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

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

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

PHI GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1–NATURE OF BUSINESS

Established in June 1982, PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation primarily engaged in energymergers and natural resourcesacquisitions as a principal (www.phiglobal.com). The Company has adopted a long-term planplans to acquire energy-related assetsestablished operating businesses in selective industries and other natural resources, partner with other companies to develop energy projectsinvest in select geographical areas, andvarious ventures that may potentially create significant long-term value for our shareholders. In addition, we also provide renewable energy solutionscorporate finance services, including bio-mass, wind, solar power and other technologies. The Company offers merger and acquisition advisory and consulting services tofor client companies through itsour wholly owned subsidiary PHI Capital Holdings, Inc.. In addition,Inc. (www.phicapitalholdings.com). No assurances can be made that the Company is also engagedwill be successful in international trade activity.achieving its plans.

The Company, originallyOriginally incorporated under the name ofin June 1982 as JR Consulting, Inc., the Company was initiallyforemost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based brokerage firm, in late 1999, the Company changed its name to Providential Securities, Inc. (Nevada) in January 2000. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company was engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity, and investment in special situations. BeginningIn October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation, (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation (US), and Philand Vietnam Ltd.), PHI Gold Corporation (formerly PHI Mining Corporation), and PHI Energy Corporation, and has beenbegan to mainly focusingfocus on acquisition and development opportunities in energy business and natural resources, including investing in and/or developingresource businesses. The Company has recently expanded its scope of acquisitions to include other industries besides energy assets, independent power plant projects, renewable energy, industrial minerals, and international trade.natural resources. In addition, PHI Capital Holdings, Inc., the Company’sa wholly owned subsidiary of PHI, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services and arranging capital for other companies in a variety of industries. No assurances can be made that the Company will be successful in achieving its plan.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of PHI Group, Inc., its wholly-ownedwholly owned subsidiary PHI Capital Holdings, Inc., and theits discontinued operations Providential Securities, Inc., PHI Energy Corporation, PHI Gold Corporation (formerly PHI Mining Group),Corp, Providential Vietnam Ltd., and Philand Ranch Limited (including its 100% owned subsidiary Philand Corporation and Philand Vietnam Ltd), Omni Resources, Inc., and American Pacific Resources, Inc., collectively referred to as the “Company.” All significant inter-company transactions have been eliminated in consolidation.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction with the audited financial statements for the year ended June 30, 2015.2016. In the opinion of management, all adjustments consisting of normal reoccurring accruals have been made to the financial statements. The results of operation for the three and six months ended December 31, 2015September 30, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2016.2017.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

MARKETABLE SECURITIES

The Company’s securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.

EachTypically, each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is quoted on either the “Pink Sheets” or the OTC Bulletin Board. As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.

Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold. On December 31, 2015,September 30, 2016, the marketable securities have been recorded at $270,997$456,686 based upon the fair value of the marketable securities.securities, including the value of 97,350,000 shares of Sports Pouch Beverage Company’s common stock to be returned to the client company (Note 3).

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.

Level3 - 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 in public securities traded on public exchanges or over-the-counter (OTC), private securities, real estate, convertible securities, interest bearing securities and other types of securities and has adopted specific techniques for their respective valuations.

Equity Securities in Public Companies

Unrestricted

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

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

Restricted

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

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

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

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, marketable securities, and accounts payable.

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.

ACCOUNTS RECEIVABLE

Management reviews the composition of accounts receivable and analyzes historical bad debts. As of Sept 30, 2016, the Company had $25,000 in accounts receivable.

PROPERTIES AND EQUIPMENT

Property and equipment are carried at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets from three to five years. Expenditures for maintenance and repairs are charged to expense as incurred.

REVENUE RECOGNITION

The Company’s revenue recognition policies are in compliance with ASC 13 (previously Staff accounting bulletin (SAB) 104). The Company recognizes consulting and advisory fee revenues when the transaction is completed and the service fees are earned. Expenses are recognized in the period in which the corresponding liability is incurred. Payments received before all of the relevant criteria for revenue recognition are recorded as unearned revenue.

STOCK-BASED COMPENSATION

Effective July 1, 2006, the Company adopted ASC 718-10-25 (previously SFAS 123R) and accordingly has adopted the modified prospective application method. Under this method, ASC 718-10-25 is applied to new awards and to awards modified, repurchased, or cancelled after the effective date. Additionally, compensation cost for the portion of awards that are outstanding as of the date of adoption for which the requisite service has not been rendered (such as unvested options) is recognized over a period of time as the remaining requisite services are rendered.

RISKS AND UNCERTAINTIES

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

RECENT ACCOUNTING PRONOUNCEMENTS

The Comp

The Company has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible impact they may have on the Company’s financial statements. In most cases, management has determined that the pronouncement has either limited or no application to the Company and, in all cases, implementation would not have anyh material impact on the financial statements taken as eitherevaluatedor is currently evaluatingtheimplications,if any,of eachof thesepronouncementsand thepossible impact theymayhave onthe Company’sfinancialstatements. In most cases,management hasdeterminedthatthepronouncementhas eitherlimited or no application tothe Company and, inall cases, implementationwould nothave amaterialimpactonthefinancialstatementstakenasawhole. whole.

NOTE 2 – LOANS RECEIVABLE

Loans receivable consist of the following at December 31, 2015September 30, 2016 and June 30, 2015:2016:

NOTE 3–MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE

The Company’s marketable securities are classified as available-for-sale and, as such, are carried at fair value. All of the securities are comprised of shares of common stock of the investee. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes. Each investment inThese marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationallyare quoted on the National Association of Securities Dealers OTC Bulletin Board (“OTCBB”) or the Pink Sheets.  As such, each investment ismarkets and are accounted for in accordance with the provisions of SFAS No. 115.

Marketable securities held by the Company and classified as available for sale as of December 31, 2015September 30, 2016 consisted 34,642,106of 34,010,106 shares of Myson Group, Inc. (formerly Vanguard Mining Corporation), a public company tradedquoted on the OTC Markets (Trading symbol “MYSN”) and 194,000,000389,400,000 shares of Sports Pouch Beverage Co., a public company tradedquoted on the OTC Markets (Trading symbol “SPBV”). The Company owns 292,050,000 shares of SPBV and will return 97,350,000 of the total 389,400,000 SPBV shares to the client company. The fair value of the shares recorded as of December 31, 2015September 30, 2016 was $270,997.$456,686 (including 97,350,000 shares of SPBV to be returned to the client company).

The change in unrealized appreciation (depreciation) related* Excluding 97,350,000 shares of Sports Pouch Beverage Company’s common stock held by the Company and to be returned to the Level 2 investments still held at December 31, 2015 is ($14,777). Level 1 and Level 2 securities sold during the quarter ended September 30, 2015 were sold at net realized gain of $36,886.client company.

NOTE 4 – PROPERTIES AND EQUIPMENT

As of December 31, 2015,September 30, 2016, the Company owned and held title to ten acres of land, Parcel Identification Number 09705010180 & 190, in Suwannee County, Florida at historical cost of $82,733. The Company did not have any properties and equipment as of JuneSeptember 30, 2015.2016.

NOTE 5– OTHER ASSETS

The Other Assets comprise of the following as of December 31, 2015September 30, 2016 and June 30, 2015:2016:

During the year ended June 30, 2011, the Company signed a consulting agreement to assist Agent155 Media Corp., a Delaware corporation, with respect to its corporate restructuring and business combination with Freshwater Technologies, Inc., a Nevada corporation. As part of the restructuring requirements, the Company made payment to Manning Elliot LLP in the amount of $24,476 on behalf of Freshwater Technologies, Inc. and other loan amounts to Agent155 Media Corp. As of June 30, 2014, Christopher Martinez, the President of Agent155 Media Corp., assumed the balance of $66,955 from Agent155 Media Corp. as his personal obligations to the Company.

As of December 31, 2015,September 30, 2016, the total amounts owed by the President of Agent155 Media Corp., deposits for acquisitionChristopher Martinez and the investment in a subsidiarydeposit for purchase were collectively reported as Other Assets totaling $144,505.$141,955.

NOTE 6 – DISCONTINUED OPERATIONS

As of June 30, 2012, the Company decided to recognizediscontinued 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 September 30, 2015,2016, the Company had a balance of $1,045,232$1,040,687 as Liabilities from Discontinued Operations.

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The accounts payable and accrued expenses at December 31, 2015September 30, 2016 and June 30, 20152016 consist of the following:

NOTE 8 – DUE TO OFFICER

Due to officer, represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, except for $100,000 as described below, unsecured and due on demand. As of December 31, 2015September 30, 2016 and June 30, 2015,2016, the balances were $1,843,125$885,882 and $1,879,458,$899,674, respectively.

As of December 31, 2015, the Company has a short term note payable amounting $100,000 with interest bearing $3,000 per month payable to a member of the Board of Directors.

NOTE 9 – LOANS AND PROMISSORY NOTES

SHORT TERM NOTES PAYABLE:

As of DecemberSeptember 30, 20152016 and June 30, 2015,2016, the Company had short-term notes payable amounting to $1,313,500$631,538 and $1,342,618$673,660 with accrued interest of $3,189,253$2,912,218 and $3,031,152,$2,879,655, respectively. These notes bear interest rates ranging from 0%6% to 36% per annum.

SomeCONVERTIBLE PROMISSORY NOTES:

On February 29, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. This convertible note is due and payable on November 29, 2016 with interest of 10% per annum. This note is convertible at the election of Auctus Fund, LLC from time to time after the issuance date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 24% per annum and the note becomes immediately due and payable. Should an event of default occur, the Company is liable to pay 150% of the notes payable are securedthen outstanding principal and interest. The note agreement contains covenants requiring Auctus Fund’s written consent for certain activities not in existence or not committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $100,000, and certain guarantees with respect to preservation of existence of the Company as summarized below:and non-circumvention. Outstanding note principal and interest accrued thereon can be converted in whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s common stock determined by 55% of the average of the two lowest closing trading prices of the Company’s common stock during the twenty (20) trading days prior to the date the of the note. The Company may prepay the amounts outstanding to Auctus Fund at any time up to the 180^thday following the issue date of this note by making a payment to the note holder of an amount in cash equal to 125% to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Noteplus (x) accrued and unpaid interest on the unpaid principal amount of this Noteplus (y) Default Interest, depending on the time of prepayment. On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.

On July 20, 2016, the Company issued a convertible promissory note in the amount of $50,000 to EMA Financial, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures in one year and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading immediately preceding the Closing Date of this note, and (ii) 55% of the lowest sale price for the Common Stock on the Principal Market during the twenty (20) consecutive Trading Days immediately preceding the Conversion Date. The note may be prepaid at 130% - 145% of outstanding principal and interest up to 180 days.

On August 16, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures on May 16, 2017 and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) 50% multiplied by the average of the two lowest Trading Price during the previous twenty-five Trading Day period ending on the latest complete Trading Date prior to the date of this note and (ii) 50% multiplied by the average of the two lowest Trading Prices for the Common Stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The note may be prepaid at 135% - 150% of outstanding principal and interest up to 180 days.

