||||||||
| Acc. Other Comprehensive Loss | $ | (142,376 | ) | $ | (142,376 | ) | ||||||||||||||||||||||||||||||
| Net income (loss) for the year | $ | (884,047 | ) | $ | (884,047 | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2013 | 5,979,990 | $ | 239,518 | (2,987 | ) | $ | (3,801 | ) | $ | 27,952,581 | $ | - | $ | (142,376 | ) | $ | (36,699,002 | ) | $ | (9,207,699 | ) | |||||||||||||||
| Shares issued for conversion of notes on Jul 01, 2013 | 412,569 | 413 | $ | 177,527 | $ | - | $ | 177,940 | ||||||||||||||||||||||||||||
| Shares issued for conversion of note on Feb 11, 2014 | 337,097 | 337 | - | 0 | $ | 156,413 | $ | - | $ | 156,750 | ||||||||||||||||||||||||||
| Acc. Other Comprehensive Loss | $ | (709,183 | ) | $ | (709,183 | ) | ||||||||||||||||||||||||||||||
| Net income (loss) for the year | $ | (255,994 | ) | $ | (255,994 | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2014 | 6,729,656 | $ | 240,268 | (2,987 | ) | $ | (3,801 | ) | $ | 28,286,521 | $ | - | $ | (709,183 | ) | $ | (36,954,987 | ) | $ | (9,141,182 | ) | |||||||||||||||
| Shares issued for conversion of notes on Aug 27, 2014 | 91,440 | $ | 91 | $ | 27,341 | $ | 27,432 | |||||||||||||||||||||||||||||
| Shares issued for conversion of notes on Jan 22, 2015 | 77,049 | $ | 77 | $ | 30,743 | $ | 30,820 | |||||||||||||||||||||||||||||
| Shares issued for cash on Feb 11, 2015 | 300,000 | $ | 300 | $ | 20,700 | $ | 21,000 | |||||||||||||||||||||||||||||
| Cancellation of shares issued for investment - 5/18/15 | (3,288,443 | ) | $ | (3,288 | ) | $ | (3,288 | ) | ||||||||||||||||||||||||||||
| Adjustment for common stock | 1,646 | $ | - | $ | - | |||||||||||||||||||||||||||||||
| Adjustment for treasury stock | (302 | ) | $ | 0 | $ | (36 | ) | $ | (36 | ) | ||||||||||||||||||||||||||
| Acc. Other Comprehensive Gain (Loss) | $ | 99,341 | $ | 99,341 | ||||||||||||||||||||||||||||||||
| Net income (loss) for the year ended June 30, 2015 | $ | (1,368,915 | ) | $ | (1,368,915 | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2015 | 3,911,348 | $ | 237,447 | (3,289 | ) | $ | (3,801 | ) | $ | 28,365,269 | $ | 0 | $ | 99,341 | $ | (37,679,736 | ) | $ | (8,981,480 | ) | ||||||||||||||||
| Cancellation of 25,510 shares - Uy Tran 9/28/2015 | -25,510 | $ | (26 | ) | $ | (9,974 | ) | $ | (10,000 | ) | ||||||||||||||||||||||||||
| Shares issued for cash - 2/2/2016 | 121,212 | $ | 121 | $ | 39,879 | $ | 40,000 | |||||||||||||||||||||||||||||
| Shares issued for conversion of notes - 2/2/2106 | 98,084 | $ | 98 | $ | 31,902 | $ | 32,000 | |||||||||||||||||||||||||||||
| Shares issued for consulting service - 2/4/2016 | 100,000 | $ | 100 | $ | 32,900 | $ | 33,000 | |||||||||||||||||||||||||||||
| Shares issued for conversion of notes and accruals - 3/28/2016 | 4,670,540 | $ | 4,671 | $ | 1,732,770 | $ | 1,737,441 | |||||||||||||||||||||||||||||
| Shares issued for conversion of notes - 5/9/2016 | 691,824 | $ | 692 | $ | 274,308 | $ | 275,000 | |||||||||||||||||||||||||||||
| Shares issued for consulting service - 6/13/2016 | 100,000 | $ | 100 | $ | 39,150 | $ | 39,250 | |||||||||||||||||||||||||||||
| Shares issued for consulting service - 6/28/2016 | 30,000 | $ | 30 | $ | 14,970 | $ | 15,000 | |||||||||||||||||||||||||||||
| Adjustment to APIC for treasury stock | $ | 36 | $ | 36 | ||||||||||||||||||||||||||||||||
| Change in treasury stock | $ | (18,022 | ) | $ | (18,022 | ) | ||||||||||||||||||||||||||||||
| Acc. Other Comprehensive Gain (Loss) | $ | 30,263 | $ | 30,263 | ||||||||||||||||||||||||||||||||
| Net income (loss) for the year ended June 30, 2016 | $ | (7,998 | ) | $ | (7,998 | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2016 | 9,697,498 | $ | 243,233 | -67,271 | $ | (21,823 | ) | $ | 30,521,209 | $ | 30,263 | $ | (37,774,842 | ) | $ | (7,001,960 | ) | |||||||||||||||||||
The accompanying notes form an integral part of these audited consolidated financial statements
| F-5 |
PHI GROUP, INC. AND SUBSIDIARIES
(FORMERLY PROVIDENTIAL HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS
ITEM 1. BUSINESS OVERVIEW
PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation engaged in mergers and acquisitions as a principal (www.phiglobal.com). The Company has adopted plans to acquire established operating businesses in selective industries and invest in various ventures that may potentially create significant long-term value for our shareholders. In addition, we also provide corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary PHI Capital Holdings, Inc. (www.phicapitalholdings.com). No assurances can be made that the Company will be successful in achieving its plans.
Originally incorporated in June 1982 as JR Consulting, Inc., the Company was foremost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based brokerage firm, in late 1999, the Company changed its name to Providential Securities, Inc. (Nevada) in January 2000. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company was engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation, (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation (US), and Philand Vietnam Ltd.), PHI Gold Corporation (formerly PHI Mining Corporation), and PHI Energy Corporation, and began to mainly focus on acquisition and development opportunities in energy and natural resource businesses. Starting July 2016, the Company has engaged Milost Advisors, Inc., a New York-based investment-banking firm, as its buy-side advisor and begun to seek acquisition opportunities in other industries besides energy and natural resources. In addition, PHI Capital Holdings, Inc., a wholly owned subsidiary of PHI, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services and arranging capital for other companies in a variety of industries.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of PHI Group, Inc., its wholly owned subsidiary PHI Capital Holdings, Inc., and its discontinued operations Providential Securities, Inc., PHI Energy Corporation, PHI Gold Corp, Providential Vietnam Ltd. and Philand Ranch Limited (including its 100% owned subsidiary Philand Corporation and Philand Vietnam Ltd), Omni Resources, Inc., Cornerstone Biomass Corp., and American Pacific Resources, Inc., collectively referred to as the “Company.” All significant inter-company transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.
MARKETABLE SECURITIES
The Company’s securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.
Each investment in marketable securities typically represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally quoted on the FINRA’S OTC Bulletin Board (“OTCBB”) or the OTC Markets. As such, each investment is accounted for in accordance with the provisions of ASC 320 (previously SFAS No. 115).
Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold. On June 30, 2016 and 2015 the marketable securities have been recorded at $383,770 and $350,556, respectively based upon the fair value of the marketable securities at that time.
ACCOUNTS RECEIVABLE
Management reviews the composition of accounts receivable and analyzes historical bad debts. As of June 30, 2016, the Company had no accounts receivable.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 2002, the Company adopted ASC 350 (Previously SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 350. ASC 350 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Maintenance and repair costs are charged to expense as incurred; costs of major additions and betterments are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in income. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to ten years.
DEPRECIATION AND AMORTIZATION
The cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation and amortization of fixed assets are computed on a straight-line basis.
NET EARNINGS (LOSS) PER SHARE
The Company adopted the provisions of ASC 260 (previously SFAS 128). ASC 260 eliminates the presentation of primary and fully diluted earnings per share (“EPS”) and requires presentation of basic and diluted EPS. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period.
| F-7 |
The net earnings (loss) per share is computed as follows:
| 2016 | 2015 | |||||||
| Basic and diluted net loss per share: | ||||||||
| Numerator: | ||||||||
| Net income (loss) | $ | (7,998 | ) | $ | (1,368,915 | ) | ||
| Denominator: | ||||||||
| Basic weighted average number of common shares outstanding (adjusted for 1:1,500 reverse split) | 5,324,120 | 6,573,093 | ||||||
| Basic net income (loss) per share | $ | (0.00 | ) | $ | (0.21 | ) | ||
| Diluted weighted average number of common shares outstanding (adjusted for 1:1,500 reverse split) | 5,324,120 | 6,573,093 | ||||||
| Diluted net income (loss) per share | $ | (0.00 | ) | $ | (0.21 | ) | ||
STOCK-BASED COMPENSATION
Effective July 1, 2006, the Company adopted ASC 718-10-25 (previously SFAS 123R) and accordingly has adopted the modified prospective application method. Under this method, ASC 718-10-25 is applied to new awards and to awards modified, repurchased, or cancelled after the effective date. Additionally, compensation cost for the portion of awards that are outstanding as of the date of adoption for which the requisite service has not been rendered (such as unvested options) is recognized over a period of time as the remaining requisite services are rendered.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value - Definition and Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available.
Valuation techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
Level 2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
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Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors, including; type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction.
To the extent that valuation is based upon models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy in which the fair value measurement falls in its entirety is determined based upon the lowest level input that is significant to the fair value measurement.
Fair Value - Valuation Techniques and Inputs
The Company holds and may invest public securities traded on public exchanges or over-the-counter (OTC), private securities, real estate, convertible securities, interest bearing securities and other types of securities and has adopted specific techniques for their respective valuations.
Equity Securities in Public Companies
Unrestricted
The Company values investments in securities that are freely tradable and listed on major securities exchanges at their last reported sales price as of the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Securities traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 or 3 of the fair value hierarchy.
