Per Share Common Stock Prices by Quarter;

For the Fiscal Year Ended June 30, 2018

Per Share Common Stock Prices by Quarter;

For the Fiscal Year Ended June 30, 2017

Holders of Common Equity:

There are approximately 1,574 shareholders of record of the Company’s common stock, of which 1,281 are active.

Dividends:

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

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

ITEM 6. SELECTED FINANCIAL DATA

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, 2018 AND JUNE 30, 2017

Revenues:

The Company generated $1,672,659 in revenues from sales, consulting, advisory and management services during the fiscal year ended June 30, 2018, as compared to $113,500 in revenue for the year ended June 30, 2017. The increase of $1,559,159 in total revenues between the two periods was due to increases in sales of $432,000 and advisory fees of $1,127,159.

Operating Expenses:

The Company incurred total operating expenses of $1,902,966 for the year ended June 30, 2018 as compared to $670,458 for the year ended June 30, 2017. This represents an increase of $1,232,508 or 183.83 % in total operating expenses from the prior year. The increase was due to an increase of $ 1,196,900 in professional services primarily related to the setup of the Luxembourg institutional bank fund and an increase of $ 35,816 in general and administrative expenses between the two fiscal years.

Income (loss) from operations:

The Company had a loss from operations of $230,307 for the fiscal year ended June 30, 2018 as compared to a loss from operations of $556,958 for the fiscal year ended June 30, 2017. This represents a decrease of $326,651 or 58.65% % in loss from operations during the current fiscal year as compared to that of the precious year. This was mainly due to the fact that the Company generated more revenues while simultaneously incurring comparably more expenses in connection with the setup of the Luxembourg institutional bank fund during the fiscal year ended June 30, 2018.

Other income (expense)

The Company had a net other expense of $1,796,013 for the fiscal year ended June 30, 2018 as compared to a net other expense of $1,003,760 for the prior year. This was primarily due to the fact the Company had an increase in interest expense of $826,174 and an increase in other expense of $26,243.86, while there was no loss on sale of assets and marketable securities in the current fiscal year.

Net income (loss):

The Company had a net loss of $2,026,320 for the fiscal year ended June 30, 2018, as compared to a net loss of $1,560,718 for the prior year, representing an increase of $465,603 in net loss between the two fiscal years. The net loss per share based on the basic and diluted weighted average number of common shares outstanding for the fiscal year ended June 30, 2018 was $(0.03) as compared to $(0.10) for the fiscal year ended June 30, 2017.

CASH FLOWS

We had $13,937 in cash and cash equivalents of as of June 30, 2018, as compared to $38,369 in cash and cash equivalents as of June 30, 2017, respectively.

Net cash used in our operating activities was $1,955,640 for the fiscal year ended June 30, 2018 as compared to net cash used in operating activities of $6,924,748 for the fiscal year ended June 30, 2017, respectively. The underlying reasons for the decrease in net cash used in operating activities between the two periods were mainly due to an increase in net loss from operations of $465,602 and an increase of $962,789 in other assets and pre-paid expenses in the current fiscal year as compared to the previous fiscal year, offset by an increase in accrued expenses of $6,396,999 between the two periods.

Net cash used in investing activities was $25,702,841 for the fiscal year ended June 30, 2018 as compared to cash provided by investing activities of $224,688 for the fiscal year ended June 30, 2017, 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 $25 million acquisition of mineral assets by American Pacific Resources, Inc., a subsidiary of the Company, an investment in Aquarius Power, Inc. in the amount of $5,000 and the recognition of $697,841 for contract liability in connection with a service agreement with a client/partner during the fiscal year ended June 30. 2018.

Net cash provided by financing activities was $27,634,050 for the fiscal year ended June 30, 2018 as compared to cash provided by financing activities of $6,735,447 for the fiscal year ended June 30, 2017, respectively. The underlying reasons for the increase in cash provided by financing activities during the current fiscal year were primarily due to the demand promissory note issued for the purchase of the mining claims in Oregon by American Pacific Resources, Inc. and the change Common Stock of $2,596,453 in the current fiscal year, as compared to the prior fiscal year.

HISTORICAL FINANCING ARRANGEMENTS

SHORT TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK

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

CONVERTIBLE PROMISSORY NOTES

The Company has also from time to time issued convertible promissory notes to various private investment funds for short-term working capital and special projects. Typically these notes bear interest rates from 5% to 12% per annum, mature within one year, are convertible to common stock of the Company at a discount ranging from 42% to 50%, and may be repaid within 180 days at a prepayment premium ranging from 130% to 150%. (Note 11)

COMPANY’S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS

In the next twelve months the Company intends to focus on completing the establishment and deployment of the contemplated institutional bank fund in Luxembourg, together with a number of sub-funds, for investing in a number of selective industries, as well as developing the Asia Diamond Exchange in Vietnam. In addition, the Company continues to carry out its merger and acquisition program by acquiring all or controlling interests in certain target companies and also plans to invest in special situations that may potentially generate significant revenues and profitability for the Company in the short term. Moreover, we will also 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 well as investing in special situations as part of our scope of business. We intend to use equity, debt and project financing to meet our capital needs for acquisitions and investments.