The value of the derivative liability at September 30, 2010 is $160,488.

The Company intends to prepay the outstanding convertible notes within the respective allowable prepayment time frames.

DUE TO PREFERRED STOCKHOLDERS:STOCKHOLDERS OF DISCONTINUED OPERATIONS

The Company classified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock in a previously discontinued subsidiary of the Company due to deficiency in compliance of the preferred shares subscription agreement in connection with the referenced subsidiary in the year 2000. The Company has made an offer for these preferred stock holders to receive shares of common stock in the Company in exchange for the preferred shares but so far only a small number of the preferred shareholders have accepted the offer.

The interest expenses payable to holders of the referenced preferred stock of $400,355$419,705 and $387,455$413,255 have been included in accrued interest included in the accrued expensesAccrued Interest Expenses on the balance sheets as of December 31, 2015September 30, 2016 and June 30, 2015,2016, respectively.

OTHER CURRENT PAYABLE

During the fiscal year ended 30, 2016, the Company received a total 389,400,000 shares of Common Stock of Sports Pouch Beverage Company, Inc. and recognized 292,050,000 shares as earned revenues. The balance of 97,350,000 shares was recorded as Other Current Payable in the accompanying consolidated financial statements as of September 30, 2016. The Company returned these shares to Sports Pouch Beverage Company on November 2, 2016 (Subsequent Event – Note 19).

ADVANCES FROM CUSTOMERS (PREVIOUSLY CLASSIFIED AS UNEARNED REVENUE)

As of September 30, 2012, the Company reclassifieddecided to reclassify the previously recorded Unearned Revenues as Advances from Customers because the Company has not been able to complete the consulting services for the related clients due to their inability to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission. As of December 31, 2015,September 30, 2016, the Company recorded $558,219$288,219 as Advances from Customers.

UNEARNED REVENUES

As of September 30, 2016, the Company recorded $40,000 from a client as Unearned Revenues because certain conditions have not been met as of the date of this report.

NOTE 10 – LITIGATION

LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2015:SEPTEMBER 30, 2016:

QUANG VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.

This case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s counsel and unilaterally reached a settlement 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 December 31, 2015June 30, 2016 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated financial statements.

WILLIAM DAVIDSON VS. DOAN ET AL.

On or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831). Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and the company.

On July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company, reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liabilitiesliability associated with the balance of these notes in the accompanying consolidated financial statements as of December 31, 2015.September 30, 2016.

NOTE 11 – 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 total balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company is currently working with the Internal Revenue Service and the State of California Employment Department to resolve the remaining balance.

NOTE 12 – BASIC AND DILUTED NET PROFIT (LOSS) PER SHARE

Net loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares for the period ended December 31, 2015September 30, 2016 were the same since the inclusion of Common stock equivalents is anti-dilutive.

NOTE 13–STOCKHOLDER’S EQUITY

The total number of authorized capital stock of the Company is 400,000,000 shares with a par value of $0.001 per share, consisting of 300,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined by the Board of Directors of the Company.

On March 15, 2012, the Company effectuated a 1 for 1,500 reverse split of the Company’s Common Stock.

Treasury Stock:

The balance of treasury stock as of December 31, 2015June 30, 2016 was 64,28967,271 post-split shares valued at $3,851.$21,823.

Common Stock:

Since July 1, 2016, the Company has issued the following amounts of its Common Stock:

On July 29, 2016, the Company issued 225,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.40 per share to Milost Advisors, Inc. for buy-side advisory services in connection with contemplated acquisitions of target companies in South Africa and North America.

On August 29, 2016, the Company issued 48,930 shares of PHI Group, Inc.’s restricted Common Stock to an investor under the auspices of Rule 144 for $20,000 in cash, at the price of $0.4088 per share.

On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 for the convertible promissory note dated February 29, 2016 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.

On October 30, 2016, the Company issued 200,000 shares of PHI Group, Inc.’s restricted Common Stock to two independent consultants for consulting services at the price of $0.25 per share.

As of December 31, 2015,November 14, 2016 there were 9,559,165 post-split16,174,353 shares of the Company’s $0.001 par value Common Stock issued, including 5,673,327 shares reserved for a special dividend distribution.

Preferred Stock:There is no preferred stock issued and outstanding.

Class A Preferred Stock:On April 2, 2015, the Company designatedthedesignated the first fifty million (50,000,000) shares of the Company’s previously authorized 100,000,000 shares of Preferred Stock, with a par value of $0.001 per share, as Class A Cumulative Convertible Redeemable Class A PreferredStockPreferred Stock (the “Class A Preferred Stock“”) with the following rights and terms:

1) Dividends: Each holder of Class A Preferred Stock is entitled to receive twelve percent (12%) non-compounding cumulative dividends per annum, payable semi-annually.

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

3) Redemption Rights: The Company, after a period of two years from the date of issuance, may at any time or from time to time redeem the Class A Preferred Stock, in whole or in part, at the option of the Company’s Board of Directors, at a price equal to one hundred twenty percent (120%) of the original purchase price of the Class A Preferred Stock or of a unit consisting of any shares of Class A Preferred Stock and any warrants attached thereto, plus, in each case, accumulated and unpaid dividends to the date fixed for redemption.

NOTE 14–STOCK-BASED COMPENSATION PLAN

On February March 18, 2015, the Company adopted an Employee Benefit Plan to set aside 1,000,000 shares of common stock for eligible employees and independent contractors of the Company and its subsidiaries. As of December 31, 2015September 30, 2016 the Company has not issued any stock in lieu of cash under this plan.

NOTE 15On September 23, 2016, the Company issued incentive stock options and nonqualified stock options to certain key employee(s) (Henry Fahman – OTHER EXPENSE CEO/CFO) and directors (Tam Bui, Henry Fahman, and Frank Hawkins constitute the Board of Directors) as deferred compensation. The options allow the holders to acquire the Company’s Common Stock at the fair exercise price of the Company’s Common Stock on the grant date of each option at $0.24 per share, based on the 10-days’ volume-weighted average price prior to the grant date. The number of options is equal to a total of 6,520,000. The options terminate seven years from the date of grant and become vested and exercisable after one year from the grant date. The following assumptions were used in the Monte Carlo analysis by Doty Scott Enterprises, Inc., an independent valuation firm, to determine the fair value of the stock options:

Vesting is based on a one year cliff from grant date.

Net Other ExpenseAnnual attrition rates were used in the valuation since ongoing employment was condition for vesting the fiscal quarter ended December 31, 2015 consistsoptions.

The fair value of the following:Company’s Stock Options as of issuance valuation date is as follows:

NOTE 1615–RELATED PARTY TRANSACTIONS

The Company accrued $52,500 in salaries for Henry Fahman (President of the Company)President and Tina Phan (Secretary andthe Secretary & Treasurer of the Company)Company during the quarters ended December 31, 2015September 30, 2016 and December 31, 2014.September 30, 2015.

NOTE 1716–CONTRACTS AND COMMITMENTS

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH THINH HUNG INVESTMENT CO.

Effective May 21,During the fiscal year ended June 30, 2010 the Company signed an agreement with Thinh Hung Investment Co., Ltd., a Vietnam-based company, to assist Thinh Hung in identifying, locating and, possibly, acquiring various business opportunities for Thinh An Co., Ltd., a subsidiary of Thinh Hung, including but not limited to a reverse merger, a stock swap, or a business combination between Thinh An and a publicly-traded company in the U.S. In exchange for the services rendered, the Company would receive compensation in cash from Thinh Hung and common stock of the combined company. As of September 30, 2011, the Company has completedconsummated a stock purchase and investment agreement between Thinh Anh Co., Ltd. and Vietnam Foods Corporation, a Nevada corporation. However, the combined company has not filed a registration statement with the Securities and Exchange Commission to become a reporting company. The Company has recognized $26,656 as only revenues from this transaction. During the fiscal year ended June 30, 2016, the Company repaid $5,000 to Thinh Hung Investment Co.. The balance of $288,219 was booked as Customer Advances in the liability portion of the balance sheet.

AGREEMENT WITH PACA

On February 25, 2013, PHI Capital Holdings, Inc., a subsidiary of the Company, signed a consulting/engagement agreement with PACA, a New York corporation, to contemplate raising capital for the purpose of financing PHI Group, Inc.’s business plan including acquisition of various energy properties and general working capital. The term of the engagement is two years and has been extended to February 24, 2016. PACA will be entitled to cash success fee and equity success fee for each successful financing transaction.

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH ASIA GREEN CORP.

On January 17, 2014 PHI Capital Holdings, Inc., a wholly-owned subsidiary of the Company, signed a Business and Financial Consulting Agreement with Asia Green LLC (“Asia Green VN”), a Vietnamese company engaged in afforestation and reforestation projects in Vietnam, to assist Asia Green in becoming a fully reporting publicly traded company in the United States and in arranging capital for Asia Green to execute its business plan. PHI Capital Holdings is entitled to receive six hundred twenty thousand U.S. dollars as compensation for the services rendered. The term of this agreement is one year or until Asia Green has become a fully reporting public company. On April 4, 2014 Touchlink Communications, Inc., a Nevada corporation, a majority-owned subsidiary of the Company, changed its name to Asia Green Corporation and entered into a Corporate Combination Agreement with Asia Green VN to become the holding company for Asia Green VN’s agroforestry and afforestation business. On July 28, 2014 Asia Green Corporation changed its name to Omni Resources, Inc to pursue a new business.

ASSUMPTION OF DEBT BY AGENT155 MEDIA CORP’S OFFICER.

October 29, 2014, Christopher Martinez, President of Agent155 Media Corp. personally assumed the balance of $66,955 previously owed to the Company by Agent155 Media Corp. as his personal obligations retroactively December 31, 2011.

BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH AG MATERIALS, LLC.

On January 7, 2015, the Company signed a Business Cooperation and Investment Agreement with AG Materials, LLC, an Alabama limited liability company, (“AGM”) to primarily cooperate with each other to establish and operate a 200,000 MT wood pellet plant in Live Oak, Suwannee County, Florida. Both AGM and the Company intend to utilize the benefits of AGM’s previous arrangements with Klausner Lumber One, LLC, a wholly-owned subsidiary of Klausner Group, an Australian company, to purchase 400,000 to 800,000 short tons (ST) of feedstock per year from Klausner Lumber One, to purchase a fifteen-acre parcel of land to build the new wood pellet plant in Live Oak, Suwannee County, Florida. The Company will be responsible for providing the required capital for the purchase of land, machinery and equipment, and accessories, for construction and for working capital of the new wood pellet plant. AGM and the Company will enter into a definitive agreement which includes specific terms and conditions, obligations, benefits, representations, warranties, covenants, and indemnities customary for a transaction of this type. Both parties have incorporated Cornerstone Biomass Corporation, a Florida corporation, as the entity to manage the joint-venture wood pellet project in Live Oak, Florida. Moreover, AGM and the Company may from time to time cooperate with each other and jointly engage in other business activities that deem mutually acceptable and beneficial to both parties.