Restricted
Securities traded on public exchanges or over-the-counter (OTC) where there are formal restrictions that limit (i.e. Rule 144 holding periods and underwriter’s lock-ups) their sale shall be valued at the closing price on the date of valuation less applicable discounts. The Company may apply a discount to securities with Rule 144 restrictions. Additional discounts may be assessed if the Company believes there are other mitigating factors which warrant the additional discounting. When determining potential additional discounts, factors that will be taken into consideration include, but are not limited to; securities’ trading characteristics, volume, length and overall impact of the restriction as well as other macro-economic factors. Valuations should be discounted appropriately until the securities may be freely traded.
If it has been determined that the exchange or OTC listed price does not accurately reflect fair market value, the Company may elect to treat the security as a private company and apply an alternative valuation method.
Investments in restricted securities of public companies may be included in Level 2 of the fair value hierarchy. However, to the extent that significant inputs used to determine liquidity discounts are not observable, investments in restricted securities in public companies may be categorized in Level 3 of the fair value hierarchy.
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, marketable securities, and accounts payable.
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As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is primarily attributed to the short maturities of these instruments.
Effective July 1, 2008, the Company adopted ASC 820 (previously SFAS 157), Fair Value Measurements and adopted this Statement for the assets and liabilities shown in the table below. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. The adoption of ASC 820 did not have a material impact on our fair value measurements. ASC 820 permits the Company to defer the recognition and measurement of the nonfinancial assets and nonfinancial liabilities until January 1, 2010. At June 30, 2016, the Company did not have any nonfinancial assets or nonfinancial liabilities that are recognized or disclosed at fair value. ASC 820 requires that financial assets and liabilities that are reported at fair value be categorized as one of the types of investments based upon the methodology mentioned in Level 1, Level 2 and Level 3 above for determining fair value.
Assets measured at fair value on a recurring basis are summarized below. The Company has no financial liabilities measured at fair value on a recurring basis.
Available-for-sale securities
| Securities available for sale | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| June 30, 2016 | - | $ | 60,054 | $ | 323,717 | $ | 383,770 | |||||||||
| June 30, 2015 | $ | 16,828 | $ | 301,562 | $ | 32,166 | $ | 350,556 | ||||||||
The Company uses various approaches to measure fair value of available-for-sale securities, while applying the three-level valuation hierarchy for disclosures, specified in ASC 820. Our Level 1 securities were measured using the quoted prices in active markets for identical assets and liabilities.
The company’s policy regarding the transfers in and/or out of Level 3 depends on the trading activity of the security, the volatility of the security, and other observable units which clearly represents the fair value of the security. If a level 3 security can be measured using a more fairly represented fair value, we will transfer these securities either into Level 1 or Level 2, depending on the type of inputs.
REVENUE RECOGNITION
The Company’s revenue recognition policies are in compliance with ASC 13 (previously Staff accounting bulletin (SAB) 104). The Company recognizes consulting and advisory fee revenues when the transaction is completed and the service fees are earned. Expenses are recognized in the period in which the corresponding liability is incurred. Payments received before all of the relevant criteria for revenue recognition are recorded as unearned revenue.
ADVERTISING
The Company expenses advertising costs as incurred. Advertising costs for the years ended June 30, 2016 and 2015 were $79,072 and $4,350, respectively. The increase in advertising expenses in the current year includes expenses for investor relations and public relations totaling $64,170.
COMPREHENSIVE INCOME (LOSS)
ASC 220-10-45 (previously SFAS 130, Reporting Comprehensive Income) establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. As of June 30, 2016 and 2015, respectively, accumulated other comprehensive incomes of $30,263 and $99,341 are presented on the accompanying consolidated balance sheets.
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INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740 (previously SFAS No. 109, “Accounting for Income Taxes”). Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
REPORTING OF SEGMENTS
ASC 280 (previously Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information), which supersedes Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise, establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operated in one segment that generated revenues during the years ended June 30, 2016 and 2015.
RISKS AND UNCERTAINTIES
In the normal course of business, the Company is subject to certain risks and uncertainties. The Company provides its service and receives marketable securities upon execution of transactions. Consequently, the value of the securities received from customers can be affected by economic fluctuations and each customer’s business growth. The actual realized value of these securities could be significantly different than recorded value.
RECENT ACCOUNTING PRONOUNCEMENTS
| Update
No. 2013-11—Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward,
a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) [Download] |
July 2013 | Effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. | ||
| Update
No. 2013-09—Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic
Employee Benefit Plans in Update No. 2011-04 [Download] |
July 2013 | The deferral in this amendment is effective upon issuance for financial statements that have not been issued. | ||
| Update
No. 2013-07—Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting [Download] |
April 2013 | Effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013. Early adoption is permitted. | ||
| Update
No. 2013-04—Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which
the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force) [Download] |
February 2013 | Effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter. |
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| Update
2013-02—Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive
Income [Download] |
February 2013 | For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. | ||
| Update
2013-01—Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities [Download] |
January 2013 | An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of Update 2011-11. |
The Company has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible impact they may have on the Company’s financial statements. In most cases, management has determined that the pronouncement has either limited or no application to the Company and, in all cases, implementation would not have a material impact on the financial statements taken as a whole.
NOTE 3 – LOANS RECEIVABLE
Loans receivable consist of the following at June 30, 2016 and 2015:
| Loans Receivable | June 30, 2016 | June 30, 2015 | ||||||
| Loan to Catalyst Resource Group | - | $ | 5,140 | |||||
| Loan to Provimex, Inc. | - | $ | 2,000 | |||||
| Loan to Catthai Corp. | - | $ | 2,700 | |||||
| Loan to Myson Group, Inc. | $ | 2,282 | - | |||||
| Total | $ | 2,282 | $ | 9,841 | ||||
We wrote off a total of $9,841 owed by Catalyst Resource Group, Provimex, Inc., and Catthai Corp. during the year ended June 30, 2016.
NOTE 4 – OTHER ASSETS
The Other Assets comprise of the following as of June 30, 2016 and 2015:
| 2016 | 2015 | |||||||
| Other Receivable | $ | 66,955 | $ | 66,955 | ||||
| Deposits for purchases | $ | 75,000 | $ | 8,224 | ||||
| Investment in a subsidiary | $ | - | $ | 2,550 | ||||
| Total Other Assets | $ | 141,955 | $ | 77,729 | ||||
During the year ended June 30, 2011, the Company signed a consulting agreement to assist Agent155 Media Corp., a Delaware corporation, with respect to its corporate restructuring and business combination with Freshwater Technologies, Inc., a Nevada corporation. As part of the restructuring requirements, the Company made payment to Manning Elliot LLP in the amount of $24,476 on behalf of Freshwater Technologies, Inc. and other loan amounts to Agent155 Media Corp. During the fiscal year ended June 30, 2014, the President of Agent155 Media Corp. assumed the balance of $66,955 from Agent155 Media Corp. as his personal obligations to the Company.
On July 17, 2015, the Company made an advance payment of $75,000 to Asia Green Corporation, a Nevada corporation, for a total of 500,000 shares of common stock of Asia Green Corporation. As of June 30, 2016, the total amount owed by Christopher Martinez and deposit for purchase were collectively reported as Other Assets totaling $141,955.
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NOTE 5 – MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE
The Company’s marketable securities are classified as available-for-sale and, as such, are carried at fair value. All of the securities are comprised of shares of common stock of the investee. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes. Each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally quoted on the National Association of Securities Dealers OTC Bulletin Board (“OTCBB”) or the Pink Sheets. As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.
Marketable securities owned by the Company and classified as available for sale as of June 30, 2016 consisted of 34,384,106 shares of Myson Group, Inc. (formerly Vanguard Mining Corporation) and 292,050,000 shares of Sports Pouch Beverage Company, both public companies traded on the a public company traded on the OTC Markets (Trading symbols MYSN and SPBV, respectively). The fair value of the marketable securities recorded as of June 30, 2016 was $$383,770. The Company did not recognize another 97,350,000 shares of Sports Pouch Beverage Company valued at $97,350 as available for sale because these are shares are to be returned to the client and classified as Other Current Payable in the accompanying consolidated financial statements.
| Securities available for sale | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| June 30, 2016 | - | $ | 60,054 | $ | 323,717 | $ | 383,770 | |||||||||
| June 30, 2015 | $ | 16,828 | $ | 301,562 | $ | 32,166 | $ | 350,556 | ||||||||
During the fiscal year ended June 30, 2016, there was no transfer of securities from level 3 to level 2.
NOTE 6 – PROPERTY AND EQUIPMENT
As of June 30, 2016, the Company owned and held title to ten acres of land, Parcel Identification Number 09705010180 & 190, in Suwannee County, Florida at historical cost of $82,733. The Company did not have any property and equipment as of June 30, 2015.
NOTE 7 – DISCONTINUED OPERATIONS
As of June 30, 2012, the Company decided to recognize the businesses of PHI Gold Corp. (formerly PHI Mining Corporation), Providential Vietnam Ltd., PHI Energy Corp., and Philand Ranch Ltd., a United Kingdom corporation, together with its wholly-owned subsidiaries Philand Corporation (USA), Philand Ranch Ltd. (Singapore) and Philand Vietnam Ltd. as discontinued operations for practical business and accounting purposes. As of June 30, 2013, the Company recorded a total of $2,234,327 for the liabilities and potential liability contingencies and wrote off all non-performing assets associated with these discontinued operations. As of June 30, 2016, the Company had a balance of $1,045,232 as Liabilities from Discontinued Operations.
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The accounts payable and accrued expenses at June 30, 2016 and 2015 consist of the following:
| Accounts Payable and Accrued Expenses | June 30, 2016 | June 30, 2015 | ||||||
| Accounts payable | 144,212 | 131,454 | ||||||
| Accrued salaries and payroll taxes | 1,090,279 | 849,279 | ||||||
| Accrued interest | 2,879,655 | 3,031,152 | ||||||
| Accrued legal expenses | 172,091 | 172,091 | ||||||
| Accrued consulting fees | 173,870 | 173,870 | ||||||
| Other accrued expenses | 26,888 | 26,888 | ||||||
| Total | $ | 4,486,995 | $ | 4,384,734 | ||||
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NOTE 9 – DUE TO OFFICER
Due to officer, represents loans and advances made by officers of the Company and its subsidiaries, unsecured and due on demand. As of June 30, 2016 and 2015, the balances were $899,674 and $1,879,458, respectively.
| Officers/Directors | June 30, 2016 | June 30, 2015 | ||||||
| Henry Fahman | 811,324 | 1,577,958 | ||||||
| Tam Bui | 63,350 | 276,500 | ||||||
| Frank Hawkins | 12,500 | 12,500 | ||||||
| Lawrence Olson | 12,500 | 12,500 | ||||||
| Total | $ | 899,674 | $ | 1,879,458 | ||||
NOTE 10 – LOANS AND PROMISSORY NOTES
SHORT TERM NOTES PAYABLE:
As of June 30, 2016 and June 30, 2015, the Company had short-term notes payable amounting to $673,660 and $1,342,618 with accrued interest of $2,879,655 and $3,031,152, respectively. These notes bear interest rates ranging from 6% to 36% per annum.