Management has taken action and formulated plans to meet the Company’s operating needs through June 30, 2019 and beyond. The working capital cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities and additional financing. The Company plans to generate revenues from its consulting services, merger and acquisition advisory services, and acquisitions of target companies with cash flows.

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

EQUITY LINE FACILITY

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

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

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

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

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

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

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

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

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Currency Fluctuations and Foreign Currency Risk

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

Interest Rate Risk

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

Valuation of Securities Risk

Since 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.

ITEM 8. FINANCIAL STATEMENTS

PHI GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

AUDITORS’ REPORT

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

PHI GROUP INC.

Opinion on the Financial Statements

We have audited the accompanying balance sheet ofPHI GROUP INC.(the “Company”) as of June 30, 2018, the related statement of operations, changes in stockholders’ equity (deficit) and cash flows, and the related notes [and schedules] (collectively referred to as the “financial statements”). The financial statements of the Company for the year ended June 30, 2017 were audited by other auditors, whose report, dated October 12, 2017 expressed an unqualified opinion on those financial statements. Our opinion, in so far as it relates to the year end June 30, 2017, is based solely on the report of other auditors. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and the results of its operations and its cash flows for the period ended June 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

There are no critical audit matters.

The Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $ 40,551,299 and stockholders’ deficit of $4,844,747 as of June 30, 2018. These factors as discussed in Note 22 of the financial statements raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 22. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

DylanFloyd Accounting & Consulting

We have served as the Company’s auditor since 2018.

Newhall, California

October 12, 2018

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (AUDITED)

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

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS (AUDITED)

FOR THE YEARS ENDED

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

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2018 AND 2017

AUDITED

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

PHI GROUP, INC. AND SUBSIDIARIES

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED JUNE 30, 2018 AND 2017

(Audited)

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

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 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, the Company provides 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). Furthermore, PHI has been actively pursuing the establishment of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”) together with a number of initial sub-funds for investment in agriculture, energy, real estate and other selective projects. No assurances can be made that the Company will be successful in achieving its plans.

Originally incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication and filed Articles of Domestication to become a Wyoming corporation on September 20, 2017. In the beginning, the Company was foremost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based financial services company, the Company changed its name to Providential Securities, Inc., a Nevada corporation, 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 mainly focused on acquisition and development opportunities in energy and natural resource businesses. At the present, the Company is engaged in mergers and acquisitions as a principal and investments in natural resources, energy, agriculture, consumer goods, technology and special situations. 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. Furthermore, PHI is in the process of completing the formation of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”) and a number of initial sub-funds thereunder for investment in agriculture, energy, real estate and other selective projects, in accordance with the Luxembourg Law of July 23, 2016 relative to reserved alternative investment funds, Law of August 23, 2016 relative to commercial companies, and Modified Law of July 12, 2013 relative to alternative investment fund managers.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of PHI Group, Inc., its wholly owned subsidiaries PHI Capital Holdings, Inc., Abundant Farms, Inc., American Pacific Resources, Inc., and PHI Group Regional Center, LLC as well as 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., and Cornerstone Biomass Corp., 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.

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 quoted on a national exchange or on 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, 2018 and 2017 the marketable securities have been recorded at $1,100,483 and $502,696, 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, 2018, the Company had $432,000 in 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.

The net earnings (loss) per share is computed as follows:

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:

Level1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

Level2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors, including; type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction.

To the extent that valuation is based upon models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy in which the fair value measurement falls in its entirety is determined based upon the lowest level input that is significant to the fair value measurement.

Fair Value - Valuation Techniques and Inputs

The Company holds and may invest public securities traded on public exchanges or over-the-counter (OTC), private securities, real estate, convertible securities, interest bearing securities and other types of securities and has adopted specific techniques for their respective valuations.

Equity Securities in Public Companies

Unrestricted

The Company values investments in securities that are freely tradable and listed on major securities exchanges at their last reported sales price as of the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.

Securities traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 or 3 of the fair value hierarchy.

Restricted

Securities traded on public exchanges or over-the-counter (OTC) where there are formal restrictions that limit (i.e. Rule 144 holding periods and underwriter’s lock-ups) their sale shall be valued at the closing price on the date of valuation less applicable discounts. The Company may apply a discount to securities with Rule 144 restrictions. Additional discounts may be assessed if the Company believes there are other mitigating factors which warrant the additional discounting. When determining potential additional discounts, factors that will be taken into consideration include, but are not limited to; securities’ trading characteristics, volume, length and overall impact of the restriction as well as other macro-economic factors. Valuations should be discounted appropriately until the securities may be freely traded.

If it has been determined that the exchange or OTC listed price does not accurately reflect fair market value, the Company may elect to treat the security as a private company and apply an alternative valuation method.

Investments in restricted securities of public companies may be included in Level 2 of the fair value hierarchy. However, to the extent that significant inputs used to determine liquidity discounts are not observable, investments in restricted securities in public companies may be categorized in Level 3 of the fair value hierarchy.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, marketable securities, short-term notes payable, convertible notes, derivative liability and accounts payable.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is primarily attributed to the short maturities of these instruments.