BUSINESS COOPERATION AGREEMENT AND MASTER CONTRACT FOR PURCHASE AND SALE OF SAND WITH KIEN HOANG MINERALS JOINT STOCK COMPANY

On May 8, 2015, the Company signed a Business Cooperation Agreement with Kien Hoang Minerals Joint Stock Company (“ KHM JSC”), a Vietnamese company, to develop and expand international markets for KHM’s mineral products, particularly exports of reclamation sand and granite to Singapore through Primearth Resources Asia Pte Ltd, another strategic partner of the Company’s. The Company was granted the first right of refusal by KHM to purchase approximately 102 million cubic meters of sand and 40 million cubic meters of granite. On June 12, 2015, the Company signed a Master Contract for Purchase and Sale of 60 million cubic meters of sand recovered from the dredging and clearing of traffic pathways at De Gi estuary and surrounding areas in Binh Dinh Province, Vietnam over a period of five years for exports to Singapore and other Asian markets.

CONSULTING AGREEMENT WITH SPORTS POUCH BEVERAGE COMPANY

On June 3, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement with Sports Pouch Beverage Company (“SPBV”), a Nevada corporation, to provide consulting services and assist SPBV with respect to business development, mergers and acquisitions, corporate governance, and corporate finance. PHI Capital Holdings, Inc. is entitled to receive up to forty percent of common stock in SPBV as compensation for the services rendered. The duration of this agreement is one year. As of December 31, 2015,June 30, 2016 PHI Capital Holdings, Inc. has received 389,400,000 shares of SPBV stock and recorded 194,700,000a total of 292,050,000 shares as partial earned revenues from this transaction.

AGREEMENT WITH PRIMEFORTH RENEWABLE ENERGY LTD.

On June 24, 2015, PHI Capital Holdings, Inc., a wholly owned subsidiary The balance of 97,350,000 shares will be returned to the Company, signed a Consulting Engagement Agreement with Primeforth Renewable Energy Ltd. (“Primeforth”), a Singaporean company, to provide consulting services with respect to corporate development, corporate financeclient and debt financing for Primeforth Renewable Energy. PHI Capital Holdings is entitled to a one-time non-refundable professional fee of $20,000 and 4% cash success fee for any financing arranged for Primeforth. The term of this agreement is two years. Primeforth is engagedrecorded as Other Current Payable valued at $97,350 in developing alternative energy using patented microalgae technologies.

SETTLEMENT AGREEMENT WITH HAI P. NGUYEN

On July 16, 2015, the Company signed a Settlement and Payment Agreement with Hai P. Nguyen and agreed to pay the latter $25,000 in cash and 500,000 shares of Common Stock of Myson Group, Inc. as compensation for Hai P. Nguyen’s portion of contribution towards the budget to complete the services in connection with the Consulting Agreement dated January 24, 2014 between Vietnam Mining Corporation (now known as Myson Group, Inc.) and PHI Capital Holdings, Inc. As of December 31, 2015, the Company has fulfilled its obligations under this agreement.accompanying consolidated financial statements (Subsequent Event – Note 19).

AGREEMENT FOR DEFRAYAL OF EXPENSES AND STOCK COMPENSATION WITH ASIA GREEN CORPORATION

On July 17, 2015, the Company signed an agreement to provide $75,000 to Asia Green Corporation (AGMC”), a Nevada corporation, for AGMC to pay certain required expenses and resume its status as fully reporting company with the Securities and Exchange Commission. In exchange for the fund, AGMC agrees to allocate 500,000 shares of its Common Stock upon the consummation of a business combination between itself and a Vietnamese company engaged in agriculture and reforestation. This amount was recorded as Deposit for Acquisition in the Company’s balance sheet as of September 30, 2016.

MASTER AGREEMENTACQUISITION OF MAJORITY INTEREST IN A LIQUEFIED PETROLEUM GAS COMPANY IN VIETNAM

On January 23, 2016, PHI Group, Inc. (the “Company”) entered into Private Stock Purchase and Sale Agreement to purchase 50.90% of equity ownership (the “Exchange Ownership”) in Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation), a Vietnamese company, hereinafter referred to as “Pacific Petro,” in exchange for a combination of cash and Common Stock and/or Preferred Stock of the Company. The fair value for the Exchange Ownership will be determined by the majority shareholders of Pacific Petro (the “Majority Shareholders”) and the Company after the completion of a business valuation of Pacific Petro by Grant Thornton Vietnam Ltd. and the financial audits of Pacific Petro by a PCAOB-registered auditing firm.

Originally established as Binh Duong Gas LLC in 1998, Pacific Petro changed its name to Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation) in May 2010. This company’s headquarters is located at 99 Ich Thanh Street, Truong Thanh Ward, District 9, Ho Chi Minh City, Vietnam. Website:http://www.pacificpetro.com.vn/

Pacific Petro is the third largest private liquefied petroleum gas (LPG) company in Southern Vietnam, engaged in sales of liquefied petroleum gas (LPG), manufacturing of gas canisters and cylinders, filling of LPG, repair and maintenance of gas tanks, and wholesale of solid fuels, liquid, gas and related petroleum products.

This company owns a gas canister-manufacturing factory on a 215,200 square-foot lot in Ben Cat District, Binh Duong Province and a gas filling plant on a 65,600 square-foot lot in District 9, Ho Chi Minh City, Vietnam. It has also acquired a 93,600 square-foot lot Go Dau Industrial Park, Dong Nai Province to build a proprietary LPG storage area and has been granted 83 acres in Phu Huu Village, Nhon Trach District, Dong Nai Province to build an integrated port for imports of energy-related commodities and products.

PHI Group has engaged Grant Thornton to conduct an independent business valuation but has not completed the required financial audits of Pacific Petro. After the expiration of the afore-mentioned Purchase and Sale Agreement on June 30, 2016, both parties have agreed to a conditional extension of the transaction and intend to renegotiate the terms and conditions of payment.

MEMORANDUM OF UNDERSTANDING FOR BUSINESS COOPERATION AND& INVESTMENT AGREEMENT WITH RAT SOKHORN INCORPORATION CO., LTD.

On July 31, 2015,March 9, 2016, the Company signed a Master AgreementMemorandum of Understanding for Business Cooperation and Investment Agreement with Rat Sokhorn IncorporationSes Meas Gas Import Export, Construction & Development Co., Ltd., (“Ses Meas”) a Cambodian company, to cooperate with each other to develop liquefied petroleum gas (LPG) and other energy-related businesses in Cambodia, including but not limited to increasing Ses Meas market share of LPG business in Cambodia, establishing dry port and LPG storage and logistics facilities, engaging in waste-to-energy business, and potentially establishing and operating an oil refinery in Cambodia in conjunction with an qualified international investor. Subsequently, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate of Ses Meas, to establish, manage and operate a dry port in Cambodia.

On April 30, 2016, the Company signed a Joint Venture Agreement with W.B.J. Import Export Co., Ltd., an affiliate of Ses Meas, to establish, manage and operate a dry port in Cambodia. According to the Joint Venture Agreement, PHI Group, Inc. will contribute 65% investment capital to the dry port project and hold 65% equity interest in the development and implementationjoint venture company. In light of the following projects: (1) a 5,160-ha thermal coal concession in Sdach Kong Khang Lechrecent contemplated acquisition activities of the Company, we intend to re-evaluate the potential contribution and Kanthaor Khang Cheung areas, Banteay Meas and Kampong Trach Districts, Kampot Province, Cambodia; (2) a mine-mouth coal-fired power plant at the referenced coal concession; (3) a limestone concession in Sdach Kong Khang Lech and Kanthaor Khang Cheung areas, Banteay Meas and Kampong Trach Districts, Kampot Province, Cambodia for the cement and precipitated calcium carbonate; (4) a container seaport in Kampot Province; and (5) exploration and exploitationpriority of precious and base metals in Cambodia. The Company will be responsible for arranging the required capital, technical expertise, engineering, procurement, construction (EPC), operations, and sales and marketing in connectionthis project compared with the proposed projects. The implementation of any one of these projects is subject to satisfactory due diligence and feasibility study by the Company. The Company’s management has conducted site visits with qualified technical professionals and consulted with Royal Haskoning DHV (www.royalhaskoningdhv.com) regarding these projects.other investment opportunities.

BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH CAVICO LAO MINING CO. LTD.PT JAYA SAKTI GLOBALINDO

On August 7, 2015,March 17, 2016, the Company signed a Business Cooperation and Investment Agreement with Cavico Lao Mining Co.PT Jaya Sakti Globalindo (JSG), Ltd. (“CLM”)an Indonesian company, to provide the initial required capitalutilize hard assets held by JSG and its affiliates as collaterals for project financing. The parties intend to be raised from the Company’s 506(c) private placement for CLM’s interim operations and a budget to conduct an independent JORC reportenter into definitive agreements for the nickel portion of the CLM’s a 80-hectare multi-mineral minecollateral provision in the Khoam Bang mountainous area at Ban Bo, Bulikhamsay, Laos People’s Democratic Republic. In addition, the Company shall establish a subsidiary to be the holding company for the CLM’s assets to be spun off as a separate publicly traded company (“PubCo”) on the NASDAQ Stock Markets, subject to certain conditions and requirements. CLM management believes the estimated value of the nickel portion in the afore-mentioned multi-mineral mine is approximately $1.5 billion - $4 billion, subject to further independent validation.

MASTER AGREEMENT FOR BUSINESS COOPERATION WITH DREDGE MASTERS AND CIVIL WORKS

On August 19, 2015, the Company signed an agreementconnection with Dredge Masters and Civil Works, Inc., a Filipino corporation, to cooperate with each other in order to optimize the dredging, transshipment, loading, shipping and unloading of saline sand on large scales to serve the needs of land reclamation in Singaporean and other Asian countries. The term of this agreement is one year.

STOCK PURCHASE AND INVESTMENT AGREEMENT WITH VINABENNY ENERGY JOINT STOCK COMPANY

On September 1, 2015, the Company signed an agreement to acquire a 50.10% equity ownership in VinaBenny Energy Joint Stock Company (“VinaBenny”, a Vietnamese company, for $10,700,000 and to arrange capital for VinaBenny to complete a 84,000 MT Liquefied Petroleum Gas (LPG) terminal in Can Giuoc District, Long An Province, Vietnam. This agreement expired on December 31, 2015.

AGREEMENT WITH REDICSACO JOINT STOCK COMPANY

On September 11, 2015, the Company signed a Principle Business and Investment Agreement with Redicsaco JSC, a Vietnamese company, to cooperate with each other with respect to the dredging, transshipment, loading, sale and export of saline reclamation sand from the Ham Luong River waterway, Ben Tre Province, Vietnam to Singapore, Brunei and other Asian markets. The initial authorized volume of sand from this location is 25 million cubic metersspecific projects and the total reserve is more than 390 million cubic meters.