CONVERTIBLE PROMISSORY NOTE:
On February 29, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. This convertible note is due and payable on November 29, 2016 with interest of 10% per annum. This note is convertible at the election of Auctus Fund, LLC from time to time after the issuance date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 24% per annum and the note becomes immediately due and payable. Should an event of default occur, the Company is liable to pay 150% of the then outstanding principal and interest. The note agreement contains covenants requiring Auctus Fund’s written consent for certain activities not in existence or not committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $100,000, and certain guarantees with respect to preservation of existence of the Company and non-circumvention. Outstanding note principal and interest accrued thereon can be converted in whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s common stock determined by 55% of the average of the two lowest closing trading prices of the Company’s common stock during the twenty (20) trading days prior to the date the of the note. The Company may prepay the amounts outstanding to Auctus Fund at any time up to the 180th day following the issue date of this note by making a payment to the note holder of an amount in cash equal to 125% to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, depending on the time of prepayment. On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company (Note 22 - Subsequent Event).
| F-14 |
DUE TO PREFERRED STOCKHOLDERS:
The Company classified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock in a previously discontinued subsidiary of the Company due to deficiency in compliance of the preferred shares subscription agreement in connection with the referenced subsidiary in the year 2000. The Company has made an offer for these preferred stock holders to receive shares of common stock in the Company in exchange for the preferred shares but so far only a small number of the preferred shareholders have accepted the offer.
The interest expenses payable to holders of preferred stock of $413,255 and $387,455 have been included in accrued interest included in the accrued expenses on the balance sheets as of June 30, 2016 and June 30, 2015, respectively.
OTHER CURRENT PAYABLE
During the fiscal year ended June 30, 2016, the Company received a total 389,400,000 shares of Common Stock of Sports Pouch Beverage Company, Inc. and recognized 292,050,000 shares as earned revenues. The balance of 97,350,000 shares will be returned to the client and is recorded as Other Current Payable in the accompanying consolidated financial statements as of June 30, 2016.
ADVANCES FROM CUSTOMERS
As of September 30, 2012, the Company decided to reclassify the previously recorded Unearned Revenues as Advances from Customers because the Company has not been able to complete the consulting services for the related clients due to their inability to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission. As of June 30, 2016, the Company recorded $288,219 as Advances from Customers after recognizing $270,000 as other income.
UNEARNED REVENUES
As of June 30, 2016, the Company recorded $40,000 from a client as Unearned Revenues because certain conditions have not been met as of the date of this report.
NOTE 11 – LITIGATION
LEGAL PROCEEDING SETTLED AND UNPAID AS OF JUNE 30, 2015:
QUANG VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.
This case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s counsel and unilaterally reached a settlement that had not been approved by the Company. While the Company was in the process of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations, the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus $4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment for $79,000. In May 2011, the Claimants filed an application for and renewal of judgment for a total of $140,490.78. As of June 30, 2016 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated financial statements.
WILLIAM DAVIDSON VS. DOAN ET AL.
On or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831). Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and the company.
On July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company, reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability associated with the balance of these notes in the accompanying consolidated financial statements as of June 30, 2016.
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NOTE 12 – PAYROLL LIABILITIES
The payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the quarter ended June 30, 2014, the Company paid $41,974.22 to the Internal Revenue Service and $ 19,289.94 to the State of California Employment Development Department towards the balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company is currently working with the Internal Revenue Service and the State of California Employment Department to resolve the remaining balances.
NOTE 13 – BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares for the year ended June 30, 2016 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE 14 – STOCKHOLDER’S EQUITY
The total number of authorized capital stock of the Company is 400,000,000 shares with a par value of $0.001 per share, consisting of 300,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined by the Board of Directors of the Company.
On March 15, 2012, the Company effectuated a 1 for 1,500 reverse split of the Company’s Common Stock.
Treasury Stock:
The balance of treasury stock as of June 30, 2016 was 67,271 post-split shares valued at $21,823.
Common Stock:
Since July 1, 2015, the Company has issued the following amounts of its Common Stock:
On February 2, 2016, the Company issued 121,212 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the auspices of Rule 144 for $40,000 in cash, at the price of $0.33 per share.
On February 2, 2016, the Company issued 98,084 shares of PHI Group, Inc.’s free-trading Common Stock to a lender for conversion of a $32,000 loan principal at the price of $0.3263 per share.
On February 4, 2016, the Company issued 100,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant for marketing and investor relation services.
On March 28, 2016, Henry Fahman, Chairman and Chief Executive Officer of the Company, converted $1,000,000 of debts into 2,688,172 shares of restricted common stock of the Company at the conversion price of $0.372 per share.
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On March 28, 2016, Tam Bui, an independent director and Chairman of the Audit Committee the Company, converted $276,500 of principal loan amounts and $76,850 of accrued and unpaid interest amounts, totaling $353,350, into 949,866 shares of restricted common stock of the Company at the conversion price of $0.372 per share.
On March 28, 2016, Natalie Bui, the spouse of Tam Bui, converted $384,090.50 of principal loan amounts into 1,032,502 shares of restricted common stock of the Company at the conversion price of $0.372 per share.
On May 9, 2016, the Company issued 691,824 shares of PHI Group, Inc.’s free-trading Common Stock to a lender for conversion of a $275,000 loan principal at the price of $0.3975 per share.
On June 13, 2016, the Company issued 100,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant for marketing and investor relation services at the price of $0.3975 per share.
On June 28, 2016, the Company issued 30,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant for marketing and investor relation services at the price of $0.50 per share.
On July 29, 2016, the Company issued 225,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.40 per share to Milost Advisors, Inc. for buy-side advisory services in connection with contemplated acquisitions of target companies in South Africa and North America.
On August 29, 2016, the Company issued 48,930 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the auspices of Rule 144 for $20,000 in cash, at the price of $0.4088 per share.
On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 for the convertible promissory note dated February 29, 2016 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.
As of October 12, 2016 there were 16,174,353 shares of the Company’s $0.001 par value Common Stock issued, excluding 5,673,327 shares reserved for a special dividend distribution.
Preferred Stock: There is no preferred stock issued and outstanding.
Class A Preferred Stock: On April 2, 2015, the Company designated the first fifty million (50,000,000) shares of the Company’s previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, as Class A Cumulative Convertible Redeemable Class A Preferred Stock (the “Class A Preferred Stock”) with the following rights and terms:
1) Dividends: Each holder of Class A Preferred Stock is entitled to receive twelve percent (12%) non-compounding cumulative dividends per annum, payable semi-annually.
2) Conversion: Each share of the Class A Preferred Stock shall be convertible into the Company’s Common Stock any time after one year from the date of issuance at a Variable Conversion Price (as defined herein) of the Common Stock. The “Variable Conversion Price” shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the average Trading Price for the Company’s Common Stock during the ten (10) trading-day period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Class A Preferred Stock to the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security as of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, NYSE or applicable trading market as reported by a reliable reporting service (“Reporting Service”) mutually acceptable to the Company and Holder of the Class A Preferred Stock.
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3) Redemption Rights: The Company, after a period of two years from the date of issuance, may at any time or from time to time redeem the Class A Preferred Stock, in whole or in part, at the option of the Company’s Board of Directors, at a price equal to one hundred twenty percent (120%) of the original purchase price of the Class A Preferred Stock or of a unit consisting of any shares of Class A Preferred Stock and any warrants attached thereto, plus, in each case, accumulated and unpaid dividends to the date fixed for redemption.
NOTE 15 – STOCK-BASED COMPENSATION PLAN
On February March 18, 2015, the Company adopted an Employee Benefit Plan to set aside 1,000,000 shares of common stock for eligible employees and independent contractors of the Company and its subsidiaries. As of June 30, 2016 the Company has not issued any stock in lieu of cash under this plan.
NOTE 16 – GAIN (LOSS) ON SETTLEMENT OF DEBTS
For the fiscal year ended June 30, 2016, there was no gain or loss on settlements of debts, as compared to a net loss in the amount of $25,845 on conversion of promissory notes by lender during the year ended June 30, 2015.
NOTE 17 – OTHER INCOME (EXPENSE)
Net Other Income (Expense) for the fiscal year ended June 30, 2016 consists of the following:
| OTHER INCOME (EXPENSE) | FY Ended June 30, 2016 | |||
| Other Income (Reversal of Impairment) | $ | 270,000 | ||
| Interest Income | $ | 74.54 | ||
| Write-offs | $ | (12,391 | ) | |
| Debit interest expense | $ | (260 | ) | |
| Net Miscellaneous Income (Expense) | $ | (1,990 | ) | |
| NET OTHER INCOME (EXPENSE) | $ | 255,433 | ||
NOTE 18 – RELATED PARTY TRANSACTIONS
The Company accrued $210,000 in salaries for the President and Secretary of the Company during the year ended June 30, 2016.
NOTE 19 – INCOME TAXES
No provision was made for income tax since the Company has significant net operating loss carry forward. Through June 30, 2016, the Company incurred net operating losses for tax purposes of approximately $37,734,753. The net operating loss carry forward may be used to reduce taxable income through the year 2031. Net operating loss for carry forwards for the State of California is generally available to reduce taxable income through the year 2022. The availability of the Company’s net operating loss carry-forward is subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock. (See Note 2).
“Under section 6501(a) of the Internal Revenue Code (Tax Code) and section 301.6501(a)-1(a) of the Income Tax Regulations (Tax Regulations), the IRS is required to assess tax within 3 years after the tax return was filed with the IRS. The Company’s 2015 tax return is open and may be subject to examination by the taxing authorities”.