Effective July 1, 2008, the Company adopted ASC 820 (previously SFAS 157),Fair Value Measurements and adopted this Statement for the assets and liabilities shown in the table below. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. The adoption of ASC 820 did not have a material impact on our fair value measurements. 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, 2018, the Company did not have any nonfinancial assets or nonfinancial liabilities that are recognized or disclosed at fair value. ASC 820 requires that financial assets and liabilities that are reported at fair value be categorized as one of the types of investments based upon the methodology mentioned in Level 1, Level 2 and Level 3 above for determining fair value.

Assets measured at fair value on a recurring basis are summarized below. The Company also has convertible notes and derivative liabilities as disclosed in this report that are measured at fair value on a regular basis until paid off or exercised.

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 STANDARDS

ASC 606-10 provides the following overview of how revenue is recognized from an entity’s contracts with customers: An entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service).

The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). For performance obligations satisfied over time, an entity recognizes revenue over time by selecting an appropriate method for measuring the entity’s progress toward complete satisfaction of that performance obligation. (Paragraphs 606-10 25-23 through 25-30).

In addition, ASC 606-10 contains guidance on the disclosures related to revenue, and notes the following:

It also includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. Specifically, Section 606-10-50 requires an entity to provide information about:

- Revenue recognized from contracts with customers, including disaggregation of revenue into appropriate categories.

- Contract balances, including the opening and closing balances of receivables, contract assets, and contract liabilities.

- Performance obligations, including when the entity typically satisfies its performance obligations and the transaction prices is that is allocated to the remaining performance obligations in a contract.

- Significant judgments, and changes in judgments, made in applying the requirements to those contracts.

Additionally, Section 340-40-50 requires an entity to provide quantitative and/or qualitative information about assets recognized from the costs to obtain or fulfill a contract with a customer.

The Company’s revenue recognition policies are in compliance with ASC 606-10. The Company recognizes consulting and advisory fee revenues in accordance with the above-mentioned guidelines and expenses are recognized in the period in which the corresponding liability is incurred.

ADVERTISING

The Company expenses advertising costs as incurred. Advertising costs for the years ended June 30, 2018 and 2017 were $36,221 and $31,413, respectively. The increase in advertising expenses in the current year is primarily due to an increase of $4,808 in investor relations expenses during the fiscal year ended June 30, 2018, as compared to the previous fiscal year.

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, 2018 and 2017, respectively, accumulated other comprehensive incomes of $751,962 and $153,474 are presented on the accompanying consolidated balance sheets.

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 two segments that generated revenues during the year ended June 30, 2018 and one segment in the year ended June 30, 2017.

RISKS AND UNCERTAINTIES

In the normal course of business, the Company is subject to certain risks and uncertainties. The Company provides its service and receives marketable securities upon execution of transactions. Consequently, the value of the securities received from customers can be affected by economic fluctuations and each customer’s business growth. The actual realized value of these securities could be significantly different than recorded value.

RECENT ACCOUNTING PRONOUNCEMENTS

Update No. 2018-13 – August 2018

Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement

Modifications: The following disclosure requirements were modified in Topic 820:

1. In lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities.

2. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly.

3. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions: The following disclosure requirements were added to Topic 820; however, the disclosures are not required for nonpublic entities:

1. The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.

2. The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Update No. 2018-07 – June 2018

Compensation – Stock Compensation (Topic 718)

Improvements to Nonemployee Share-Based Payment Accounting

Main Provisions: The amendments in this Update expand the scope of Topic 718 to include sharebased payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.

Update No. 2017-13 - September 2017

Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606)

FASB Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), issued in May 2014 and codified in ASC Topic 606, Revenue from Contracts with Customers, and No. 2016-02.

The transition provisions in ASC Topic 606 require that a public business entity and certain other specified entities adopt ASC Topic 606 for annual reporting 3 periods beginning after December 15, 2017, including interim reporting periods within that reporting period. FN2 All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.

Update No. 2016-10 - April 2016

Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

1. Identify the contract(s) with a customer.

2. Identify the performance obligations in the contract.

3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations in the contract.

5. Recognize revenue when (or as) the entity satisfies a performance obligation.

The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.

The Companyhas eitherevaluatedor is currently evaluatingtheimplications,if any,of eachof thesepronouncementsand thepossible impact theymayhave onthe Company’sfinancialstatements. In most cases,management hasdeterminedthatthe implementation of these pronouncementswould nothave amaterialimpactonthefinancialstatementstakenasawhole.

NOTE 3 – LOANS RECEIVABLE

Loans receivable consist of the following at June 30, 2018 and 2017:

NOTE 4 – OTHER ASSETS

The Other Assets comprise of the following as of June 30, 2018 and 2017:

Investments consist of a $5,000 investment in AQuarius Power, Inc., a renewable energy technology company, and a 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A., acquired by American Pacific Resources, Inc., a subsidiary of the Company, in exchange for a total purchase price of twenty-five million U.S. Dollars ($US 25,000,000) paid in a combination of cash, convertible demand promissory note and PHI Group, Inc.’s Class A Series II Convertible Cumulative Redeemable Preferred Stock. Contract assets consist of a balance of $697,841 from an agreement dated March 27, 2018 with a client for the total amount of $2,000,000, of which $1,212,159 was received and recognized as revenue during the fiscal year ended June 30, 2018.

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 OTC Markets. 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, 2018 consisted of 33,805,106 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, 2018 was $1,100,483.

During the fiscal year ended June 30, 2018, there was no transfer of securities from level 3 to level 2.