AGREEMENT WITH HATICO INVESTMENT DEVELOPMENT JOINT STOCK COMPANY

On September 11, 2015, the Company signed a Principle Business Cooperation Agreement with HATICO Investment Development Joint Stock Company, a Vietnamese company, to cooperate with each other in order to dredge, sellterms and export saline reclamation sand from Ha Tien, Kien Giang Province, Vietnam and to develop a deep-water seaport terminal at this location. It is estimated that the volumeconditions of sand from this location is approximately one billion cubic meters. Both parties have agreed in principle for the Company to acquire 50.90% of HATICO or own the same percentage in a joint venture company to be set up.

BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH HUNG THINH MINERALS INVESTMENT CO., LTD

On October 26, 2015 the Company signed a Principle Business Cooperation and Investment Agreement with Hung Thinh Minerals Investment Co., Ltd. “(HTMI”), a Vietnamese company that owns a titanium mine and a slag processing plant in Binh Thuan Province, Vietnam to cooperate with HTMI to increase its capacity to produce 150,000 MT of titanium slag per year, to develop HTMI into a major refiner of titanium-related products, including titanium pigments, ingots, sponge, and alloys, and to list HTMI on an international stock exchange to raise capital for its growth and expansion program. PHI Group, Inc. will acquire 49% of HTMI, plus 2% proxy voting right in HTMI, as a prerequisite to cooperate with HTMI in this development program. The closing of this transaction is subject to satisfactory due diligence review of HTMI, the signing of a definitive agreement, and HTMI’s compliance with the U.S. Generally Accepted Accounting Principles (GAAP).such provisions. As of the daydate of this report, the Company has not completedundertaken any projects that would qualify for the required due diligence reviewutilization of HTMI.

BUSINESS COOPERATION AND INVESTMENT AGREEMENT WITH SPARTAN MINING AND DEVELOPMENT CORPORATIONcollateral assets from JSG and its affiliates.

LETTER OF INTENT TO ACQUIRE WOOD PELLET COMPANY IN ALABAMA

On October 30, 2015,April 27, 2016, the Company signed a Principle Business CooperationLetter of Intent to acquire Lee Energy Solutions, LLC, an Alabama company that owns a 100,000 MT/year wood pellet manufacturing facility in Crossville, Alabama. The Letter of Intent was amended twice and Investment Agreementexpired on September 20, 2016.

ENGAGEMENT LETTER WITH MILOST ADVISORS, INC.

On July 11, 2016, the Company signed an engagement letter with Spartan MiningMilost Advisors, Inc. to assist the Company in its analysis, consideration and, Development Corporation (“SMDC”)if appropriate, execution of various financial and strategic alternatives available to it, including securing additional equity and/or debt capital, assisting the Company in its analysis and consideration of financial aspects of certain potential strategic transactions such as mergers, acquisitions, spin-offs, joint ventures, minority investments, negotiated purchases, or other similar transactions. In consideration for the services rendered by Milost, the Company agrees to pay Milost a retainer fee equal to $100,000, payable in the form of $10,000 in cash and $90,000 in stock of the Company valued at $0.40 per share. The Company also agrees to pay Milost a success fee of 8% for equity financing and 5% for mezzanine and senior debt financings.

MEMORANDUM OF UNDERSTANDING BETWEEN MILOST GLOBAL, INC.

On July 18, 2016, the Company signed a Memorandum of Understanding with Milost Global, Inc., a Philippine company,U.S. private equity firm, to cooperate in promoting the competitiveness of each other as well as joint activities to acquire cash-flow positive companies in North America, South Africa, Australia, Singapore and New Zealand and seek growth through M&A alternatives in order to fast-track shareholder value and dividend distribution. Both parties agree to use Milost Advisors, Inc. as the first right of refusal advisor to conduct a strategic planning exercise, form a joint venturenew Special Purpose Company (SPC) through which the partnership activities will be carried out. The same SPC will be held, managed and controlled by both parties pari passu. It is intended that this partnership will assist both parties with the implementation of their combined growth strategies and will help identify areas where each party can provide capacity building support.

LETTER OF INTENT TO ACQUIRE A SOUTH AFRICAN MINING SERVICES COMPANY

On July 19, 2016, the Company presented a pre-conditional non-binding undertaking to make an offer to acquire the entire issued capital of an undisclosed South African mining services company listed on the Johannesburg Stock Exchange (“SA Target”). On July 25, 2016, approval was given by the SA Target’s Board of Directors to its management team to enter into further discussions with PHI Group in good faith and to proceed with the due diligence process outlined in the undertaking.

Following the completion of the due diligence process conducted by Milost Advisors, Inc. and the Company, on September 3, 2016, the Company presented a Letter of Intent (“LOI”) to the SA Target to acquire all its issued capital in exchange for common stock in PHI Group. The exchange rate would be determined on the basis of 10 days’ Volume-Weighted Average Price (VWAP) of both companies before the day of the LOI. According to the LOI, the Company also commits to the provision of a USD $ 20 million shareholder loan facility to the SA Target. Approximately USD $ 12 million will be used for the repayment of the SA Target subsidiary’s term loan and the remaining USD $ 8 million will be available as a draw down facility for financing the working capital requirements of the SA Target. The USD $ 12 million facility will be non-interest bearing until the company has effectively turned around or whilst there are minority shareholders in Buildmax. Thereafter, interest of 5% per annum will be charged on the shareholder loan and the loan will be repaid over a period to be agreed depending on the free cash flow generated by the SA Target.

On September 6, 2016, approval was granted by both the SA Target’s Board of Directors and Independent Board to its management team to enter into further discussions with PHI Group in good faith and to proceed with the transaction.

On September 14, 2016, the Company received confirmation from SA Target’s management that 77% of the shareholders of the SA Target approved the acquisition offer by PHI Group.

On October 10, 2016, Milost Global, Inc. submitted a revised offer to SA Target, which was declined by SA Target’s Board of Directors on October 11, 2016. The Company intends to renegotiate the terms and conditions for this transaction under more favorable conditions and at an appropriate time in the near future.

SECURED LINE OF CREDIT FACILITY WITH TCA GLOBAL CREDIT MASTER FUND, LP

On August 30, 2016, the Company signed a term sheet with TCA Global Credit Master Fund, LP (“Investor”) for a maximum $15,000,000 senior secured line of credit, of which $4,000,000 will be made available to the Company on the first drawdown (the “Initial Line of Credit”) for acquisition financing. The Closing Date will be the start date for the Line of Credit Facility.

The Company, at the discretion of the Investor, may request an increase in the line of credit at agreed upon time periods and agreed upon amounts. The sum of the Initial Line of Credit and the subsequent line increases, if any, (the “Then Current Line Size”) shall not exceed the maximum line of credit. Each subsequent line increase will require the Company to execute and deliver a new or revised revolving note to the Investor and be responsible for any fees and expenses associated with the line increase.

The line of credit may be drawn down, at the Investor’s discretion, and repaid by the Company throughout the term of the facility. The amount requested to be drawn down (the “Advance”) shall not exceed 80% of repayments to the Investor’s designated account, less interest and fees, if the reserve amount on the Then Current Line Size has not been satisfied. The frequency of Advances will be mutually agreed upon between SMDCthe Investor and the Company.

MILOST GLOBAL, INC. AGREES TO INVEST UP TO $100 MILLION IN PHI GROUP, INC.

On September 8, 2016, the Company entered into a Letter of Intent with Milost Global, Inc., a U.S. private equity firm, with respect to the principal terms and conditions under which Milost Global, Inc. will invest up to $100 million in PHI Group, Inc. Investment in the amount of $50 million will be as equity and $50 million as loan.

On September 25, 2016, the Company signed an agreement with Milost Global, Inc. for up to $50 million structured as a Milost Equity Subscription Agreement (the ‘MESA”) whereby Milost Global is willing to initially invest $15 million for working capital needs of PHI Group. The amount of $15 million will be drawn down in tranches at a minimum of $500,000 until fully utilized. Further, the MESA will be utilized for the share exchange between Milost Global, Inc. and PHI Group Inc. to dredge, extract, process, sell and export lahar sand from the Sto. Tomas, Maloma and Bucao Rivers in the Province of Zamales, the Philippines.The total volumebalance of the lahar sand$50 million facility will be available for equity leakage fir future acquisitions of PHI Group. According to be dredged from these riversthe structure of the MESA, Milost Global, Inc. is estimatedentitled to purchase shares of common stock of PHI Group for a price per share on the basis of $2 at 1.4 billion metric tonnes.a discount of 20%. The sand was created byCompany and Milost agree that for as long as the Mount Pinatubo volcanic eruption in June 1991.Company’s stock price has not reached $2 per share, Milost Global, Inc. will receive the Company’s convertible notes instead of the Company’s shares for each drawdown. Milost Global, Inc. has the right to convert the convertible notes into common shares of the Company once the price of PHI Group’s stock reaches the target price of $2. The Company agrees to pay Milost Global, Inc. a commitment fee equal to 4% of the total commitment, payable within 3 business days after the price of the Company’s common stock reaches the target price of $6.

On November 24, 2015 both parties signedSeptember 27, 2016, the Company submitted a Joint Venture AgreementDrawdown Notice to Milost Global, Inc. for a total of $2,750,000 from the MESA’s total $50-million commitment in form of a joint venture corporation,convertible note bearing annual interest of 5% and convertible to be preferably styled “PHI-Spartan Resources, Inc.,” in order to implementcommon stock at 20% discount when PHI Group’s common stock reaches $2 per share. The proceeds from this drawdown are allocated as follows: $2,150,000 towards the provisionscash payment for the purchase of the Principle Business Cooperationagricultural company (“Agri Target”) in Southeastern United States, $500,000 for due diligence and Agreement.document fees for the acquisitions of the SA Target, Agri Target and an educational company in Canada, and $100,000 for general working capital. On September 28, 2016, Milost Global, Inc. confirmed that $500,000 had been remitted to Milost Advisors from Milost Global, Inc. on behalf of PHI Group, Inc. as part of the first Drawdown Notice presented to Milost Global, Inc. by the Company. As of the date of this report, the Company has not received any direct disbursements from Milost Global, Inc. for the drawdown.

LETTER OF INTENT TO ACQUIRE AGRICULTURAL BUSINESS IN SOUTHEASTERN UNITED STATES

On August 24, 2016, the Company tendered a Letter of Intent to acquire an undisclosed fruit and vegetable company (“Agri Target”) in Southeastern United States for a total of 81% in cash and 19% in common stock of PHI Group. On September 6, 2016, the owner of the Agri Target made a counter offer which was accepted by the Company on September 16, 2016. The Company is in the process of arrangingconducting the due diligence review of the Agri Target and expects to close this transaction as soon as practical. Average annual sales of the Agri Target are approximately $25 million.

LETTER OF INTENT TO ACQUIRE CANADIAN EDUCATIONAL COMPANY.

On September 3, 2016, the Company signed a Letter of Intent for Acquisition (“LOIA”) with an undisclosed educational company in Canada (“EDU Target”) thatowns and operates 21 campuses and enrolls approximately 20,000 students yearly in various English language and career training educational courses. According to the LOIA, the Company will acquire all the issued and outstanding shares of the EDU Target in exchange for common stock of PHI Group and provide a total of C$20 million in cash and stock investment capitalin EDU Target to settle bank debts and allow for operating working capital.