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NOTE 20 – CONTRACTS AND COMMITMENTS
BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH THINH HUNG INVESTMENT CO.
During the fiscal year ended June 30, 2010 the Company signed an agreement with Thinh Hung Investment Co., Ltd., a Vietnam-based company, to assist Thinh Hung in identifying, locating and, possibly, acquiring various business opportunities for Thinh An Co., Ltd., a subsidiary of Thinh Hung, including but not limited to a reverse merger, a stock swap, or a business combination between Thinh An and a publicly-traded company in the U.S. In exchange for the services rendered, the Company would receive compensation in cash from Thinh Hung and common stock of the combined company. As of September 30, 2011, the Company consummated a stock purchase and investment agreement between Thinh Anh Co., Ltd. and Vietnam Foods Corporation, a Nevada corporation. However, the combined company has not filed a registration statement with the Securities and Exchange Commission to become a reporting company. The Company has recognized $26,656 as only revenues from this transaction. During the fiscal year ended June 30, 2016, the Company repaid $5,000 to Thinh Hung Investment Co.. The balance of $288,219 was booked as Customer Advances in the liability portion of the balance sheet.
BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH AG MATERIALS, LLC.
On January 7, 2015, the Company signed a Business Cooperation and Investment Agreement with AG Materials, LLC, an Alabama limited liability company, (“AGM”) to cooperate with each other to establish and operate a 200,000 MT wood pellet plant in Live Oak, Suwannee County, Florida. Both parties have incorporated Cornerstone Biomass Corporation, a Florida corporation, as the entity to manage the joint-venture wood pellet project in Live Oak, Florida. On July 31, 2015, PHI Group, Inc. purchased ten acres of land, namely Lots 18 & 19 Eagle’s Nest, Live Oak, Florida 32060 from Klausner Holding USA, Inc., a Georgia corporation, for the purpose of establishing the wood pellet plant. Due to recent adverse changes with respect to the global industrial wood pellet markets, the Company has decided not to pursue this wood pellet plant project. As of June 30, 2016, the Company has written off its investment in Cornerstone Biomass Corporation.
BUSINESS COOPERATION AGREEMENT AND MASTER CONTRACT FOR PURCHASE AND SALE OF SAND WITH KIEN HOANG MINERALS JOINT STOCK COMPANY
On May 8, 2015, the Company signed a Business Cooperation Agreement with Kien Hoang Minerals Joint Stock Company (” KHM JSC”), a Vietnamese company, to develop and expand international markets for KHM’s mineral products, particularly exports of reclamation sand and granite to Singapore through Primearth Resources Asia Pte Ltd, another strategic partner of the Company’s. The Company was granted the first right of refusal by KHM to purchase approximately 102 million cubic meters of sand and 40 million cubic meters of granite. On June 12, 2015, the Company signed a Master Contract for Purchase and Sale of 60 million cubic meters of sand recovered from the dredging and clearing of traffic pathways at De Gi estuary and surrounding areas in Binh Dinh Province, Vietnam over a period of five years for exports to Singapore and other Asian markets. As of the date of this report, the Company has not shipped any sand under these agreements and intends not to pursue this business activity.
CONSULTING AGREEMENT WITH SPORTS POUCH BEVERAGE COMPANY
On June 3, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement with Sports Pouch Beverage Company (“SPBV”), a Nevada corporation, to provide consulting services and assist SPBV with respect to business development, mergers and acquisitions, corporate governance, and corporate finance. PHI Capital Holdings, Inc. is entitled to receive up to forty percent of common stock in SPBV as compensation for the services rendered. The duration of this agreement is one year. As of June 30, 2016 PHI Capital Holdings, Inc. has received 389,400,000 shares of SPBV stock and recorded a total of 292,050,000 shares as earned revenues from this transaction. The balance of 97,350,000 shares will be returned to the client and is recorded as Other Current Payable valued at $97,350 in the accompanying consolidated financial statements.
AGREEMENT WITH PRIMEFORTH RENEWABLE ENERGY LTD.
On June 24, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement with Primeforth Renewable Energy Ltd. (“Primeforth”), a Singaporean company, to provide consulting services with respect to corporate development, corporate finance and debt financing for Primeforth Renewable Energy. PHI Capital Holdings is entitled to a one-time non-refundable professional fee of $20,000 and 4% cash success fee for any financing arranged for Primeforth. The Company is also entitled to additional compensations for advisory and business development services for the client. The term of this agreement is two years. During the year ended June 30, 2016, the Company recorded $40,000 as earned revenues in connection with this agreement. Primeforth is engaged in developing alternative energy using patented microalgae technologies.
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SETTLEMENT AGREEMENT WITH HAI P. NGUYEN FOR CONSULTING SERVICE
On July 16, 2015, the Company signed a Settlement and Payment Agreement with Hai P. Nguyen and agreed to pay the latter $25,000 in cash and 500,000 shares of Common Stock of Myson Group, Inc. as compensation for Hai P. Nguyen’s portion of contribution towards the budget to complete the services in connection with the Consulting Agreement dated January 24, 2014 between Vietnam Mining Corporation (now known as Myson Group, Inc.) and PHI Capital Holdings, Inc. During the year ended June 30, 2016, the Company fulfilled its obligations under this agreement by paying Hai Nguyen $25,000 in cash, of which $2,500 was advanced by the president of the company, and 500,000 shares of Common Stock of Myson Group, Inc.
AGREEMENT FOR DEFRAYAL OF EXPENSES AND STOCK COMPENSATION WITH ASIA GREEN CORPORATION
On July 17, 2015, the Company signed an agreement to provide $75,000 to Asia Green Corporation (AGMC”), a Nevada corporation, for AGMC to pay certain required expenses and resume its status as fully reporting company with the Securities and Exchange Commission. In exchange for the fund, AGMC agrees to allocate 500,000 shares of its Common Stock upon the consummation of a business combination between itself and a Vietnamese company engaged in agriculture and reforestation. This amount was recorded as Deposit for Acquisition in the Company’s balance sheet as of June 30, 2016.
BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH CAVICO LAO MINING CO. LTD.
On August 7, 2015, the Company signed a Business Cooperation and Investment Agreement with Cavico Lao Mining Co., Ltd. (“CLM”) to provide the initial required capital to be raised from the Company’s 506(c) private placement for CLM’s interim operations and a budget to conduct an independent JORC report for the nickel portion of the CLM’s a 80-hectare multi-mineral mine in the Khoam Bang mountainous area at Ban Bo, Bulikhamsay, Laos People’s Democratic Republic. In addition, the Company shall establish a subsidiary to be the holding company for the CLM’s assets to be spun off as a separate publicly traded company (“PubCo”) on the NASDAQ Stock Markets, subject to certain conditions and requirements. As of the date of this report, the Company has not been successful in raising the required capital for CLM and intends not to pursue this transaction further unless funding is available.
MASTER AGREEMENT FOR BUSINESS COOPERATION WITH DREDGE MASTERS AND CIVIL WORKS
On August 19, 2015, the Company signed an agreement with Dredge Masters and Civil Works, Inc., a Filipino corporation, to cooperate with each other in order to optimize the dredging, transshipment, loading, shipping and unloading of saline sand on large scales to serve the needs of land reclamation in Singaporean and other Asian countries. The term of this agreement is one year and expired on August 18, 2016.
STOCK PURCHASE AND INVESTMENT AGREEMENT WITH VINABENNY ENERGY JOINT STOCK COMPANY
On September 1, 2015, the Company signed an agreement to acquire a 50.10% equity ownership in VinaBenny Energy Joint Stock Company (“VinaBenny”, a Vietnamese company, for $10,700,000 and to arrange capital for VinaBenny to complete a 84,000 MT Liquefied Petroleum Gas (LPG) terminal in Can Giuoc District, Long An Province, Vietnam. This agreement expired on December 31, 2015.
AGREEMENT WITH REDICSACO JOINT STOCK COMPANY
On September 11, 2015, the Company signed a Principle Business and Investment Agreement with Redicsaco JSC, a Vietnamese company, to cooperate with each other with respect to the dredging, transshipment, loading, sale and export of saline reclamation sand from the Ham Luong River waterway, Ben Tre Province, Vietnam to Singapore, Brunei and other Asian markets. The initial authorized volume of sand from this location is 25 million cubic meters and the total reserve is more than 390 million cubic meters. As of the date of this report, the Company has not been successful developing this project due to changes in market conditions and intends not to pursue this transaction further.
AGREEMENT WITH HATICO INVESTMENT DEVELOPMENT JOINT STOCK COMPANY
On September 11, 2015, the Company signed a Principle Business Cooperation Agreement with HATICO Investment Development Joint Stock Company, a Vietnamese company, to cooperate with each other in order to dredge, sell and export saline reclamation sand from Ha Tien, Kien Giang Province, Vietnam and to develop a deep-water seaport terminal at this location. It is estimated that the volume of sand from this location is approximately one billion cubic meters. Both parties have agreed in principle for the Company to acquire 50.90% of HATICO or own the same percentage in a joint venture company to be set up. As of the date of this report, the Company has not been successful developing this project due to changes in market conditions and intends not to pursue this transaction further.
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BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH HUNG THINH MINERALS INVESTMENT CO.
On October 26, 2015 the Company signed a Principle Business Cooperation and Investment Agreement with Hung Thinh Minerals Investment Co., Ltd. “(HTMI”), a Vietnamese company that owns a titanium mine and a slag processing plant in Binh Thuan Province, Vietnam to cooperate with HTMI to increase its capacity to produce 150,000 MT of titanium slag per year, to develop HTMI into a major refiner of titanium-related products, including titanium pigments, ingots, sponge, and alloys, and to list HTMI on an international stock exchange to raise capital for its growth and expansion program. PHI Group, Inc. will acquire 49% of HTMI, plus 2% proxy voting right in HTMI, as a prerequisite to cooperate with HTMI in this development program. The closing of this transaction is subject to satisfactory due diligence review of HTMI, the signing of a definitive agreement, and HTMI’s compliance with the U.S. Generally Accepted Accounting Principles (GAAP). As of the date of this report, the Company has not been successful in obtaining complete financial information from HTMI to conduct the required due diligence review and intends not to pursue this transaction further.
BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH SPARTAN MINING AND DEVELOPMENT CORPORATION
On October 30, 2015, the Company signed a Principle Business Cooperation and Investment Agreement with Spartan Mining and Development Corporation (“SMDC”), a Philippine company, to form a joint venture between SMDC and PHI Group, Inc. to dredge, extract, process, sell and export lahar sand from the Sto. Tomas, Maloma and Bucao Rivers in the Province of Zamales, the Philippines. The total volume of the lahar sand to be dredged from these rivers is estimated at 1.4 billion metric tonnes. The sand was created by the Mount Pinatubo volcanic eruption in June 1991.
On November 24, 2015 both parties signed a Joint Venture Agreement to form a joint venture corporation, to be preferably styled “PHI-Spartan Resources, Inc.,” in order to implement the provisions of the Principle Business Cooperation and Agreement. As of the date of this agreement, the Company has not made any investment in the joint venture company.
SALE AND PURCHASE AGREEMENTS OF MARINE SAND FOR EXPORT TO SINGAPORE
On December 16, 2015, the Company signed Sale and Purchase Agreements with two Vietnamese companies, Ha Thanh Irrigation Co., Ltd. and Hoai Nhon Irrigation Co., Ltd., to export marine sand recovered from dredging projects in Binh Dinh Province, Central Vietnam to Singapore for reclamation purposes. However, the Company was not able to begin shipments of sand in April 2016 as anticipated due to structural changes that affected both Vietnamese companies. Though these contracts do not expire until December 31, 2016, they are deemed null and void because of unenforceability.
INVESTMENT IN ANTIMONY MINE IN LAO PEOPLE’S DEMORACTIC REPUBLIC
On January 19 and 20, 2016, the Company signed a Business Cooperation Agreement and an Investment Agreement with Khamchaleun Investment Sole Co., Ltd., a Laotian company, to acquire a 35% equity interest in Hung Kham Lao Investment Co., Ltd and co-invest in a 92km2 antimony mine in Chalet Village, Boualapha District, Khammuane Province, People’s Democratic Republic. The antimony mining company has been granted a quota to extract, process and sell 350,000 metric tons of antimony from this mine. As of the date of this report, the Company has not made any investment into Khamchaleun Investment Sole Co. and intends not to pursue this transaction further.
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ACQUISITION OF MAJORITY INTEREST IN A LIQUEFIED PETROLEUM GAS COMPANY IN VIETNAM
On January 23, 2016, PHI Group, Inc. (the “Company”) entered into Private Stock Purchase and Sale Agreement to purchase 50.90% of equity ownership (the “Exchange Ownership”) in Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation), a Vietnamese company, hereinafter referred to as “Pacific Petro,” in exchange for a combination of cash and Common Stock and/or Preferred Stock of the Company. The fair value for the Exchange Ownership will be determined by the majority shareholders of Pacific Petro (the “Majority Shareholders”) and the Company after the completion of a business valuation of Pacific Petro by Grant Thornton Vietnam Ltd. and the financial audits of Pacific Petro by a PCAOB-registered auditing firm.
Originally established as Binh Duong Gas LLC in 1998, Pacific Petro changed its name to Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation) in May 2010. This company’s headquarters is located at 99 Ich Thanh Street, Truong Thanh Ward, District 9, Ho Chi Minh City, Vietnam. Website: http://www.pacificpetro.com.vn/
Pacific Petro is the third largest private liquefied petroleum gas (LPG) company in Southern Vietnam, engaged in sales of liquefied petroleum gas (LPG), manufacturing of gas canisters and cylinders, filling of LPG, repair and maintenance of gas tanks, and wholesale of solid fuels, liquid, gas and related petroleum products.
This company owns a gas canister-manufacturing factory on a 215,200 square-foot lot in Ben Cat District, Binh Duong Province and a gas filling plant on a 65,600 square-foot lot in District 9, Ho Chi Minh City, Vietnam. It has also acquired a 93,600 square-foot lot Go Dau Industrial Park, Dong Nai Province to build a proprietary LPG storage area and has been granted 83 acres in Phu Huu Village, Nhon Trach District, Dong Nai Province to build an integrated port for imports of energy-related commodities and products.
PHI Group has engaged Grant Thornton to conduct an independent business valuation but has not completed the required financial audits of Pacific Petro. After the expiration of the afore-mentioned Purchase and Sale Agreement on June 30, 2016, both parties have agreed to a conditional extension of the transaction and intend to renegotiate the terms and conditions of payment.
MEMORANDUM OF UNDERSTANDING FOR BUSINESS COOPERATION & INVESTMENT
On March 9, 2016, the Company signed a Memorandum of Understanding for Business Cooperation and Investment with Ses Meas Gas Import Export, Construction & Development Co., Ltd., (“Ses Meas”) a Cambodian company, to cooperate with each other to develop liquefied petroleum gas (LPG) and other energy-related businesses in Cambodia, including but not limited to increasing Ses Meas market share of LPG business in Cambodia, establishing dry port and LPG storage and logistics facilities, engaging in waste-to-energy business, and potentially establishing and operating an oil refinery in Cambodia in conjunction with an qualified international investor. Subsequently, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate of Ses Meas, to establish, manage and operate a dry port in Cambodia.
On April 30, 2016, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate of Ses Meas, to establish, manage and operate a dry port in Cambodia. According to the Joint Venture Agreement, PHI Group, Inc. will contribute 65% investment capital to the dry port project and hold 65% equity interest in the joint venture company. In light of the recent contemplated acquisition activities of the Company following the close of the fiscal year ended June 30, 2016, the Company intends to re-evaluate the potential contribution and priority of this project compared with other investment opportunities.
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BUSINESS COOPERATION AGREEMENT WITH PT JAYA SAKTI GLOBALINDO
On March 17, 2016, the Company signed a Business Cooperation Agreement with PT Jaya Sakti Globalindo (JSG), an Indonesian company, to utilize hard assets held by JSG and its affiliates as collaterals for project financing. The parties intend to enter into definitive agreements for the collateral provision in connection with specific projects and the terms and conditions of such provisions. As of the date of this report, the Company has not undertaken any projects that would qualify for the utilization of collateral assets from JSG and its affiliates.
LETTER OF INTENT TO ACQUIRE WOOD PELLET COMPANY IN ALABAMA
On April 27, 2016, the Company signed a Letter of Intent to acquire Lee Energy Solutions, LLC, an Alabama company that owns a 100,000 MT/year wood pellet manufacturing facility in Crossville, Alabama. The Letter of Intent was amended twice and expired on September 20, 2016.
NOTE 21 – GOING CONCERN UNCERTAINTY
As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $37,734,753 and total liabilities and stockholders’ deficit of $656,730 as of June 30, 2016 . These factors as well as the uncertain conditions that the Company faces in its day-to-day operations with respect to cash flows create an uncertainty as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management has taken action to strengthen the Company’s working capital position and generate sufficient cash to meet its operating needs through June 30, 2017 and beyond.
In the next twelve months the Company intends to continue pursuing its merger and acquisition program by acquiring all or controlling interests in target companies in a number of industries, including but not limited to conventional energy, renewables, natural resources, agribusiness, technology, transportation, education, distribution, mining, oil & gas, financial Services, healthcare, and pharmaceuticals. We believe that by closing one or more of the transactions contemplated in Note 22 – Subsequent Event we will be able to build a critical mass and uplist to the Nasdaq Stock Market or NYSE in the near future. In addition, we will continue to provide advisory and consulting services to international clients through our wholly owned subsidiary PHI Capital Holdings, Inc. The Company anticipates generating substantial amounts of revenues through the merger and acquisition program and advisory services mentioned herein. However, no assurances could be made that management would be successful in achieving its plan. The president and chairman of the Company has committed to funding the Company’s operations from various sources for the next 12 months.
NOTE 22 – SUBSEQUENT EVENT
These financial statements were approved by management and available for issuance on October 11, 2016. Subsequent events have been evaluated through this date.
ENGAGEMENT LETTER WITH MILOST ADVISORS, INC.
On July 11, 2016, the Company signed an engagement letter with Milost Advisors, Inc. to assist the Company in its analysis, consideration and, if appropriate, execution of various financial and strategic alternatives available to it, including securing additional equity and/or debt capital, assisting the Company in its analysis and consideration of financial aspects of certain potential strategic transactions such as mergers, acquisitions, spin-offs, joint ventures, minority investments, negotiated purchases, or other similar transactions. In consideration for the services rendered by Milost, the Company agrees to pay Milost a retainer fee equal to $100,000, payable in the form of $10,000 in cash and $90,000 in stock of the Company valued at $0.40 per share. The Company also agrees to pay Milost a success fee of 8% for equity financing and 5% for mezzanine and senior debt financings.
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MEMORANDUM OF UNDERSTANDING BETWEEN MILOST GLOBAL, INC.
On July 18, 2016, the Company signed a Memorandum of Understanding with Milost Global, Inc., a U.S. private equity firm, to cooperate in promoting the competitiveness of each other as well as joint activities to acquire cash-flow positive companies in North America, South Africa, Australia, Singapore and New Zealand and seek growth through M&A alternatives in order to fast-track shareholder value and dividend distribution. Both parties agree to use Milost Advisors, Inc. as the first right of refusal advisor to conduct a strategic planning exercise, form a new Special Purpose Company (SPC) through which the partnership activities will be carried out. The same SPC will be held, managed and controlled by both parties pari passu. It is intended that this partnership will assist both parties with the implementation of their combined growth strategies and will help identify areas where each party can provide capacity building support.
LETTER OF INTENT TO ACQUIRE A SOUTH AFRICAN MINING SERVICES COMPANY
On July 19, 2016, the Company presented a pre-conditional non-binding undertaking to make an offer to acquire the entire issued capital of an undisclosed South African mining services company listed on the Johannesburg Stock Exchange (“SA Target”). On July 25, 2016, approval was given by the SA Target’s Board of Directors to its management team to enter into further discussions with PHI Group in good faith and to proceed with the due diligence process outlined in the undertaking.