NOTE 6 – PROPERTY AND EQUIPMENT

During the fiscal year ended June 30, 2017, the Company sold ten acres of land, Parcel Identification Numbers 09705010180 & 190, in Suwannee County, Florida. As of June 30, 2018 the Company did not have any property or equipment, except 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A. owned by American Pacific Resources, Inc., a subsidiary of the Company’s.

NOTE 7– DISCONTINUED OPERATIONS

As of June 30, 2012, the Company recognized 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, 2018, the Company had a balance of $1,255,037 as Long-term Liabilities from Discontinued Operations, consisting of $954,337 from Philand Ranch Ltd., $215,000 from preferred stock of Providential Holdings, Inc., a former subsidiary of the Company, and $85,700 in contingency liabilities.

NOTE 8 – CURRENT LIABILITIES

Current liabilities of the Company consist of the followings as of June 30, 2018 and 2017:

CURRENT ACCRUED EXPENSES

Current accrued expenses consist of $238,165 in accrued salaries and payroll tax liabilities, $149,359 in accrued interest from short-term notes, and $4,681 in dividends payable from Class A Series II Preferred Stock.

Contract liabilities consist of a balance of $697,841 as a result of an agreement dated March 27, 2018 with a client for the total amount of $2,000,000, of which $1,212,159 was recognized as revenue and thus reducing the original contract liabilities by that same amount during the fiscal year ended June 30, 2018.

NOTE 9 – LONG-TERM LIABILITIES

As of June 30, 2018 and 2017, Long-term liabilities consist of:

LONG-TERM ACCRUED EXPENSES

Long-term accrued expenses consist of accrued salaries and payroll taxes of $698,653; accrued legal fees of $172,091; consulting fees of $165,850; and other accrued expenses of $26,888.

ACCRUED INTEREST EXPENSES

Long-term accrued interest expenses consist of accrued interest from notes payable in the amount of $2,005,815.

ADVANCES FROM CUSTOMERS

The Company recorded $288,219 as Advances from Customers to reserve for consulting fees previously received from a client while the Company was not able to complete the consulting services due to the client’s inability to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission.

DEMAND PROMISSORY NOTE

The Company issued a Demand Promissory Note in the amount of $24,310,400 to Rush Gold Royalty, Inc., a Wyoming corporation, in connection with the acquisition of a 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A by American Pacific Resources, Inc., a subsidiary of the Company. As of June 30, 2018, the balance of the convertible demand promissory note was $24,048,500.

LIABILTIES FROM DISCONTINUED OPERATIONS

As of June 30, 2012, the Company recognized 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, 2018, the Company carried balance of $ 1,040,037 as Long-term Liabilities for these discontinued operations.

PREFERRED STOCK LIABILITIES FROM DISCONTINUED OPERATIONS

As of June 30, 2017, the Company re-classified $215,000 as Long-term Liabilities payable to holders of preferred stock of Providential Securities, Inc., a previous subsidiary of the Company that was discontinued in the year 2000. In the early 2000’s, the Company had made an offer for these preferred stockholders to receive shares of common stock in the Company in exchange for the preferred shares in the discontinued subsidiary but only a small number of the preferred shareholders responded and accepted the offer. In more recent years, the Company has also attempted to contact these preferred shareholders from time to time but have not received further response from them. The Company has recorded the amount of $215,000 as Long-term Liability.

NOTE 10- DUE TO OFFICERS AND DIRECTORS

Due to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, unsecured and due on demand. As of June 30, 2018 and 2017, the balances were $233,577 and $592,141, respectively.

NOTE 11 – LOANS AND PROMISSORY NOTES

SHORT TERM NOTES PAYABLE:

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, 2018, the Company had $803,310 in short-term notes payable with $2,133,947 accrued and unpaid interest. These notes bear interest rates ranging from 0% to 36% per annum.

CONVERTIBLE PROMISSORY NOTES:

During the fiscal year ended June 30, 2018, the Company issued the following convertible promissory notes to various private investment funds:

On July 20, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $28,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount. On January 18, 2018, the Company paid a total of $43,610.96 to Power Up Lending Group, which amount included the principal, prepayment premium and accrued interest. This note was paid off in full as of January 18, 2018.

On August 3, 2017, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate of 10% and convertible to Common Stock of the Company at 45% discount. On January 30, 2018, the Company paid a total of $117,984.76 to JSJ Investments, Inc., which amount included the principal amount of $78,750, prepayment premium of $35,437.50 and accrued and unpaid interest of $3,797.26. This note was paid off in full as of January 30, 2018.

On August 15, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate of 10% and convertible to Common Stock of the Company at 42% discount. On February 5, 2018, the Company paid a total of $51,300.99 to Power Up Lending Group, which amount included the principal, prepayment premium and accrued interest. This note was paid off in full as of February 5, 2018.

On August 24, 2017, the Company issued a new convertible promissory note to LG Capital for $78,750, with an interest rate of 8% and convertible to Common Stock of the Company at 50% discount. On February 20, 2018, the Company paid a total of $122,655.82 to LG Capital, which amount included the principal, prepayment premium and accrued interest. This note was paid off in full as of February 20, 2018.