On October 3, 2016, the Company presented a revised LOIA to EDU Target to modify the terms of the transaction, whereby the Company agrees to acquire approximately 311,286,356 shares of EDU Target’s stock valued at C$0.0165 per shares in exchange for common stock of PHI Group. In addition, the Company will provide C$20 million cash investment of which C$6.2 million will be for settlement of bank debts and the remaining balance of C$13.8 as operating working capital. Both parties intend to proceed with a definitive Sale and Purchase Agreement in order to close this project.transaction as soon as practical, subject to additional due diligence review of EDU Target.

CONSULTING SERVICE AGREEMENT WITH TANS COMPANY LTD.

On September 9, 2016, PHI Capital Holdings, Inc. signed a Consulting Service Agreement with Tans Company, Ltd., a Vietnam-based company, to provide advisory and consulting services on a non-exclusive basis to assist Tans Co. in becoming a publicly traded company in the U.S. Stock Market. The Company is entitled to cash compensations from Tans Co. and a portion of equity in the new public company.

SALE AND PURCHASE AGREEMENTS OF MARINE SAND FOR EXPORT TO SINGAPORELAND IN LIVE OAK, FLORIDA

On September 21, 2016, the Company entered into a Sale and Purchase Agreement to sell two lots of land in Live Oak, Florida (Lot 18 & 19 of EAGLE’s NEST, according to Plat Book 1, Page 502, of the Public Records of Suwannee County, Florida) back to Klausner Holding USA, Inc., a Georgia corporation, for $65,000. This transaction is scheduled to close on or before December 16, 2015,9, 2016.

CONSULTING SERVICE AGREEMENT

On September 23, 2016, the Company signed Salean agreement to engage a consultant for M&A due diligence, business development, and Purchase Agreementsother corporate services for a period of on year. The Company has agreed to pay the consultant a one-time fee of one hundred thousand restricted shares of the PHI Group’s stock as compensations for the term of the agreement.

MEMORANDUM OF UNDERSTANDING TO ACQUIRE ABOUND FARMS, INC.

On September 30, 2016, the Company signed a Memorandum of Understanding with Abound Farms, Inc., (“AFI Target”) a U.S. company, to acquire 100% of AFI Target. AFI Target is engaged in hydroponics and possesses proprietary water treatment systems and nutrients that are known to substantially enhance farming yields. The MOU sets forth the guidelines for further negotiations between AFI Target and the Company before the signing of a definitive agreement that contains representations, warranties, covenants, and indemnities customary for a transaction of this type. The Company intends to incorporate the AFI Target’s water treatment systems and nutrients to the Agri Target’s business after the closing of these transactions.

AGREEMENTS FOR INVESTOR AND PUBLIC RELATIONS SERVICES

On September 30, 2016, the Company signed agreements with two Vietnamese companies to export marine sand recovered from dredging projects in Central Vietnam to Singaporeindependent consulting firms for reclamation purposes.investor and public relations services for a total period of six months. The Company expectshas agreed to begin shipmentspay these companies a total of sand$35,000 in April 2016 after the monsoon season is over.cash and 100,000 shares of restricted common stock of PHI Group, Inc.

NOTE 18–GOING CONCERN UNCERTAINTY

As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $37,719,465$38,150,374 and total liabilities and stockholders’ deficit of $787,045 as of December 31, 2015 andSeptember 30, 2016. For the quarter ended September 30, 2016, the Company incurred a net loss from operations of $375,531 as compared to a net income from operations in the amount of only $47,379 for$19,874 during the six monthssame period ended December 31,September 30, 2015. The financial conditionThese factors as well as the uncertain circumstancesconditions that the Company faces in its day-to-day operations with respect to cash flows create an uncertainty as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management has taken action to strengthen the Company’s working capital position and generate sufficient cash to meet its operating needs through June 30, 20162017 and beyond.

In the next twelve months the Company intends to focus on closingcontinue pursuing its merger and acquisition program by acquiring all or controlling interests in target companies in a number of industries, including but not limited to conventional energy, renewables, natural resources, agribusiness, technology, transportation, education, distribution, mining, oil & gas, financial Services, healthcare, and pharmaceuticals. In addition, the acquisition of a majority interestCompany also plans to invest in Pacific Petro Commercial Joint Stockspecial situations that may potentially generate significant revenues and profitability for the Company in Vietnam, implementing the reclamation sand businessshort term. We believe that by closing one or more of the contemplated acquisitions we will be able to build a critical mass and uplist to the Nasdaq Stock Market or NYSE in Southeast Asia,the near future. In addition, we will continue to provide advisory and engaging inconsulting services to international trade involving energy products and industrial commodities. The Company will also use its best efforts to acquire energy-related and natural resource assets and carry out various business cooperation and investment agreements that have been signed with certain international partners. clients through our wholly owned subsidiary PHI Capital Holdings, Inc.The Company anticipates generating substantial amounts of revenues through the merger and acquisition of Pacific Petro Commercial Joint Stock Company, the reclamation sand business, certain activitiesprogram, investment in the area of natural resourcesspecial situations, and international trade.advisory services mentioned herein. However, no assurances could be made that management would be successful in achieving its plan. The president and chairman of the Company has committed to funding the Company’s operations from various sources for the next 12 months. The Company has launched a private placement program under the auspices of Rule 506(c) to raise $60 million by offering 40 million units at the price of $1.50 per unit, consisting of one share of Class A 12% cumulative convertible redeemable preferred stock, convertible to Common Stock at 25% discount to market price at the time of conversion, and a warrant to purchase one share of the Company’s Common Stock at 25% discount to market price at the time of exercise. As of the date of this report the Company has not obtained any funding through the private placement program and is considering other financing alternatives. No assurances could be made that management would be successful in achieving its plan.

NOTE 19 – SUBSEQUENT EVENT

INVESTMENT IN ANTIMONY MINE IN LAO PEOPLE’S DEMORACTIC REPUBLIC

These financial statements were approved by management and available for issuance on November 21, 2016. Subsequent events have been evaluated through this date.

CONTRIBUTION AND ASSIGNMENT OF INTELLECTUAL PROPERTY FOR ORGANIC FARMING

On January 19October 17, 2016, the Company and 20,Mr. Van Minh Pham, an individual, (the “Assignor”) signed an Intellectual Property Contribution and Assignment Agreement whereby the Assignor agreed to assign to the Company: (1) Intellectual Property relating to the natural immune and symbiotic bacteria formulations for the breeding of poultry, cattle and various aquatic species and for the growing of organic agricultural and herbal products, (2) any and all Intellectual Property Rights claiming or covering such Intellectual Property and (3) any and causes of action that may have accrued to the Assignor in connection with such Intellectual Property and/or Intellectual Property Rights. The Assignor’s prior inventions and applications include: (1) Eliminating bad smell in breeding cattle and poultry, (2) Treating stagnant water and converting into drinking water for cattle and poultry, (3) Breeding cattle and poultry without antibiotics and vaccines, and (4) Ecological shrimp breeding without using disinfectants and antibiotics. The Company intends to apply the Intellectual Property to its organic farming programs in the U.S. and abroad in the near future.

LETTER OF INTENT TO ACQUIRE LIME ROCK MINE IN FLORIDA, U.S.A.

On October 26, 2016, the Company signed a Business Cooperation Agreement and an Investment AgreementLetter of Intent with Khamchaleun Investment Sole Co., Ltd.Blue Rok, Inc., a Laotian company,Florida corporation, to acquire a 35% equity interestlime rock mine at 3153 W. U.S. Highway 27 Mayo, Florida 32066, consisting of property, facilities, equipment, inventory, and licenses and permits, including 16.6 acres of land owned free and clear by BRI and 140 acres of land leased from three discrete landowners for mining purposes, for a total purchase price of $2,900,000. It is agreed that $1,500,000 of the total purchase price will be paid in Hung Kham Lao Investment Co., Ltdcash upon closing and co-invest$1,400,000 will be paid in a 92km2 antimony mine in Chalet Village, Boualapha District, Khammuane Province, People’s Democratic Republic. The closing10 six-month installments of this transaction is expected$140,000 each without interest. Subject to occur by February 20, 2016, subject tofurther satisfactory due diligence review by the Company and mutual agreement between parties, the Company and Blue Rok’s controlling shareholder will enter into a definitive Sale and Purchase Agreement for the consummation of Hung Kham Lao Investment Co., Ltd. and the antimony mine by PHI Group. The antimony mining company has been granted a quota to extract, process and sell 350,000 metric tons of antimony from this mine.

ACQUISITION OF MAJORITY INTEREST IN A LIQUEFIED PETROLEUM GAS COMPANY IN VIETNAMtransaction.

On January 23, 2016, PHI Group, Inc. (the “Company”) entered into an agreement to purchase 50.90% of equity ownership (the “Exchange Ownership”) in Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation), a Vietnamese company, hereinafter referred to as “Pacific Petro,” in exchange for a combination of $2 million in cash and/or Common Stock and/or Preferred Stock of the Company. The fair value for the Exchange Ownership will be determined by the majority shareholders of Pacific Petro (the “Majority Shareholders”) and the Company after the completion of a business valuation of Pacific Petro by an independent reputable appraisal company and the financial audits of Pacific Petro by a PCAOB-registered auditing firm.

Originally established as Binh Duong Gas LLC in 1998, Pacific Petro changed its name to Pacific Petro Commercial Joint Stock Company (aka Pacific Petro Trading Corporation) in May 2010. This company’s headquarters is located at 99 Ich Thanh Street, Truong Thanh Ward, District 9, Ho Chi Minh City, Vietnam. Website:http://www.pacificpetro.com.vn/

Pacific Petro is the third largest liquefied petroleum gas (LPG) company in Southern Vietnam, engaged in sales of liquefied petroleum gas (LPG), manufacturing of gas canisters and cylinders, filling of LPG, repair and maintenance of gas tanks, and wholesale of solid fuels, liquid, gas and related petroleum products.

This company owns a gas canister-manufacturing factory on a 215,200 square-foot lot in Ben Cat District, Binh Duong Province and a gas filling plant on a 65,600 square-foot lot in District 9, Ho Chi Minh City, Vietnam. It has also acquired a 93,600 square-foot lot Go Dau Industrial Park, Dong Nai Province to build a proprietary LPG storage area and has been granted 83 acres in Phu Huu Village, Nhon Trach District, Dong Nai Province to build an integrated port for imports of energy-related commodities and products.

In 2014 Pacific Petro generated approximately $26,670,000 in revenues and $613,000 in net profits. In 2015 it recorded $19,491,800 in revenues and $523,400 (unaudited) in net profits. The decreases in revenues and profits in 2015 were primarily due to declining prices of petroleum and its byproducts during last year. Pacific Petro expects to generate an average of $10,280,000 in additional revenues and $690,000 in net profits per annum from the new LPG storage facilities in Go Dau Industrial Park, and $4,000,000 in additional revenues and $530,000 in net profits by adding a new line of gas-canister manufacturing in 2016, respectively.