Following the completion of the due diligence process conducted by Milost Advisors, Inc. and the Company, on September 3, 2016, the Company presented a Letter of Intent (“LOI”) to the SA Target to acquire all its issued capital in exchange for common stock in PHI Group. The exchange rate would be determined on the basis of 10 days’ Volume-Weighted Average Price (VWAP) of both companies before the day of the LOI. According to the LOI, the Company also commits to the provision of a USD $ 20 million shareholder loan facility to the SA Target. Approximately USD $ 12 million will be used for the repayment of the SA Target subsidiary’s term loan and the remaining USD $ 8 million will be available as a draw down facility for financing the working capital requirements of the SA Target. The USD $ 12 million facility will be non-interest bearing until the company has effectively turned around or whilst there are minority shareholders in Buildmax. Thereafter, interest of 5% per annum will be charged on the shareholder loan and the loan will be repaid over a period to be agreed depending on the free cash flow generated by the SA Target.
On September 6, 2016, approval was granted by both the SA Target’s Board of Directors and Independent Board to its management team to enter into further discussions with PHI Group in good faith and to proceed with the transaction.
On September 14, 2016, the Company received confirmation from SA Target’s management that 77% of the shareholders of the SA Target approved the acquisition offer by PHI Group.
On October 10, 2016, Milost Global, Inc. submitted a revised offer to SA Target, which was declined by SA Target’s Board of Directors on October 11, 2016. The Company intends to renegotiate the terms and conditions for this transaction.
SECURED LINE OF CREDIT FACILITY WITH TCA GLOBAL CREDIT MASTER FUND, LP
On August 30, 2016, the Company signed a term sheet with TCA Global Credit Master Fund, LP (“Investor”) for a maximum $15,000,000 senior secured line of credit, of which $4,000,000 will be made available to the Company on the first drawdown (the “Initial Line of Credit”) for acquisition financing. The Closing Date will be the start date for the Line of Credit Facility.
The Company, at the discretion of the Investor, may request an increase in the line of credit at agreed upon time periods and agreed upon amounts. The sum of the Initial Line of Credit and the subsequent line increases, if any, (the “Then Current Line Size”) shall not exceed the maximum line of credit. Each subsequent line increase will require the Company to execute and deliver a new or revised revolving note to the Investor and be responsible for any fees and expenses associated with the line increase.
The line of credit may be drawn down, at the Investor’s discretion, and repaid by the Company throughout the term of the facility. The amount requested to be drawn down (the “Advance”) shall not exceed 80% of repayments to the Investor’s designated account, less interest and fees, if the reserve amount on the Then Current Line Size has not been satisfied. The frequency of Advances will be mutually agreed upon between the Investor and the Company.
MILOST GLOBAL, INC. AGREES TO INVEST UP TO $100 MILLION IN PHI GROUP, INC.
On September 8, 2016, the Company entered into a Letter of Intent with Milost Global, Inc., a U.S. private equity firm, with respect to the principal terms and conditions under which Milost Global, Inc. will invest up to $100 million in PHI Group, Inc.
Investment in the amount of $50 million will be as equity and $50 million as loan.
On September 25, 2016, the Company signed an agreement with Milost Global, Inc. for up to $50 million structured as a Milost Equity Subscription Agreement (the ‘MESA”) whereby Milost Global is willing to initially invest $15 million for working capital needs of PHI Group. The amount of $15 million will be drawn down in tranches at a minimum of $500,000 until fully utilized. Further, the MESA will be utilized for the share exchange between Milost Global, Inc. and PHI Group and the balance of the $50 million facility will be available for equity leakage fir future acquisitions of PHI Group. According to the structure of the MESA, Milost Global, Inc. is entitled to purchase shares of common stock of PHI Group for a price per share on the basis of $2 at a discount of 20%. The Company and Milost agree that for as long as the Company’s stock price has not reached $2 per share, Milost Global, Inc. will receive the Company’s convertible notes instead of the Company’s shares for each drawdown. Milost Global, Inc. has the right to convert the convertible notes into common shares of the Company once the price of PHI Group’s stock reaches the target price of $2. The Company agrees to pay Milost Global, Inc. a commitment fee equal to 4% of the total commitment, payable within 3 business days after the price of the Company’s common stock reaches the target price of $6.
| F-24 |
On September 27, 2016, the Company submitted a Drawdown Notice to Milost Global, Inc. for a total of $2,750,000 from the MESA’s total $50-million commitment in form of a convertible note bearing annual interest of 5% and convertible to common stock at 20% discount when PHI Group’s common stock reaches $2 per share. The proceeds from this drawdown are allocated as follows: $2,150,000 towards the cash payment for the purchase of the agricultural company (“Agri Target”) in Southeastern United States, $500,000 for due diligence and document fees for the acquisitions of the SA Target, Agri Target and an educational company in Canada, and $100,000 for general working capital. On September 28, 2016, Milost Global, Inc. confirmed that $500,000 had been remitted to Milost Advisors from Milost Global, Inc. on behalf of PHI Group, Inc. as part of the first Drawdown Notice presented to Milost Global, Inc. by the Company.
LETTER OF INTENT TO ACQUIRE AGRICULTURAL BUSINESS IN SOUTHEASTERN UNITED STATES
On August 24, 2016, the Company tendered a Letter of Intent to acquire an undisclosed fruit and vegetable company (“Agri Target”) in Southeastern United States for a total of 81% in cash and 19% in common stock of PHI Group. On September 6, 2016, the owner of the Agri Target made a counter offer which was accepted by the Company on September 16, 2016.
The Company is in the process of conducting the due diligence review of the Agri Target and expects to close this transaction as soon as practical. Average annual sales of the Agri Target are approximately $25 million.
LETTER OF INTENT TO ACQUIRE CANADIAN EDUCATIONAL COMPANY.
On September 3, 2016, the Company signed a Letter of Intent for Acquisition (“LOIA”) with an undisclosed educational company in Canada (“EDU Target”) that owns and operates 21 campuses and enrolls approximately 20,000 students yearly in various English language and career training educational courses. According to the LOIA, the Company will acquire all the issued and outstanding shares of the EDU Target in exchange for common stock of PHI Group and provide a total of C$20 million in cash and stock investment in EDU Target to settle bank debts and allow for operating working capital.
On October 3, 2016, the Company presented a revised LOIA to EDU Target to modify the terms of the transaction, whereby the Company agrees to acquire approximately 311,286,356 shares of EDU Target’s stock valued at C$0.0165 per shares in exchange for common stock of PHI Group. In addition, the Company will provide C$20 million cash investment of which C$6.2 million will be for settlement of bank debts and the remaining balance of C$13.8 as operating working capital. Both parties intend to proceed with a definitive Sale and Purchase Agreement in order to close this transaction as soon as practical, subject to additional due diligence review of EDU Target.
CONSULTING SERVICE AGREEMENT WITH TANS COMPAMY LTD.
On September 9, 2016, PHI Capital Holdings, Inc. signed a Consulting Service Agreement with Tans Company, Ltd., a Vietnam-based company, to provide advisory and consulting services on a non-exclusive basis to assist Tans Co. in becoming a publicly traded company in the U.S. Stock Market. The Company is entitled to cash compensations from Tans Co. and a portion of equity in the new public company.
SALE OF LAND IN LIVE OAK, FLORIDA
On September 21, 2016, the Company entered into a Sale and Purchase Agreement to sell two lots of land in Live Oak, Florida (Lot 18 & 19 of EAGLE’s NEST, according to Plat Book 1, Page 502, of the Public Records of Suwannee County, Florida) back to Klausner Holding USA, Inc., a Georgia corporation, for $65,000. This transaction is scheduled to close on or before December 9, 2016.
| F-25 |
CONSULTING SERVICE AGREEMENT
On September 23, 2016, the Company signed an agreement to engage a consultant for M&A due diligence, business development, and other corporate services for a period of on year. The Company has agreed to pay the consultant a one-time fee of one hundred thousand restricted shares of the PHI Group’s stock as compensations for the term of the agreement.
OPTION GRANTS
On September 23, 2016, the Board of Directors of the Company approved option grants for the current members of the Board of Directors and the President and Chief Executive Officer of PHI Group, Inc. to acquire up to 6,520,000 shares of the Company’s common stock at an exercise price of $0.24 per share, based on the 10-days’ volume-weighted average price of PHI Group, Inc.’s Common Stock prior to the grant date. These options will be vested in one year after the grant date.
MEMORANDUM OF UNDERSTANDING TO ACQUIRE ABOUND FARMS, INC.
On September 30, 2016, the Company signed a Memorandum of Understanding with Abound Farms, Inc., (“AFI Target”) a U.S. company, to acquire 100% of AFI Target. AFI Target is engaged in hydroponics and possesses proprietary water treatment systems and nutrients that are known to substantially enhance farming yields. The MOU sets forth the guidelines for further negotiations between AFI Target and the Company before the signing of a definitive agreement that contains representations, warranties, covenants, and indemnities customary for a transaction of this type. The Company intends to incorporate the AFI Target’s water treatment systems and nutrients to the Agri Target’s business after the closing of these transactions.
AGREEMENTS FOR INVESTOR AND PUBLIC RELATIONS SERVICES
On September 30, 2016, the Company signed agreements with two independent consulting firms for investor and public relations services for a total period of six months. The Company has agreed to pay these companies a total of $35,000 in cash and 100,000 shares of restricted common stock of PHI Group, Inc.
ISSUANCES OF CONVERTIBLE PROMISSORY NOTES
On July 20, 2016, the Company issued a convertible promissory note in the amount of $50,000 to EMA Financial, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures in one year and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading immediately preceding the Closing Date of this note, and (ii) 55% of the lowest sale price for the Common Stock on the Principal Market during the twenty (20) consecutive Trading Days immediately preceding the Conversion Date. The note may be prepaid at 130% - 145% of outstanding principal and interest up to 180 days.
On August 16, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures on May 16, 2017 and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) 50% multiplied by the average of the two lowest Trading Price during the previous twenty-five Trading Day period ending on the latest complete Trading Date prior to the date of this note and (ii) 50% multiplied by the average of the two lowest Trading Prices for the Common Stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The note may be prepaid at 135% - 150% of outstanding principal and interest up to 180 days.
The Company intends to prepay these notes within the respective allowable prepayment time frames.
ISSUANCES OF COMPANY’S COMMON STOCK
On July 29, 2016, the Company issued 225,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.40 per share to Milost Advisors, Inc. for buy-side advisory services in connection with contemplated acquisitions of target companies in South Africa and North America.