On October 18, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $53,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 7/20/2018. On April 17, 2018, the Company made a payment in the amount of $25,000.00, consisting of $16,666.67 of principal and $8,333.33 of prepayment premium, to Power Up Lending Group. The principal balance due remaining under this Note after this payment was $36,333.33. On April 19, 2018, the Company issued 1,169,591 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group for the conversion of $20,000.00 of the principal amount of the Note. The principal amount of the Note remaining after this conversion was $16,333.33. On April 23, 2018, the Company issued 1,127,820 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group for the conversion of $15,000.00 of the principal amount of the Note. The principal amount of the Note remaining after this conversion was $1,333.33. On April 24, 2018, the Company issued 295,156 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending for the conversion of $1,333,33 of the principal amount of the Note together with $2,120 of accrued and unpaid interest thereto, totaling $3,453.33. The principal amount of the Note remaining after this conversion was $0.00.

On October 26, 2017, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $35,000, with an interest rate of 5% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 10/26/2018. In connection with this note, the Company issued 87,500 warrants to Crown Bridge Partners, LLC for the purchase of Common Stock of the Company at the exercise price of $0.40 per share. The exercise period commences on the issuance date and ends on the one-year anniversary thereof. On May 29, 2018, the Company issued 3,159,521 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners for the conversion of the principal, $992.47 of accrued interest and $500.00 of fees under the Note, totaling $36,492.47. The principal balance due remaining under this Note after this conversion was $0.00.

On November 24, 2017, the Company issued a new convertible promissory note to Einstein Investments LLC for $115,500, with an interest rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 10/26/2018. On June 04, 2018, the Company issued 3,149,607 shares of free-trading Common Stock of PHI Group, Inc. to Einstein Investments, LLC for the conversion of $44,050.96 principal amount together with $5,949.04 accrued interest under the Note, totaling $50,000. The principal balance due remaining under this Note after this conversion was $71,449.04.

On January 18, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/18/2019.

On January 18, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 10/10/2018.

On January 26, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 11/15/2018.

On January 31, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/18/2019.

On January 31, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $50,000, with an interest rate of 5% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/31/2019.

On February 01, 2018, the Company issued a new convertible promissory note to Adar Bays for $60,000, with an interest rate of 6% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices during the twenty five trading days immediately prior to the date of conversion. The maturity date of this note is 02/01/2019.

On February 02, 2018, the Company issued a new convertible promissory note to Auctus Fund LLC for $75,000, with an interest rate of 12% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices during the twenty five trading days immediately prior to the date of conversion. The maturity date of this note is 11/02/2018.

On February 22, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 11/30/2018.

On March 21, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 03/21/2019.

On April 2, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $55,000, with an interest rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 04/02/2019.

On April 10, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 01/30/2019.

On June 12, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $55,000, with an interest rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 06/12/2019.

On June 25, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $100,000, with an interest rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 06/25/2019.

As of June 30, 2018, the principal balance of the outstanding convertible notes was $834,699, with a total discount of $301,457, accrued interest of $21,227 and total derivative liabilities of $738,814. The Company relies on professional third-party valuation to record the value of derivative liabilities, discounts, and changes in fair value of derivatives in connection with these convertible notes and warrants, if any, that are related to the convertible notes. The Company intends to repay these notes in cash as much as practical.

NOTE 12 – LITIGATION

LEGAL PROCEEDING SETTLED AND UNPAID AS OF JUNE 30, 2018:

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, 2018 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, 2018.

NOTE 13 – PAYROLL TAX LIABILITIES

The payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the fiscal year ended June 30, 2014, the Company paid $41,974.22 to the Internal Revenue Service and $ 19,289.94 to the State of California Employment Development Department towards the balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company has not resolved the remaining balances with the Internal Revenue Service and the State of California Employment Department as of June 30, 2018.

NOTE 14 – 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, 2018 were the same since the inclusion of Common stock equivalents is anti-dilutive.

NOTE 15 –STOCKHOLDER’S EQUITY

As of June 30, 2018, the total number of authorized capital stock of the Company was 2,000,000,000 shares with a par value of $0.001 per share, consisting of 1,900,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined by the Board of Directors of the Company.

Treasury Stock

The balance of treasury stock as of June 30, 2018 was 487,767 shares valued at $44,170 based on cost basis.

Common Stock

During the fiscal year ended June 30, 2018, the Company has issued the following amounts of its Common Stock:

On July 05, 2017, the Company issued 740,741 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $10,000.00 of the principal amount of the Note, at the conversion price of $0.0135 per share. The principal amount of the Note after this conversion was $14,500.00.

On July 11, 2017, the Company issued 800,000 shares of free-trading Common Stock of PHI Group, Inc. to Auctus Fund LLC, holder of a Convertible Promissory Note dated 8/16/2016 of the Company, for the conversion of $5,152.00, consisting of $3,485.17 principal amount of the Note and $1,666.83 of accrued and unpaid interest thereto, at the conversion price of $0.00644 per share. The principal amount of the Note after this conversion was $32,613.12. Subsequently, on July 24, 2017, the Company paid a total of $49,530.72 to Auctus Fund LLC, consisting of $32,613.12 principal amount and the balance in pre-payment premium and accrued and unpaid interest in connection with the Convertible Promissory Note dated 8/16/16. This note was paid in full and the principal balance due remaining and accrued and unpaid interest remaining after this payment was $0.00.