PHI Group has contacted Grant Thornton, BDO, and RSM, and one of these firms will be chosen by the Company’s auditing firm to conduct the business valuation for Pacific Petro in the next few weeks in order to determine the fair value for the transaction. This transaction will be terminated and become null and void if not closed by June 30, 2016, except otherwise agreed by the Majority Shareholders and the Company at a later time.

ISSUANCEISSUANCES OF PHI GROUP, INC.’SCOMPANY’S COMMON STOCK

On February 2,October 30, 2016, the Company issued 121,212200,00 shares of PHI Group, Inc.’s restricted Common Stock valued at $0.25 per share to an investor under the auspices of Rule 144 for $40,000 in cash, at the price of $0.33 per share.two independent consultants consulting services.

RETURN OF SPORTS POUCH BEVERAGE COMPANY STOCK

On February 2,November 1, 2016, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, issued 98,084 shares of PHI Group, Inc.’s free-trading Common Stock to a creditor for conversion of a $32,000 loan principal at the price of $0.3263 per share.

On February 4, 2016, the Company issued 100,000 shares of PHI Group, Inc.’s restricted Common Stock to an independent consultant for marketing and investor relation services.

As of February 16, 2016, the Company had 9,878,461returned 97,350,000 shares of Common Stock issued, including 5,673,327 shares reservedof Sports Pouch Beverage Company to this client company.

LETTER OF INTENT TO ACQUIRE A FARM IN HOLMES COUNTY, FLORIDA

On November 3, 2016, the Company signed a Letter of Intent to acquire a 408-acre farm together with buildings, fixtures, and farming systems and in Bonifay, Holmes County, Florida for a special dividend distribution.total purchase price of $1,500,000. Subject to further satisfactory due diligence review by the Company and mutual agreement between parties, the Company and the farm owners will enter into a definitive Sale and Purchase Agreement for the consummation of this transaction. The total amount of Common Stock issued and outstanding as of February 16, 2016 was 4,205,134 shares.Company intends to use this property to develop a proprietary organic farming program in conjunction with EB-5 investment capital from qualified international investors.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

INTRODUCTION

Established in June 1982, PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation primarily engaged in energymergers and natural resourcesacquisitions as a principal (www.phiglobal.com). The Company has adopted a long-term planplans to acquire energy-related assetsestablished operating businesses in selective industries and other natural resources, partner with other companies to develop energy projectsinvest in select geographical areas, andvarious ventures that may potentially create significant long-term value for our shareholders. In addition, we also provide renewable energy solutionscorporate finance services, including bio-mass, wind, solar power and other technologies. The Company offers merger and acquisition advisory and consulting services tofor client companies through itsour wholly owned subsidiary PHI Capital Holdings, Inc.. In addition,Inc. (www.phicapitalholdings.com). No assurances can be made that the Company is also engagedwill be successful in international trade activity.achieving its plans.

The Company, originallyBACKGROUND

Originally incorporated under the name ofin June 1982 as JR Consulting, Inc., the Company was initiallyforemost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based brokerage firm, in late 1999financial services company, the Company changed its name to Providential Securities, Inc. (Nevada) in January 2000. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company wasand 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 investment in special situations. BeginningIn 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)Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and has beenbegan to mainly focusingfocus on acquisition and development opportunities in energy business and natural resources, including investingresource businesses. Starting July 2016, the Company has engaged Milost Advisors, Inc., a New York-based investment-banking firm, as its buy-side advisor and begun to seek acquisition opportunities in and/or developingother industries besides energy assets, independent power plant projects, renewable energy, industrial minerals, and international trade.natural resources. In addition, PHI Capital Holdings, Inc., the Company’sa wholly owned subsidiary providesof PHI, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services and arranging capital for other companies in a variety of industries. No assurances can be made that the Company will be successful in achieving its plan.

BUSINESS STRATEGY

PHI Group Inc.’s strategy is to:

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

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

3. Design and implement best-of-breed management systems; and

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

SUBSIDIARIES:

Since October 2011 the Company has divested its holdings in other subsidiaries that are not directly related to energy and natural resources in order to focus on its new scope of business. As of the date of this report,September 30, 2016, the Company owns one hundred percent100% of PHI Capital Holdings, Inc., a Nevada corporation, and 51%100% of Cornerstone Biomass Corporation,American Pacific Resources, Inc., a Florida corporation engaged in biomass energy.Wyoming corporation. American Pacific Resources, Inc. is inactive.

PHI CAPITAL HOLDINGS, INC.

PHI Capital Holdings, Inc., a Nevada corporation, was originally incorporated under the name of “Providential Capital, Inc.” in 2004 as a wholly owned subsidiary of the Company to provide merger and acquisition (M&A) advisory services, consulting services, project financing, and capital market services to clients in North America and Asia. In May 2010, Providential Capital, Inc. changed its name to PHI Capital Holdings, Inc. This subsidiary has successfully managed merger plans for several privately held and publicly traded companies and provided M&A consulting servicescontinues to clientsfocus on serving the Pacific Rim markets in the U.S. and abroad.foreseeable future.

CORNERSTONE BIOMASS CORPORATIONAMERICAN PACIFIC RESOURCES, INC.

American Pacific Resources, Inc. is a Wyoming corporation established in April 2016 with the intention to serve as a holding company for various natural resource projects in Southeast Asia. As of the date of this report American Pacific Resources, Inc. has not begun any business operation.

DISCONTINUED OPERATIONS:

The Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited – UK (together with its subsidiaries Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (now known as NS International Corp.), and PHI Energy Corporation since June 30, 2012.

Cornerstone Biomass Corporation, a Florida corporation, was set up in January 2015 by the Company and the principals of AG Materials, LLC, an Alabama company, to engage in biomass energy. The Company holds 51% and the principals of AG Materials hold 49% of equity ownership in Cornerstone Biomass Corporation. This subsidiary is currently developingsubsidiary’s plan was to develop and establishingestablish a 200,000 MT wood pellet plant adjacent to Klausner Lumber Mill in Live Oak, Florida. TheIn July 2015, the Company has purchased a 10-acre parcel of land from Klausner Holding USA Corporation in order to build the wood pellet plant adjacentplant. Due to Klausner Lumber Mill.subsequent changes in market conditions affecting industrial pellet usage in Europe, Cornerstone has been guaranteed a stable supply of feedstock from Klausner Lumber Mill in Live Oak, Florida for its production of wood pellets.

DISCONTINUED OPERATIONS:

Biomass Corp. decided not to pursue this project. The Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited (together withwritten off its subsidiaries Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (formerly PHI Mining Corporation), and PHI Energy Corporationinitial investment in Cornerstone Biomass Corp. as of June 30, 2012. (Note 6)2016 in the amount of $ 2,550 and is in the process of selling the land parcel for cash. Cornerstone Biomass Corporation was dissolved effective September 23, 2016.

SPIN-OFFSPUN-OFF SUBSIDIARIES:

HP.ITA CORPORATION (FORMERLYTANS GLOBAL, INC. (Formerly PROVIMEX, INC.)

Provimex, Inc. was originally formed on April 10, 2001 under the name “Providential Imex”, to focus on trade commerce with Vietnam. This division changed its name to Provimex on July 5, 2001. Provimex began to generate revenues from its import and export activities in August 2002 through the fiscal year ended June 30, 2005 and was incorporated as a Nevada corporation on September 23, 2004. The Company distributed a 15% stock dividend of Provimex, Inc. to PHI Group, Inc.’s shareholders of record as of September 15, 2004.OnJune 3, 2011, Provimex, Inc. signed an agreement to acquire all the issued and outstanding capital stock of Humex Medical Group Corp., a California corporation, (“Humex”) in exchange solely for a certain amount of shares of Provimex’s common stock, par value 0.001, to engage in stem research and therapy in Southeast Asia. After the merger, shareholders of Humex would own 90% of Provimex Inc. On June 13, 2012 this transaction was rescinded in its entirety effective retroactively June 3, 2011. On June 19, 2012, Provimex, Inc. changed its name to HP.ITA Corporation. On July 20, 2012, HP.ITA Corporation (“HPUS”) signed a Corporate Combination Agreement to acquire all the issued and outstanding stock ofmerge with HP.ITA Joint Stock Company (“HPVN”), a Vietnamese company, organizedin order to go public in the United States but the Corporate Combination Agreement was subsequently rescinded because HPVN was not able to implement its business plan and existing under the laws of Vietnam, in exchange solely for such amount of authorized but unissued common stock of HPUS that would have been equal to 95% of all the issued and outstanding shares of HPUS’s common stock immediately following the issuance of such shares. HPUS intends to complete the required financial audits according to the U.S. Generally Accepted Accounting Principals (“GAAP”). On September 16, 2016 HP.ITA Corp. changed its name to Tans Global, Inc. with the intention to merge with an operating company and file a Form 10 or S-1 registration statement with the Securities and Exchange Commission to become a separate fully reporting publicly tradedpublic company in the U.S. AsPHI Group is expected to hold a small portion of stock in Tans Global, Inc. following the date of this report, HPUS has not filed a registration statement with the Securities and Exchange Commission.contemplated business combination.

OMNI RESOURCES, INC. (F/K/A ASIA GREEN CORPORATION AND(Formerly TOUCHLINK COMMUNICATIONS, INC.)

Touchlink Communications was formed on July 7, 2003 as a division of the Company to provide point-of-sale (POS) terminals and prepaid calling cards to retailers, convenient stores and non-profit organizations across the US. This subsidiary was later incorporated as a Nevada corporation in February 2004 under the name of Touchlink Communications, Inc. as a wholly owned subsidiary of the Company to provide long distance services to residential and business customers in the United States. The Company has declared a 15% stock dividend of Touchlink Communications, Inc. to shareholders of record as of September 15, 2004. On November 03, 2008, this subsidiary changed its name to Vietnam Media Group, Inc. with the intent to develop a multi-media business in Vietnam and subsequently resumed the corporate name of Touchlink Communications, Inc. in February 2011. On April 11,4, 2014, this subsidiarycompany changed its name to Asia Green Corporation (“AGC”) and entered into a business combination agreement with Asia Green Limited Liability Company, a Vietnam-based company, to become a holding company for agroforestry and afforestation business in Vietnam and Southeast Asia. On July 28, 2014, AGC changed its corporate name to Omni Resources, Inc. to pursue a new business venture. The Company anticipates holdingexpects to hold about 10% equity interest in Omni Resources, Inc. following its recapitalizationOmni’s recapitalization. As of the date of this report Omni Resources, Inc. is inactive and has not implemented any reorganization plan.

STOCK OWNERSHIPS:

CATALYST RESOURCE GROUP, INC. (formerly JEANTEX GROUP, INC.)

As of December 31, 2015June 30, 2016, the Company owned 22,535,714 shares of Catalyst Resource Group, Inc. common stock, a Florida corporation, or equivalent to 2.56%. This company is currently inactive.