On August 29, 2016, the Company issued 48,930 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the auspices of Rule 144 for $20,000 in cash, at the price of $0.4088 per share.
On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 for the convertible promissory note dated February 29, 2016 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.
| F-26 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management carried out an evaluation, with the participation of our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act), as of the period covered by this report. Disclosure controls and procedures are defined as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon their evaluation, our management (including our Chief Executive Officer) concluded that our disclosure controls and procedures were not effective as of June 30, 2015, based on the material weaknesses defined below.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control of Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
| - | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets, | |
| - | provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and | |
| - | provide reasonable assurance regarding prevention or timely detection of authorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| 16 |
Under the supervision and with the participation of management, including its principal executive officer and principal financial officer, the Company’s management assessed the design and operating effectiveness of internal control over financial reporting as of June 30, 2015 based on the framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have identified material weaknesses in our internal control over financial reporting.
If we fail to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company.
The material weaknesses related to a lack of a full segregation of duties and to our lack of sufficient personnel in our accounting and financial reporting functions with sufficient experience and expertise with respect to the application of U.S. GAAP and related financial reporting.
Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of June 30, 2016.
Management’s Remediation Plan
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes in the future:
| (i) | appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and |
| (ii) | adopt sufficient written policies and procedures for accounting and financial reporting. |
The remediation efforts set out in (i) are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Management believes that despite our material weaknesses set forth above, our consolidated financial statements for the fiscal year ended June 30, 2016 are fairly stated, in all material respects, in accordance with US GAAP.
Attestation Report of the Registered Accounting Firm
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to Rule 308(b) of Regulation S-K, which permits the Company to provide only management’s report in this Annual Report.
Changes in Internal Control over Financial Reporting
No changes in the Company’s internal control over financial reporting have come to management’s attention during the Company’s last fiscal quarter that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.
| 17 |
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth certain information as of June 30, 2016, with respect to the Directors and Executive Officers of the Company.
| NAME | AGE | POSITION | ||
| Henry D. Fahman | 62 | Chairman of the Board, President, Acting CFO | ||
| Tina T. Phan | 49 | Treasurer, Secretary | ||
| Tam T. Bui | 55 | Director | ||
| Frank Hawkins | 75 | Director |
Directors are elected at the annual meeting of shareholders and hold office until the following annual meeting and until their successors are elected and qualified. All Executive Officers serve at the discretion of the Board of Directors. The Company’s securities are not registered under Section 12(g) of the Exchange Act. Accordingly, the Directors and Executive Officers of the Company are not required to file reports under Section 16(a) of that act.
Henry D. Fahman has more than 30 years experience in general management, finance, investments and corporate strategy. He has been President and Chairman of the Board of PHI Group, Inc. since January 2000, and is currently Acting Financial Officer of the Company. Mr. Fahman served as President and Chairman of the Board of Providential Securities, Inc. from its inception in October 1992 to October 2000. He holds a B.S., magna cum laude, in business administration from the University of California at Berkeley, with emphasis in finance and economic analysis and policy, and is a graduate of the Advanced Management Program (AMP166) from Harvard Business School. He has also attended other Executive Education programs at Harvard Business School and Stanford University, including Mergers and Acquisitions, Creating Competitive Advantage, and Advanced General Management. Previously, he served as a Resettlement Coordinator for the United Nations High Commissioner for Refugees. Mr. Fahman also serves as Chairman/Managing Director of PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company. Mr. Fahman is the husband of Tina T. Phan, our Secretary and Treasurer.
Tam Bui has been a Director of the Company since April 2009 and served as a Chief Technology Officer from May 2002 to April 2009. Mr. Bui holds Bachelor and Master of Science degrees from the University of Minnesota and has attended continuing Education at the University of California, Los Angeles. He has over 25 years of experience with Northrop Grumman, Honeywell, Inc. and TRW in various capacities such Project Director, Project Manager, Department Manager, Program Manager and Implementation Manager. One of Mr. Bui’s major responsibilities has been the construction of dual Emergency Command Control Communication (ECCC) centers and implementation of the Los Angeles Police Department ECCC Systems. He has a broad knowledge and experience in the areas of information technology, intranet/internet technology, inventory management, material resource planning, enterprise resource planning, human resource management, investment management, real estate, and international business.
Frank Hawkins, Director has been a Director of the Company since April 2009 and Mr. Hawkins is a founder and CEO of Hawk Associates with 30 years of award-winning investor relations experience, Mr. Hawkins has earned the wide respect of Wall Street’s investment community for straight talk and integrity. He was formerly vice president/corporate relations and planning and head of the investor relations program at Knight-Ridder, Inc. in Miami. Mr. Hawkins started his career as an agent handler in clandestine collection operations for the Defense Intelligence Agency in Germany and went on to become a foreign and war correspondent, international businessman, senior corporate executive and president of the Access Asia Group in Hong Kong. He has lived in eight countries. He has been involved in stock listings in Tokyo and Frankfurt and company presentations in London, Zurich, Geneva and Singapore. Fluent in German, he is a graduate of Cornell University and author of “Ritter’s Gold,” an adventure novel published in several languages by the New American Library. He is a member of the Association of Former Intelligence Officers and the Audubon Society and is listed in Who’s Who in America and Who’s Who in the World. He serves on the board of the Florida Keys Electric Cooperative.
| 18 |
Tina T. Phan has been Treasurer of the Company since April 2009. She served as a Director and Secretary of the Company from January 2000 to April 10, 2009 and was Vice President of Operations of Providential Securities, Inc. from 1995 to 2000. Mrs. Phan holds a B.S. in management information system from California State University, Los Angeles. Currently Mrs. Phan serves as Treasurer and Secretary of the Company. Mrs. Phan is the wife of Henry D. Fahman.
ITEM 11. EXECUTIVE COMPENSATION
(a) Any compensation received by officers, directors, and management personnel of the Company will be determined and approved from time to time by the Board of Directors of the Company as it deems appropriate and reasonable. Officers, directors, and management personnel of the Company will be reimbursed for any out-of-pocket expenses incurred on behalf of the Company.
Except for any non-cash payments mentioned in this report, there was no monetary compensation paid to any officers of the Company during the year ended June 30, 2016.
(b) There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the Company in the event of retirement at normal retirement date as there is no existing plan provided for or contributed to by the Company.
(c) All members of the Company’s Board of Directors, whether officers of the Company or not, may receive an amount yet to be determined annually for their participation in meetings of the Board and will be required to attend a minimum of four meetings per fiscal year. The Company reimburses all expenses for meeting attendance or out of pocket expenses connected directly with their Board participation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock as of October 12, 2016 (16,174,353 shares issued, including 5,673,327 shares reserved for a special dividend distribution) by (i) all shareholders known to the Company to be beneficial owners of more than 5% of the outstanding common stock; and (ii) all directors and executive officers of the Company, and as a group:
| NAME AND ADDRESS OF | AMOUNT OF BENEFICIAL | PERCENT OF | ||||||||
| TITLE OF CLASS | BENEFICIAL OWNER (1) | OWNERSHIP | CLASS | |||||||
| Common Stock | PHI Group Reserve for Special Dividend | 5,673,327 | 35.08 | % | ||||||
| 5348 Vegas Drive | ||||||||||
| Las Vegas, NV 89108 | ||||||||||
| Common Stock | Henry D. Fahman (2) | 3,485,847 | 21.55 | % | ||||||
| 15272 Flintridge Lane | ||||||||||
| Huntington Beach, CA 92647 | ||||||||||
| Common Stock | Natalie Bui (3) | 1,032,502 | 6.38 | % | ||||||
| 2563 W Rowland Ave | ||||||||||
| Anaheim, CA 92804 | ||||||||||
| Common Stock | Tam Bui | 956,881 | 5.92 | % | ||||||
| 2563 W Rowland Ave | ||||||||||
| Anaheim, CA 92804 | ||||||||||
| Common Stock | Tina T. Phan (4) | 11,063 | * | |||||||
| 15272 Flintridge Lane | ||||||||||
| Huntington Beach, CA 92647 | ||||||||||
| Common Stock | Frank Hawkins | 200 | * | |||||||
| 227 Atlantic Boulevard | ||||||||||
| Key Largo, FL 33037 | ||||||||||
| Common Stock | Shares of all directors and executive officers as a group: | 4,453,991 | 27.53 | % | ||||||
| (4 persons) | ||||||||||
| (1) | Each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them. |
| (2) | Certain of these shares have been pledged to secure certain obligations of the Company. |
| (3) | Natalie Bui is the spouse of Tam Bui. |
| (4) | Tina Phan is the spouse of Henry Fahman. |
| * Less than 1%. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Henry D. Fahman, Chairman and Chief Executive Officer of the Company, has from time to time made cash advances to the Company. The advances are unsecured, interest free and payable on demand.
Certain of the officers and directors of the Company are engaged in other businesses, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on a board of directors. As a result, certain conflicts of interest may arise between the Company and its officers and directors. The Company will attempt to resolve such conflicts of interest in favor of the Company. The officers and directors of the Company are accountable to it and its shareholders as fiduciaries, which require that such officers and directors exercise good faith and integrity in handling the Company’s affairs. A shareholder may be able to institute legal action on behalf of the Company or on behalf of itself and other similarly situated shareholders to recover damages or for other relief in cases of the resolution of conflicts is in any manner prejudicial to the Company.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The negotiated package fees billed by Dave Banerjee, CPA, an independent accountancy firm, were $9,000 for the audit of the Company’s annual consolidated financial statements for the year ended June 30, 2016 and $1,500 per quarter for the review of unaudited quarterly financial statements.