On July 17, 2017, the Company issued 880,000 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $7,920.00 of the principal amount of the Note, at the conversion price of $0.009 per share. The principal amount of the Note after this conversion was $6,580.

On July 21, 2017, the Company issued 1,019,872 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $7,955.00, consisting of $6,580 principal amount of the Note and $1,375.00 of accrued and unpaid interest thereto, at the conversion price of $0.0078 per share. The principal balance due remaining and accrued and unpaid interest remaining after this conversion was $0.00.

On July 25, 2017, Henry Fahman, Chairman and Chief Executive Officer of the Company, converted $300,000 of indebtedness owed by the Company into 20,000,000 shares of restricted common stock of PHI Group, Inc. at the conversion price of $0.015 per share. The conversion into restricted common stock of the Company was effectuated pursuant to the resolutions of the Company’s Board of Directors dated March 12, 2012, June 06, 2012, and November 2, 2012 which remain in full force and effect, allowing creditors of the Company to convert any or all of their outstanding indebtedness and accrued and unpaid interest thereof into shares of common stock of PHI Group, Inc. by relying on the exemption from the registration requirements of the United States Securities Act of 1933, as amended (the “Act”).

On July 25, 2017, the Company issued a total of 1,533,333 shares of restricted Common Stock of PHI Group, Inc. pursuant to Rule 144 to two non-US shareholders in connection with private stock purchase agreements dated July 19, 2017 and July 20, 2017, respectively, between these shareholders and the Company, for a total of $23,000.00, at the purchase price of $0.015 per share.

On October 17, 2017, the Company issued 434,783 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $12,000.00 of the principal amount of the Note.

On October 19, 2017, the Company issued 371,057 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc., holder of a Convertible Promissory Note dated February 2, 2017 of the Company, for the conversion of $10,000.00 of the principal balance of the Note.

On October 23, 2017, the Company issued 622,407 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $15,000.00 principal balance of the Note.

On October 24, 2017, the Company issued 250,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC., holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $3,587.50 of the principal amount of the Note, less $750.00 of applicable fees under the Note.

On October 31, 2017, the Company issued 419,212 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $6,500.00 of the remaining principal amount of the Note together with $2,010.00 of accrued and unpaid interest thereto, totaling $8,510.00.

On November 7, 2017, the Company issued 600,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $3,750.00 of the principal balance of the Note, less $1,350.00 of applicable fees under the Note.

On November 8, 2017, the Company issued 2,154,700 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC, holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $17,852.43 of the principal balance of the Note together with $3,356.17 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $21,708.60.

On November 16, 2017, the Company issued 80,000 shares of restricted Common Stock of PHI Group, Inc. to Andreas Held, a current shareholder of the Company, for $1,920 in cash under the auspices of Rule 144 pursuant to a Private Stock Purchase Agreement dated November 14, 2017.

On November 21, 2017, the Company issued 1,000,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $5,950.00 of the principal balance of the Note, less $1,050.00 of applicable fees under the Note.

On December 01, 2017, the Company issued 2,346,000 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC, holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $15,062.55 of the principal balance of the Note together with $202.57 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $15,765.12.

On December 05, 2017, the Company issued 1,385,677 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc., holder of a Convertible Promissory Note dated February 2, 2017 of the Company, for the conversion of $11,000.00 of the principal balance of the Note together with $1,651.23 of accrued and unpaid interest thereto, totaling $12,651.23.

On December 12, 2017, the Company issued 2,000,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $7,140.00 of the principal balance of the Note, less $1,050.00 of applicable fees under the Note.

On December 13, 2017, the Company issued 2,250,821 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc., holder of the $40,000 Convertible Promissory Note dated April 5, 2017 of the Company, for the conversion of $12,420.75 of the principal balance of the Note.

On December 14, 2017, the Company issued 2,744,300 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC, holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $10,339.52 of the principal balance of the Note together with $137.68 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $10,977.20.

On December 14, 2017, the Company issued 1,724,138 shares of restricted Common Stock of PHI Group, Inc. to Steve Truong for $20,000 in cash under the auspices of Rule 144 pursuant to a Private Stock Purchase Agreement dated December 14, 2017.

On December 19, 2017, the Company issued 2,500,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $8,750.00 of the principal balance of the Note, less $1,050.00 of applicable fees under the Note.

On December 20, 2017, the Company issued 2,913,837 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc., holder of the $40,000 Convertible Promissory Note dated April 5, 2017 of the Company, for the conversion of $16,079.47 of the principal balance of the Note.

On December 29, 2017, the Company issued 2,300,000 shares of free–trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $7,550.00 of the principal and $500.00 of fees under the Note totaling $8,050.00.

On December 29, 2017, the Company issued 2,500,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $8,750.00 of the principal balance of the Note, less $1,050.00 of applicable fees under the Note.

On January 08, 2018, the Company issued 1,835,795 shares of free-trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC, holder of a Convertible Promissory Note dated March 03, 2017 of the Company, for the conversion of $6,745.50 of the principal balance of the Note, $97.68 of accrued and unpaid interest and $500.00 conversion fee under the Note totaling $7,343.18. The principal balance due remaining under this Note after this conversion was $0.00.