MYSON GROUP, INC. (FORMERLY(formerly VANGUARD MINING CORPORATION AND VIETNAM MINING CORPORATION)

Since June 2010,As of September 30, 2016, PHI Group, Inc. and PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, has provided consulting and advisory services to Myson Group, Inc. (formerly Vanguard Mining Corporation and Vietnam Mining Corporation) and has been compensated withtogether owned 34,010,106 shares of Common Stock of Vanguard Mining Corporation in lieu of cash for services rendered. As of December 31, 2015, the Company owned 34,642,106 post-split shares of Myson Group, Inc., or equivalent to 4.97%a Nevada corporation currently traded on the OTC markets under the symbol “MYSN.”

SPORTS POUCH BEVERAGE COMPANY, INC.

As of September 30, 2016, the Company through PHI Capital Holdings, Inc. owned 292,050,000 shares of Sports Pouch Beverage Company, Inc., a Nevada corporation traded on the OTC Markets under the symbol “SPBV”.

CRITICAL ACCOUNTING POLICIES

The Company’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of long-lived and intangible assets, recoverability of deferred tax and the valuation of shares issued for services. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

Valuation of Long-Lived and Intangible Assets

The recoverability of long-lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of” as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset.

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of DecemberMarch 31, 2015,2016, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

RESULTS OF OPERATIONS

The following is a discussion and analysis of our results of operations for the three-month and six-month periods ended December 31,September 30, 2016 and 2015, and 2014, our financial condition at December 31, 2015September 30, 2016 and factors that we believe could affect our future financial condition and results of operations. Historical results may not be indicative of future performance.

This discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q. Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). All references to dollar amounts in this section are in United States dollars.

Three months ended December 31, 2015September 30, 2016 compared to the three months ended December 31, 2014September 30, 2015

Total Revenues:

The Company had $194,700$50,000 in revenue from consulting services for the quarter ended December 31, 2015September 30, 2016 as compared to $11,965$40,000 in revenue from management service for the quarter ended December 31, 2014,September 30, 2015, an increase of $182,735$10,000 between the two periods.

Operating Costs and Expenses:

Total operating expenses were $121,037$239,946 and $95,612$96,929 for the three months ended December 31,September 30, 2016, and 2015, and 2014, respectively.

The variance of $143,017 in operating expenses between the two periods was primarily due to an increase in professional services of $12,561$128,280, and an increase in general and administrative expenses of $12,864$15,237 during the quarter ended December 31, 2015September 30, 2016 compared to the corresponding period in 2014.2015. The increase in professional services was due to additional expenses in connection with due diligence review of new acquisition targets during the current quarter. General and administrative expenses were $31,876$28,772 and $19,012$13,535 for the three months ended December 31,September 30, 2016, and 2015, and 2014, respectively. The increase in general and administrative expenses between the two comparable periods was primarily due to an increase in traveladvertising expenses of $6,736,$8,695 and an increase in filing fees of $2,406$4,168, respectively.

Income (Loss) from Operations:

Loss from operations for the three months ended September 30, 2016 was $189,946, as compared to loss from operations for the same period ended September 30, 2015 was $56,929, respectively, due to factors mentioned in Total Revenues and an increase in advertising expense of $6,922, respectively.Operating Costs and Expenses above.

Other Income and Expenses:

Net other expenses were $45,028$185,585 for the three months ended December 31, 2015,September 30, 2016, as compared to $52,906net other income of $76,803 for the three months ended December 31, 2014.September 30, 2015. The decreaseincrease in other expenses of $7,878$262,388 between the two periods was mainly due to a decreasean increase in interest expense of $503,$95,559 in connection with the conversion of the promissory note dated February 29, 2016 into common stock of the Company by Auctus Fund, LLC, an increase in net gain fromother expense of $10,494, and a variance of $156,335 due to loss on sale of marketable securities, of $9,285, and an increase in miscellaneous expense of 1,820.respectively.

Interest expenses were $79,923$175,136 and $80,426$79,576 for the three months ended December 31,September 30, 2016 and 2015, and 2014, respectively.

Net Income (Loss):

Net incomeloss for the three months ended December 31, 2015September 30, 2016 was $28,635,$375,531, as compared to a net lossincome of ($136,553)$76,803 for the same period in 2014,2015, which is equivalent to $0.01($0.04) per share for the current period and ($0.02) per share$0.01 for the samecorresponding period in 2014, bothended September 30, 2015, based on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period after adjusting for the 1 for 1,500 reverse split effected on March 15, 2012.

The variance of $165,188 between the two comparable periods is primarily due to the following factors: an increase of $182,735 in revenues, an increase of $25,425 in total operating expenses, and a decrease in other expense of $7,878.

Six months ended December 31, 2015 compared to the six months ended December 31, 2014

Total Revenues:

The Company had $234,700 in revenues for the six months ended December 31, 2015, as compared to $15,096 of revenues for same six-month period ended 2014, an increase of $219,604 between the two periods.

Operating Costs and Expenses:

Total operating expenses were $219,096 and $182,198 for the six months ended December 31, 2015, and 2014, respectively. The increase in total operating expenses of $36,899 during the current six-month period is primarily due to an increase in professional services in the amount of $18,969 and an increase in general and administrative expenses of $17,929, as compared to the six months ended December 31, 2014. Salaries and wages were the same for both periods. There was a total of $60,810 in professional services during the current six-month period as compared to $41,841 in professional services during the corresponding six-month period ended December 31, 2014. General and administrative expenses were $53,286 during the six months ended December 31, 2015 as compared to $35,357 during the same corresponding period in 2014. The increase in general and administrative expenses during the current six-month period, as compared to the same period ended December 31,2014, was primarily due to a decrease in expense of $3,075 related to the collection of the Petrobras bond transaction, an increase of $7,984 in advertising expense, an increase of $1,700 in donations, an increase of $1,791 in filing fees, an increase of $8,200 in travel expenses, and a decrease in $1,145 in transfer agent fees, respectively. The increase in total operating expenses between the two periods was due to increased business development activities during the current period.

Other Income and Expenses:

Net other income was $31,776 for the six-month ended December 31, 2015, as compared to net other expenses of $169,540 for the six-month ended December 31, 2014. Interest expense were $159,431 and $161,141 for the six months ended December 31, 2015, and 2014, respectively. The variance in net other income and expenses between the two periods is primarily due to a gain on sale of marketable securities in the amount of $193,196 during the six months ended December 31, 2015, as compared to a loss on sale of marketable securities in the amount of $8,526 during the same period ended December 31, 2014, offset by an increase in miscellaneous expenses of $1,910 between the two periods.

Net Income (Loss):

Net income for the six months ended December 31, 2015 was $47,379, as compared to net loss of $336,642 for the same period in 2014, which is equivalent to $0.01 per share for the current period and ($0.05) per share for the same period in 2013, both based on the weighted average number of basic and diluted shares outstanding at the end of each corresponding period after adjusting for the 1 for 1,500 reverse split effected on March 15, 2012.

The variance between the two comparable periods is mainly due to the following factors: an increase of $219,604 in revenues, an increase of $36,899 in total operating expenses, and an increase of $201,316 in net other income and expenses during the six-month period ended December 31, 2015 compared to the six-month period ended December 31, 2014.

CASH FLOWS

The Company’s cash and cash equivalents balance were $41,312$6,205 and $32,481$208,745 as of December 31,September 30, 2016 and September 30, 2015, and December 31, 2014, respectively.

Net cash provided byused in the Company’s operating activities during the six-monththree-month period ended December 31, 2015September 30, 2016 was $377,807,$227,170, as compared to net cash provided by operating activities of $516,008 during the three-month period ended September 30, 2015. This represents a variance of $743,178 in net cash used in operating activities of $42,594 during the six-month period ended December 31, 2014. This represents an increase of $420,401and net cash provided by operating activities between the two periods. The underlying reason for the variance was primarily due to a net incomeloss from operations of $47,379$375,531 during the six-monththree-month period ended December 31, 2015,September 30, 2016, as compared to a net lossincome from operations in the amount of $336,642$19,874 during the corresponding six-monththree-month period ended December 31, 2014, a decreaseSeptember 30, 2015; an increase in other assets and prepaid expenses in the amount of $42,024 and an increase in accounts payable and accrued expenses in the amount of $5,644$29,332 during the six-monththree-month period ended December 31, 2015,September 30, 2016, as compared to a decrease in other assets and prepaid expenses in the amount of $2,864$166,820 during the corresponding three-month period ended September 30, 2015; and a decreasean increase in accounts payable and accrued expenses in the amount of $834,719$177,693 during the sixthree-month period ended September 30, 2016, as compared to an increase in accounts payable and accrued expenses in the amount of $329,315 during the three months ended December 31, 2014.September 30, 2015.

The Company used $149,509 in investing activities during the six-monththree-month period ended December 31,September 30, 2015 whereas there was no cash provided by or used in investing activities for the six-month period ended December 31, 2014. The increase in cash used inand did not have any investing activities during the currentthree-month period is due to the purchase of 10 acres of land in Live Oak, Florida and a deposit for purchase of equity in a company during the current period.ended September 30, 2016.

Cash used inprovided by financing activities was $198,011$230,893 for the six-monththree-month period ended December 31, 2015,September 30, 2016, as compared to cash provided byused in financing activities in the amount of $44,452$168,410 for the six-monththree-month period ended December 31, 2014.September 30, 2015. The primary underlying reasons for the variance of $399,303 between the two periods were due to changesan increase in proceeds from common stock of ($26,588) and $27,432, changes$248,942 during the current period as a result of certain creditors’ conversions of debts into common stock of the Company, a change in Accumulated Other Comprehensive Income (Loss)(loss) of ($84,314) and $37,748, and changes$27,757, a change in Accumulated Deficit of ($87,108)$87,108, a change in Treasury Stock of $13,972, and 0 fora change in net borrowings from officers in the six-monthamount of $15,824 between the current three-month periods ended December 31, 2015September 30, 2016 and 2014, respectively. The Company repurchased 38,500 shares of its Common Stock from the open market and cancelled 25,510 restricted shares of its Common Stock during the six-monthcorresponding previous period ended December 31, 2105.September 30, 2015.