All Other Fees
The Company did not pay Dave Banerjee, CPA any non-audit fees for fiscal year 2016 or 2015.
| 19 |
ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
Financial Statements
The following consolidated financial statements of PHI Group, Inc. and its subsidiaries are included:
| Consolidated Balance Sheets | — June 30, 2016 and 2015. |
| Consolidated Statements of Operations | — For the fiscal years ended June 30, 2016 and 2015 |
| Consolidated Statements of Cash Flows | — For the fiscal years ended June 30, 2016 and 2015 |
| Consolidated Statements of Changes in Owners’ Equity | — For the fiscal years ended June 30, 2016 and 2015 |
Notes to Consolidated Financial Statements +
Report of Independent Registered Public Accounting Firm (Dave Banerjee, CPA).
| EXHIBIT NO. | DESCRIPTION | |
| 2.1 | Plan of Exchange between the Company and Prima Eastwest Model Management, Inc. (incorporated by reference to Exhibit 2 to the Form 8-K filed on March 1, 1996) | |
| 2.2 | Corporate Combination Agreement between the Company and Providential Securities, Inc., effective on January 14, 2000 (incorporated by reference to Exhibit 10.12 to the Form 10-KSB filed on January 10, 2000). | |
| 3.1 | Articles of Incorporation (1) | |
| 3.2 | Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 10-KSB for the fiscal year ended June 30, 1995). | |
| 3.3 | Amendment to Articles of Incorporation (6) | |
| 3.4 | Certificate of Amendment to Articles of Incorporation (6)3.5 Bylaws, as amended (6) | |
| 4.1 | Form of Series 1 Bridge Notes Purchase and Security Agreement between the Company and investors, dated March 27, 2000 (6) | |
| 4.2 | Form of Series 1 Bridge Note executed by the Company issued by the Company to Investors. (6) | |
| 4.3 | Form of Common Stock Purchase Warrant issued by the Company to investors. (6) | |
| 4.4 | Form of Re-pricing Warrant issued by the Company to investors. (6) | |
| 4.5 | Form of Registration Rights Agreement between the Company and investors, dated March 27, 2000 (6) | |
| 4.6 | Form of Common Stock Purchase Warrant to be issued by the Company to Sovereign Capital Advisors, LLC (6) | |
| 4.7 | Form of Convertible Promissory Note issued by the Company to preferred shareholders of Providential Securities, Inc. (6) | |
| 5.1 | Opinion Re Validity of Agreements (6) 10.1 Benatone Exchange Agreement, with Creditors (2) | |
| 10.2 | Benatone Share Acquisition Agreement (for Weldnow Enterprise, Ltd.) (2) | |
| 10.3 | Benatone Share Acquisition Agreement (Dynedeem Limited) (2) | |
| 10.4 | Benatone Exchange Agreement (2) | |
| 10.5 | Benatone Asset Sale Agreement (2) |
| 20 |
| 10.6 | Benatone Royalty Agreement (2) | |
| 10.7 | Benatone Consultancy Agreement (2) | |
| 10.8 | Benatone Deed (2) | |
| 10.9 | Autokraft Stock Purchase Agreement (3) | |
| 10.10 | Autokraft Stock Subscription Agreement (3) | |
| 10.11 | Prima Agreement and Plan of Merger (4) | |
| 10.12 | Escrow Agreement between the Company and Warshaw Burstein Cohen Schelsinger & Kuh, LLP, dated March 28, 2000. (6) | |
| 10.13 | Placement Agency Agreement between the Company and Sovereign Capital Advisors, LLC, dated March 28, 2000. (6) | |
| 10.14 | Guaranty Agreement between Henry Fahman and SovCap Equity Partners, Ltd, dated March 28, 2000. (6) | |
| 10.15 | Pledge Agreement between Henry Fahman and SovCap Equity Partners, Ltd, dated March 28, 2000. (6) | |
| 10.16 | Partnership Purchase Agreement between the Company and Holt Collins, dated May 31, 2000. (6) | |
| 10.17 | Memorandum of Agreement between DataLogic Consulting, Inc. and PHI Group, Inc., dated April 25, 2001. (5) | |
| 10.18.1 | Letter of Intent between PHI Group, Inc. and Epicenter, Inc., dated October 30, 2000. (5) | |
| 10.18.2 | Amendment to Letter of Intent between PHI Group, Inc. and Epicenter, Inc., dated November 30, 2000. (5) | |
| 10.18.3 | Amendment to Letter of Intent between PHI Group, Inc. and Epicenter, Inc., dated January 12, 2001. (5) | |
| 10.18.4 | Amendment to Letter of Intent between PHI Group, Inc. and Epicenter, Inc., dated June 26, 2001. (5) | |
| 10.18.5 | Amendment to Letter of Intent between PHI Group, Inc. and Epicenter, Inc., dated October 02, 2001. (5) | |
| 10.19 | Joint Venture Agreement between Providential Holdings, Inc and Boxo, Inc., dated January 1, 2001. (5) | |
| 10.20 | License of Manna Technologies Joint Venture Company, dated March 21, 2001. (5) | |
| 10.21 | Memorandum of Agreement between International Consulting and Training Center, Ministry of Trade, Vietnam and the Company, dated March 24, 2001. (5) | |
| 10.22 | Memorandum of Agreement among General Transportation Company No. 5, Chu Lai Industrial Zone and the Company, dated March 25, 2001. (5) | |
| 10.23 | Letter of Intent between PHI Group, Inc. and Global Systems and Technologies, Corp. dated October 18, 2001. (6) | |
| 10.24 | Letter of Intent between PHI Group, Inc. and Estate Planning and Investment Company dated November 7, 2001. (6) | |
| 10.25 | Joint Venture Agreement between PHI Group, Inc. and Mimi Ban dated November 23, 2001. (6) | |
| 10.26 | Plan of acquisition of Nettel Global Communication Corp. (incorporated by reference to the Company’s Current Report on Form 8-K filed May 3, 2002) | |
| 10.27 | Joint Venture Agreement with Vietnam’s Minh Hieu Joint Stock Company. (7) | |
| 10.28 | Memorandum of Agreement with HDT Enterprises, LLC dated March 15, 2002. (7) | |
| 10.29 | Memorandum of Agreement and Principal Contract with Vietnam’s Center of Telecom Technology. (7) | |
| 10.30 | Stock Purchase Agreement with SlimTech, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K, filed May 1, 2002). | |
| 10.31 | Stock Purchase Agreement with ATC Technology Corp. (incorporated by reference to the Company’s Current Report on Form 8-K, Filed September 17, 2002) | |
| 10.32 | Mutual Rescission of Stock Purchase Agreement with Nettel Global Communication Corp. (8). | |
| 10.33 | Business Consulting Agreement with Nettel Global Communication Corp. (8) | |
| 10.34 | Business Consulting Agreement with Medical Career College (8) | |
| 10.35 | Mutual Rescission of Stock Purchase Agreement with SlimTech (8) | |
| 10.36 | Mutual Rescission of Stock Purchase Agreement with Clear Pass, Inc. (8). | |
| 10.37 | Mutual Rescission of Joint Venture Agreement with HTV CO, Ltd. (8). | |
| 10.38 | Mutual Rescission of Stock Purchase Agreement with Real ID Technology (8). | |
| 10.39 | Business Consulting Agreement with Lexor Incorporated (8). | |
| 10.40 | Amended Closing Memorandum with ATC Technology Corp. (8) | |
| 10.41 | Stock Purchase Agreement with Tangshan YutianSaw Corporation (incorporated by reference to the Company’s Current Report on Form 8-K filed June 15, 2004) | |
| 10.42 | Asset Purchase Agreement with Western Medical, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K, file June 2, 2006) | |
| 10.43 | Principle Business Cooperation Agreement with Cavico Vietnam Joint Stock Corporation (incorporated by reference to the Company’s Current Report on Form 8-K, filed October 2, 2006) |
| 21 |
| 16.1 | Notification of Change of Accountants, Kabani & Co. appointed (incorporated by reference to exhibits filed with Form 8-K/A, filed September 10, 2001) | |
| 17.1 | Resignation of Nhi T. Le as director and officer and appointment of Thorman Hwinn as Director (incorporated by reference to exhibits filed with Form 8-K, filed July 9, 2001) | |
| 17.2 | Resignation of Tam Bui as Director (incorporated by reference to the Company’s Current Report on Form 8-K, filed September 30, 2004). | |
| 17.3 | Resignation of Gene M. Bennett as Chief Financial Officer (incorporated by reference to the Company’s Current Report on Form 8-K, filed March 23, 2005). | |
| 17.4 | Resignation of Robert Stevenson as Director (incorporated by reference to the Company’s Current Report on Form 8-K, filed July 18, 2006). | |
| 17.5 | Resignation of Ghanshyam Dass as Director (incorporated by reference to the Company’s Current Report on Form 8-K, filed September 29, 2010). | |
| 17.6 | Resignation of Paul Nguyen as Director (incorporated by reference to the Company’s Annual Report for the Fiscal Year ended June 30, 2012 as filed with the Securities and Exchange Commission on June 2, 2014). | |
| 21.1 | Subsidiary of the Registrant. | |
| 31.1-32.2 | Certifications in Accordance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| (1) | Incorporated by reference to the Company’s Registration Statement on Form S-18, declared effective August 10, 1982 (SEC File No. 2-78335-NY), and to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995. |
| (2) | Incorporated by reference to the Company’s Current Report on Form 8-K, dated September 7, 1995 |
| (3) | Incorporated by reference to the Company’s Current Report on Form 8-K/A, dated September 12, 1995. |
| (4) | Incorporated by reference to the Company’s Current Report on Form 8-K, dated March 1, 1996. |
| (5) | Incorporated reference to Form 10KSB for the year ended June 30, 2000 filed October 16, 2001. |
| (6) | Incorporated by reference to Form 10KSB for the year ended June 30, 2001 filed December 17, 2001. |
| (7) | Incorporated by reference to Form 10QSB for the quarter ended March 31, 2002 filed May 14, 2002. |
| (8) | Incorporated by reference to Form 10KSB for the year ended June 30, 2003, filed October 17, 2003. |
| 22 |
Pursuant to the requirement of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| PHI GROUP, INC. | ||
| Dated: October 13, 2016 | ||
| By: | /s/ Henry D. Fahman | |
| Henry D. Fahman, President | ||
In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE | ||
| /s/ Henry D. Fahman | ||||
| HENRY D. FAHMAN | Chairman/President/Acting Chief Financial Officer | October 13, 2016 | ||
| /s/ Tina T. Phan | Treasurer | October 13, 2016 | ||
| TINA T. PHAN | ||||
| /s/ Tam T. Bui | Director | October 13, 2016 | ||
| TAM T. BUI | ||||
| /s/ Frank Hawkins | Director | October 13, 2016 | ||
| FRANK HAWKINS |
| 23 |