On January 09, 2018, the Company issued 2,601,957 shares of free-trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc., holder of a Convertible Promissory Note dated April 05, 2017 of the Company, for the conversion of $11,499.78 of the principal balance and accrued and unpaid interest of $2,858.64 totaling $14,358.42. The principal balance due remaining under this Note after this conversion was $0.00.

On January 11, 2018, the Company issued 2,900,000 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $9,650.00 of the principal and $500.00 of fees under the Note totaling $10,150.00. The principal balance due remaining under this Note after this conversion was $17,800.00.

On January 25, 2018, the Company issued 2,500,000 shares of free-trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 4, 2017 of the Company, for the conversion of $9,625.00 of the principal balance of the Note, less $1,050 of conversion fees under the Note. The principal balance due remaining under this Note after this conversion is $9,977.50

On January 29, 2018, the Company issued 3,812,188 shares of free-trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder of a Convertible Promissory Note dated April 4, 2017 of the Company, for the conversion of $9,975.50 of the principal balance of the Note, $3,649.43 of accrued and unpaid interest, and $1,050 for legal and transfer agent fees for conversion, totaling $14,467.93. This Note was paid off in full as of January 29, 2018; the principal balance due remaining under this Note after this conversion is $0.00.

On January 29, 2018, the Company issued 2,500,000 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $9,562.50 of the principal and $500.00 of fees under the Note, totaling $10,062.50. The principal balance due remaining under this Note after this conversion was $8,237.50.

On January 30, 2018, the Company issued 100,000 shares of PHI Group, Inc.’s restricted common stock to Andreas Held, a long-term shareholder of PHI Group, Inc.’s, for $981.00 in cash.

On January 30, 2018, the Company issued 100,000 shares of PHI Group, Inc.’s restricted common stock to Cuong Tran, an independent consultant, for technical consulting service.

On February 8, 2018, the Company issued 2,509,693 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $8,237.50 of principal, $1,012.66 of accrued interest, and $500.00 of fees under the Note, totaling $9,750.16. The principal balance due remaining under this Note after this conversion was $0.00.

On February 8, 2018, Henry Fahman, the Company’s Chief Executive Officer and Chief Financial Officer, converted $150,000.00 of the accrued and unpaid salary for the fiscal year ended June 30, 2011 into 4,746,084 shares of Restricted Common Stock of PHI Group, Inc. at the effective price of $0.031605 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012, which still remain in full force and effect.

On February 8, 2018, Tina Phan, the Company’s Corporate Secretary and Treasurer, converted $60,000.00 of the accrued and unpaid salary for the fiscal year ended June 30, 2011 into 1,898,434 shares of Restricted Common Stock of PHI Group, Inc. at the effective price of $0.031605 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012, which still remain in full force and effect.

On February 28, 2018, the Company issued 4,744,007 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the Common Stock Purchase Warrant dated as of June 9, 2017 in connection with the $35,000.00 Convertible Promissory Note of June 9, 2017 by the Company, for the cashless exercise of $17,300.00 value of warrants. The total warrant value remaining after this exercise was $17,700.00.

On April 13, 2018, the Company issued 4,653,954 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the Common Stock Purchase Warrant dated June 9, 2017 in connection with the $35,000.00 Convertible Promissory Note of June 9, 2017 by the Company, for the cashless exercise of $17,700.00 value of warrants. The total warrant value remaining after this exercise was $0.00.

On April 19, 2018, the Company issued 1,169,591 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $20,000.00 of the principal amount of the Note, at the conversion price of $0.0171 per share. The principal amount of the Note remaining after this conversion was $16,333.33.

On April 23, 2018, the Company issued 1,127,820 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $15,000.00 of the principal amount of the Note, at the conversion price of $0.0133 per share. The principal amount of the Note remaining after this conversion was $1,333.33.

On April 24, 2018, the Company issued 295,156 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd., holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $1,333,33 of the principal amount of the Note together with $2,120 of accrued and unpaid interest thereto, totaling $3,453.33, at the conversion price of $0.0117 per share. The principal amount of the Note remaining after this conversion was $0.00.

On April 27, 2018, Tina Phan, the Company’s Corporate Secretary and Treasurer, converted $120,000.00 of the accrued and unpaid salaries for the fiscal years ended June 30, 2012 and June 30, 2013 into 4,629,630 shares of Restricted Common Stock of PHI Group, Inc. at the effective price of $0.02592 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012, which still remain in full force and effect.

On April 27, 2018, Henry Fahman, the Company’s Chief Executive Officer and Chief Financial Officer, converted $300,000.00 of the accrued and unpaid salaries for the fiscal years ended June 30, 2012 and June 30, 2013 into 11,574,074 shares of Restricted Common Stock of PHI Group, Inc. at the effective price of $0.02592 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012, which still remain in full force and effect.

On May 29, 2018, the Company issued 3,159,521 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the $35,000.00 Convertible Promissory Note dated October 26, 2017 of the Company, for the conversion of the principal, $992.47 of accrued interest and $500.00 of fees under the Note, totaling $36,492.47. The principal balance due remaining under this Note after this conversion was $0.00.