HISTORICAL FINANCING ARRANGEMENTS

SHORT TERM NOTES PAYABLE:

PAYABLE AND ISSUANCE OF COMMON STOCK: In the course of its business, the Company has obtained short-term loans from individuals and institutional investors and from time to time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. As of December 31, 2015September 30, 2016 and June 30, 2015,2016, the Company had short-term notes payable amounting to $1,313,500$631,538 and $1,342,618$673,660 with accrued interest of $3,189,253$2,912,218 and $3,031,152,$2,879,655, respectively. These notes bear interest rates ranging from 6%0% to 36% per annum. Some

CONVERTIBLE PROMISSORY NOTES:

On February 29, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. This convertible note is due and payable on November 29, 2016 with interest of 10% per annum. This note is convertible at the election of Auctus Fund, LLC from time to time after the issuance date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 24% per annum and the note becomes immediately due and payable. Should an event of default occur, the Company is liable to pay 150% of the notes payable are securedthen outstanding principal and interest. The note agreement contains covenants requiring Auctus Fund’s written consent for certain activities not in existence or not committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $100,000, and certain guarantees with respect to preservation of existence of the Company as summarized below:and non-circumvention. Outstanding note principal and interest accrued thereon can be converted in whole, or in part, at any time by Auctus after the issuance date into an equivalent of the Company’s common stock determined by 55% of the average of the two lowest closing trading prices of the Company’s common stock during the twenty (20) trading days prior to the date the conversion notice is sent by Auctus. The Company may prepay the amounts outstanding to Auctus Fund at any time up to the 180^th day following the issue date of this note by making a payment to the note holder of an amount in cash equal to 125% to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Noteplus(x) accrued and unpaid interest on the unpaid principal amount of this Noteplus (y) Default Interest, depending on the time of prepayment.

On August 30, 2016, Auctus Fund, LLC converted the principal amount of $56,750 and $2,829.76 in accrued interest, totaling $59,579.76, into 529,598 shares of free-trading stock of the Company.

On July 20, 2016, the Company issued a convertible promissory note in the amount of $50,000 to EMA Financial, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures in one year and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading immediately preceding the Closing Date of this note, and (ii) 55% of the lowest sale price for the Common Stock on the Principal Market during the twenty (20) consecutive Trading Days immediately preceding the Conversion Date. The note may be prepaid at 130% - 145% of outstanding principal and interest up to 180 days.

On August 16, 2016, the Company issued a convertible promissory note in the amount of $56,750 to Auctus Fund, LLC, a Delaware limited liability company. The note has a coupon rate of 10%, matures on May 16, 2017 and is convertible to Common Stock of the Company at a conversion price equals the lower of: (i) 50% multiplied by the average of the two lowest Trading Price during the previous twenty-five Trading Day period ending on the latest complete Trading Date prior to the date of this note and (ii) 50% multiplied by the average of the two lowest Trading Prices for the Common Stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The note may be prepaid at 135% - 150% of outstanding principal and interest up to 180 days.

The Company intends to prepay these notes within the respective allowable prepayment time frames.

The value of the derivative liabilities at September 30, 2010 is $160,488.

COMPANY’S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS

In the next twelve months the Company intends to continue pursuing its merger and acquisition program by acquiring all or controlling interests in target companies in a number of industries, including but not limited to conventional energy, renewables, natural resources, agribusiness, technology, transportation, education, distribution, mining, oil & gas, financial Services, healthcare, and pharmaceuticals. In addition, the Company also plans to invest in special situations that may potentially generate significant revenues and profitability for the Company in the short term. We believe that by closing one or more of the contemplated acquisitions we will be able to build a critical mass and uplist to the Nasdaq Stock Market or NYSE in the near future. Moreover, we will continue to provide advisory and consulting services to international clients through our wholly owned subsidiary PHI Capital Holdings, Inc.The Company anticipates generating substantial amounts of revenues through the merger and acquisition program, investment in special situations, and advisory services mentioned herein. However, no assurances could be made that management would be successful in achieving its plan. The president and chairman of the Company has committed to funding the Company’s operations from various sources for the next 12 months.

FINANCIAL PLANS

LIQUIDITY AND CAPITAL RESOURCES: The Company’s operations are currently financed through income from consulting and advisory services, various loans, sale of marketable securities and issuance of common stock under the auspices of Rule 144. In addition, the Company also anticipates generating revenues through energy-related and natural resource activities, and international trade and joint operations with other companies. However, no assurances can be made that management will be successful in achieving its plan or that additional capital will be available on a timely basis or at acceptable terms.

MATERIAL CASH REQUIREMENTS:We must raise substantial amounts of capital to fulfill our plan of acquiring energy-related and natural resource assets as part of our scope of business. We intend to use equity, debt and project financing to meet our capital needs for acquisitions.

Management has taken action and formulated plans to strengthen the Company’s working capital position and generate sufficient cash to meet its operating needs through June 30, 20162017 and beyond. The working capital cash requirements for the next 12 months following the end of the current quarter wouldare 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 In September 2016 the Company has engagedsigned an agreement with Milost Global, Inc., a number of investment banking firms and negotiated withU.S. private equity firmsfirm, for a commitment of up to arrange$100 million to finance the Company’s future acquisitions and provide for working capital needs. Investment in the amount of USD 50 million will be as equity and USD 50 million as loans.In addition, the Company may use other sources of funds, including short-term loans and long-term debt and equity financing, for potential acquisitions.as may be needed. The Company believes it will be able to secure the required financing arrangements;capital to implement its business plan; however, no assurances could be made that management would be successful in achieving its plan.

AVAILABLE FUTURE FINANCING ARRANGEMENTS: The Company has engaged a number of investment banking firms, worked with some commercial banks and negotiated with private equity firms to arrange financing for potential acquisitions. The Company has also launched a private placement memorandum to raise $60 million by offering investment units consisting of Class A cumulative convertible preferred stock and warrants under the auspices of Regulation 506(c). However, as of the date of this report the Company has not raised any capital through this offering and may choose an alternative financing plan. No assurances could be made that management would be successful in achieving its new plan. 

DUE TO PREFERRED STOCKHOLDERS: The Company classified $215,000 of preferred stock previously subscribed in one of its long discontinued subsidiaries as a current liability payable to holders of preferred stock in this subsidiary due to deficiencies in connection with previous preferred share subscription agreements. This amount was past due as of December 31, 2015.

The interest payable to holders of preferred stock of the above-mentioned discontinued subsidiary in the amounts of $400,355 and $387,455 has been included in accrued interest included in account payable and accrued expenses on the balance sheet as of December 31, 2015 and June 30, 2015.

COMPANY’S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS

While the Company is currently engaged in energy and natural resources, it intends to primarily focus on the following plan of operation for the next twelve months:

ITEM 3. 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 operations are conducted in Vietnam and Indonesia using Vietnamese Dong and Indonesian Rupiahs, which are theother countries whose official currencies of these countries. Theare not U.S. dollars. However, the effect of the fluctuations of exchange rates is considered minimal to our business operations.

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 4. CONTROLS AND PROCEDURESControls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2015, the end of the period coveredrequired by this report, the Company’s Chief Executive Officer and Chief Financial Officer reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e). As of the end of the period covered by this report, based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that material information that the Company must disclose in the reports that it files or submits13a-15(b) under the Securities Exchange Act of 1934, as amended the(the “Exchange Act”), is recorded, processed, summarized,our management carried out an evaluation, with the participation of our Chief Executive Officer, of the effectiveness of the design and reported on a timely basis,operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act), as of the period covered by this report. Disclosure controls and procedures are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the Companyus in reports that it files or submitsfiled with the SEC under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s chiefmanagement, including its principal executive officer and chiefprincipal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon their evaluation, our management (including our Chief Executive Officer) concluded that our disclosure controls and procedures were not effective as of June 30, 2015, based on the material weaknesses defined below.

Changes in Internal ControlsControl over Financial Reporting

There was no change in our internal control over financial reporting that occurred during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.    

Management’s Report on Internal Control overof Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting at PHI Group.reporting. Internal control over financial reporting is a processset of processes designed by, or under the supervision of, our chiefa company’s principal executive officer/acting chiefand principal financial officer and effected by our board of directors, management and other personnel,officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. A company’sGAAP and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting includes policiesmay not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and proceduresoperated, can provide only reasonable, and not absolute, assurance that (1) pertainthe objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the maintenancerisk that controls may become inadequate because of recordschanges in conditions, or that accuratelythe degree of compliance with the policies or procedures may deteriorate.

Under the supervision and fairly reflect, in reasonable detail, transactionswith the participation of management, including its principal executive officer and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation ofprincipal financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and board of directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Ourofficer, the Company’s management assessed the design and operating effectiveness of PHI Group’s internal control over financial reporting as of December 31, 2015. In making this assessment, our management usedJune 30, 2015 based on the criteria establishedframework set forth in theInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In connection with the evaluation of our disclosure controls and procedures, our management team attempted to identify any “material weakness” in our internal control environment. We defined “material weakness” as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We defined “significant deficiency” as a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.Commission.

We have identified on a preliminary basis the following material weaknesses in our internal control over financial reporting:

If we fail to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company.

Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2016.

Management’s Remediation Plan

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes in the future:

The remediation efforts set out in (i) are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Management believes that despite our material weaknesses set forth above, our consolidated financial statements for the quarterly report ended September 30, 2016 are fairly stated, in all material respects, in accordance with US GAAP.

Attestation Report of the Registered Accounting Firm

This Quarterly Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to Rule 308(b) of Regulation S-K, which permits the Company to provide only management’s report in this Annual Report.

Changes in Internal Control over Financial Reporting

No changes in the Company’s internal control over financial reporting have come to management’s attention during the fiscal quarter ended September 30, 2016 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGALLEG.AL PROCEEDINGS

Other than as set forth below, Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against Company has been threatened.

LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2015:SEPTEMBER 30, 2016:

QUANG VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.

This case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s counsel and unilaterally reached a settlement 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 December 31, 2015September 30, 2016 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated financial statements.

WILLIAM DAVIDSON VS. DOAN ET AL.

On or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831). Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and the company.

On July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company, reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liabilitiesliability associated with the balance of these notes in the accompanying consolidated financial statements as of December 31, 2015.September 30, 2016.

ITEM 1A. RISK FACTORS

RISK FACTORS

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

General Risks Related to Our Business

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

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

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

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

Acquisitions involve a number of special risks, including:

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

Our businessesAs some of our business activities are currently focused ininvolved with Southeast Asia, particularly Indonesia and Vietnam, and any adverse change to the economy or business environment in these countries could significantly affect our operations, which would lead to lower revenues and reduced profitability.

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

Risks associated with coalenergy business

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

Risks Related to Our Securities

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

AlthoughThough our executive officers/directorsofficers and principal stockholders who hold 5% or more of the outstanding common stock owneddirectors as of December 31, 2015,November 14, 2016, in the aggregate, less than 10%only hold approximately 27.53% of our outstanding common stock, our Board of Directors is able to decide the rights and terms associated with the Company’s Preferred Stock, which decision may allow the Board of Directors to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.

In addition,

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

The stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares.

The price at which investors purchase shares of our common stock may not be indicative of the price that will prevail in the trading market. Investors may be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.

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

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

These regulations require broker-dealers to:

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

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

*Provide certain written disclosures to the purchaser.

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

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

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

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

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

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

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

Acquisitions involve a number of special risks, including:

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None, except as may be noted elsewhere in this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None, except as may be noted elsewhere in this report.

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

None

ITEM 5. OTHER INFORMATION

None, except as may be noted elsewhere in this report.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

SIGNATURES

Pursuant to the requirement of Section 12requirements of the Securities Exchange Act of 1934, the registrant has duly caused this registration statementreport to be signed on its behalf by the undersigned, thereunto duly authorized.

PHI GROUP, INC.

Date: February 16, 2016

In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.