On June 04, 2018, the Company issued 3,149,607 shares of free-trading Common Stock of PHI Group, Inc. to Einstein Investments, LLC, holder of the $115,000 Convertible Promissory Note dated November 24, 2017 of the Company, for the conversion of $44,050.96 principal amount together with $5,949.04 accrued interest under the Note, totaling $50,000. The principal balance due remaining under this Note after this conversion was $71,449.04.

On June 21, 2018, the Company issued 6,048,786 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC., holder of the Common Stock Purchase Warrant dated as of October 26, 2017 in connection with the $35,000.00 Convertible Promissory Note of October 26, 2017 by the Company, for the cashless exercise of $22,285.00 value of warrants. The total warrant value remaining after this exercise was $12,715.00.

On June 26, 2018, the Company issued 157,604 shares of free-trading Common Stock of PHI Group, Inc. to Buu Chung, holder of the convertible promissory note dated 4/14/2005 of the Company, for the conversion of $3,000 principal amount. The principal balance due remaining under this Note after this conversion was $0.00.

As of June 30, 2018, there were 135,893,815 shares of the Company’s common stock issued and outstanding, excluding 5,673,327 shares of common stock that have been set aside for a special dividend distribution.

Preferred Stock

The Company has filed Certificates of Designation and Amendments to Certificate of Designation with the Nevada Secretary of State to designate the Company’s authorized Preferred Stock as follows:

Class A Preferred Stock

I. DESIGNATIONS, AMOUNTS AND DIVIDENDS

1.Class A Series I Cumulative Convertible Redeemable Preferred Stock

A. Designation: The designation of the first twenty million (20,000,000) shares of the previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, shall be Class A Series I Cumulative Convertible Redeemable Preferred Stock.

B. Number of Shares: The number of shares of Class A Series I Preferred Stock authorized shall be twenty million (20,000,000) shares.

C. Dividends: Each holder of Class A Series I Preferred Stock is entitled to receive ten percent (10%) non-compounding cumulative dividends per annum, payable semi-annually.

2. Class A Series II Cumulative Convertible Redeemable Preferred Stock

A. Designation. The designation of the next twenty-five million (25,000,000) shares of the previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, shall be Class A Series II Cumulative Convertible Redeemable Preferred Stock (the “Class A Series II Preferred Stock”).

B. Number of Shares. The number of shares of Class A Series II Preferred Stock authorized shall be twenty-five million (25,000,000) shares.

C. Dividends: Each holder of Class A Series II Preferred Stock is entitled to receive eight percent (8%) cumulative dividends per annum, payable semi-annually.

3. Class A Series III Cumulative Convertible Redeemable Preferred Stock

A. Designation. The designation of the next fifty million (50,000,000) shares of the previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, shall be Class A Series III Cumulative Convertible Redeemable Preferred Stock (the “Class A Series III Preferred Stock”).

B. Number of Shares. The number of shares of Class A Series III Preferred Stock authorized shall be fifty million (50,000,000) shares.

C. Dividends: Each holder of Class A Series III Preferred Stock is entitled to receive eight percent (8%) cumulative dividends per annum, payable semi-annually.

II. CONVERSION

1. Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of PHI Group, Inc.

Each share of the Class A Preferred Stock, either Series I or Series II shall be convertible into the Company’s Common Stock any time after two years from the date of issuance at a Variable Conversion Price (as defined herein) of the Common Stock. The “Variable Conversion Price” shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the average Trading Price for the Company’s Common Stock during the ten (10) trading-day period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Class A Preferred Stock to the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security as of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, or applicable trading market as reported by a reliable reporting service (“Reporting Service”) mutually acceptable to the Company and Holder of the Class A Preferred Stock.

2. Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of a subsidiary of PHI Group, Inc.’s.

Alternatively, each share of the Class A Preferred Stock, either Series I or Series II, may be convertible into Common Stock of a subsidiary of PHI Group, Inc.’s, to be determined by the Company’s Board of Directors, any time after such subsidiary has become a fully-reporting publicly traded company for at least three months, at a Variable Conversion Price (as defined herein). The Variable Conversion Price to be used in connection with the conversion into Common Stock of a subsidiary of PHI Group, Inc.’s shall mean 50% multiplied by the Market Price (as defined herein), representing a discount rate of 50%, of that Common Stock. “Market Price” means the average Trading Price for the Common Stock of said subsidiary of PHI Group, Inc.’s during the ten (10) trading-day period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Preferred Stock to the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security as of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, NYSE or applicable trading market as reported by a reliable reporting service (“Reporting Service”) mutually acceptable to the Company, said subsidiary and Holder of the Class A Preferred Stock.”

3. Conversion of Class A Series III Preferred Stock of PHI Group, Inc. into Common Stock of American Pacific Plastics, Inc., a subsidiary of PHI Group, Inc.’s.

The entire Class A Series III Preferred Stock of PHI Group, Inc. (i.e. fifty million (50,000,000) shares) may be convertible into eighty percent (80%) American Pacific Plastics, Inc.’s Common Stock which will have been issued and outstanding immediately after such conversion or exchange on a pro rata basis.

4. Conversion Shares.

The amount of shares of Common Stock of PHI Group, Inc., or alternatively, of a subsidiary of PHI Group, Inc.’s, to be received by Holder at the time of conversion of Class A Series I or Series II Preferred Stock of PHI Group, Inc. will be based on the following formula: