NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –NATURE OF BUSINESS

INTRODUCTION

PHI Group, Inc. (the “Company” or “PHI”) (www.phiglobal.com) is primarily engaged in mergersthe operations of PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund” (“RAIF”) under the laws of Luxembourg, and acquisitions as a principal (www.phiglobal.com). The Company has adopted plans to acquire established operating businessesthe development of the Asia Diamond Exchange in selective industries and invest in various ventures that may potentially create significant long-term value for our shareholders. In addition,Vietnam. Besides, the Company provides corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary PHILUX Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) ((www.phicapitalholdings.comwww.philuxcap.com). Furthermore, the Company has been working and invests in selective industries as well as special situations that may potentially create significant long-term value for shareholders. PHILUX Global Funds plans to establish a Luxembourg Bank Fund in accordance with the “Reserved Alternative Investment Fund” (“RAIF”), known as PHILUX GLOBAL FUNDS, together withinclude a number of sub-funds for agricultural,investment in the proposed Asia Diamond Exchange in Vietnam (ADE), real estate, infrastructure, agriculture, renewable energy, and real estate projects as well as other investments.healthcare.

BACKGROUND

Originally incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication and filed Articles of Domestication to become a Wyoming corporation on September 20, 2017. In the beginning, the Company was foremost engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based financial services company,In January 2000, the Company changed its name to Providential Securities, Inc., a Nevada corporation, in January 2000.following a business combination with Providential Securities, Inc., a California-based financial services company. The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From October 2000 to October 2011, the Company and its subsidiaries were engaged in mergers and acquisitions, advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation previously listed on the Frankfurt Stock Exchange (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation - US, and Philand Vietnam Ltd. - Vietnam), Providential Vietnam Ltd., PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada corporation), and mainly focused on acquisition and development opportunities in energy and natural resource businesses. At the present, the

The Company is engagedcurrently focused on operating PHILUX Global Funds, SCA, SICAV-RAIF by setting up a number of sub-funds for investment in mergersreal estate, renewable energy, infrastructure, agriculture and acquisitionshealthcare as a principalwell as developing and investmentsestablishing the Asia Diamond Exchange in natural resources, energy, agriculture, consumer goods, technology and special situations.Vietnam. In addition, PHIPHILUX Capital Advisors, Inc. (formerly Capital Holdings, Inc.), a wholly owned subsidiary of PHI,the Company, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services for other companies in a variety of industries. Furthermore, PHI is in the process of completing the establishment of PHILUX Global Funds, a Luxembourg Bank Fund in accordance with the “Reserved Alternative Investment Fund” (“RAIF”), and a number of initial sub-funds thereunder for agricultural, energy, real estate projects and other investments, in accordance with the Luxembourg Law of July 23, 2016 relative to reserved alternative investment funds, Law of August 23, 2016 relative to commercial companies, and Modified Law of July 12, 2013 relative to alternative investment fund managers. The Company has also been working with special international partners and the Chu Lai Open Economic Zone Authority to potentially develop and establish an Asia Diamond Exchange in the Free-Trade Zone of Quang Nam Province, Vietnam.client companies. No assurances can be made that the Company will be successful in achieving its plans.

BUSINESS STRATEGY

PHI’s strategy is to:

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

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

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of PHI Group, Inc., its wholly owned subsidiaries PHI Capital Holdings, Inc.,(1) American Pacific Resources, Inc., American Pacific Plastics,a Wyoming corporation (100%), (2) PHILUX Capital Advisors, Inc., a Wyoming corporation (100%), and (3) PHI Luxembourg Development S.A., and its previously discontinued operations,a Luxembourg corporation (100%), 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, 2018.2019. In the opinion of management, all adjustments consisting of normal reoccurring accruals have been made to the financial statements. The results of operation for the three and nine months ended MarchDecember 31, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2019.2020.

USE OF ESTIMATES

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

Cash and Cash Equivalents

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

MARKETABLE SECURITIES

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

Typically, each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is quoted on either the OTC Markets or other public exchanges. As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.

Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold. On MarchDecember 31, 2019, the marketable securities were recorded at $873,498,$207,241 based upon the fair value of the marketable securities at that time.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value - Definition and Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available.

Valuation techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy is categorized into three levels based on the inputs as follows:

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

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

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

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

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

Fair Value - Valuation Techniques and Inputs

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

Equity Securities in Public Companies

Unrestricted

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

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

Restricted

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

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

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

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

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

Effective July 1, 2008, the Company adopted ASC 820 (previously SFAS 157),Fair Value Measurements and adopted this Statement for the assets and liabilities shown in the table below. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. The adoption of ASC 820 did not have a material impact on our fair value measurements. At December 31, 2018, the Company did not have any nonfinancial assets or nonfinancial liabilities that are recognized or disclosed at fair value. ASC 820 requires that financial assets and liabilities that are reported at fair value be categorized as one of the types of investments based upon the methodology mentioned in Level 1, Level 2 and Level 3 above for determining fair value.

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

Available-for-sale securities

The Company uses various approaches to measure fair value of available-for-sale securities, while applying the three-level valuation hierarchy for disclosures, specified in ASC 820. Our Level 1 securities were measured using the quoted prices in active markets for identical assets and liabilities.

The company’s policy regarding the transfers in and/or out of Level 3 depends on the trading activity of the security, the volatility of the security, and other observable units which clearly represents the fair value of the security. If a level 3 security can be measured using a more fairly represented fair value, we will transfer these securities either into Level 1 or Level 2, depending on the type of inputs.

ACCOUNTS RECEIVABLE

Management reviews the composition of accounts receivable and analyzes historical bad debts. As of MarchDecember 31, 2019, the Company haddid not have any accounts receivable in the amount of $432,000.receivable.

PROPERTIES AND EQUIPMENT

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

REVENUE RECOGNITION STANDARDS

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

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

Step 2: Identify the performance obligations in the contract.

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

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

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

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

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

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

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

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

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

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

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

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

STOCK-BASED COMPENSATION

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

RISKS AND UNCERTAINTIES

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

RECENT ACCOUNTING PRONOUNCEMENTS

Update No. 2018-13 – August 2018

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

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

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

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

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

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

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

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

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

Update No. 2018-07 – June 2018

Compensation – Stock Compensation (Topic 718)

Improvements to Nonemployee Share-Based Payment Accounting

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

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

Update No. 2017-13 - September 2017

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

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

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

Update No. 2016-10 - April 2016

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

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

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

2. Identify the performance obligations in the contract.

3. Determine the transaction price.

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

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

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

The Company has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible impact they may have on the Company’s financial statements. In most cases, management has determined that the implementation of these pronouncements would not have a material impact on the financial statements taken as a whole.

NOTE 3 – MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE

The Company’s marketable securities are classified as available-for-sale and, as such, are carried at fair value. All of the securities are comprised of shares of common stock of the investee. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes. These marketable securities are quoted on the OTC Markets or other public exchanges and are accounted for in accordance with the provisions of SFAS No. 115.

Marketable securities held by the Company and classified as available for sale as of MarchDecember 31, 2019 consisted of 32,900,106905,000 shares of Myson Group, Inc., a public company quoted on the OTC Markets (Trading symbol “MYSN”) and (formerly Vanguard Mining Corporation) 292,050,000 shares of Sports Pouch Beverage Co., a public companyboth of which are publicly-traded companies quoted on the OTC Markets (Trading symbol “SPBV”)symbols “MYSN” and “SPBV,” respectively). The fair value of the shares recorded as of MarchDecember 31, 2019 was $873,498.$207,241.

NOTE 4 – PROPERTIES AND EQUIPMENT

Except as disclosed elsewhere in this report, theThe Company did not have any properties or equipment as of MarchDecember 31, 2019.

NOTE 5– OTHER CURRENT ASSETS

As of December 31, 2019, Other Current Assets totaling $863,842 comprise of the following: (1) As of March 31, 2019: $5,000 investment$862,237 in Aquarius Power, Inc., $25,000,000 investment in 51% of twenty-one mining claims over an area of approximately 400 acres situated five miles Northeastescrow deposit with DLP Law Firm as part of the town of Granite, Grant County, Oregon, U.S.A., near Granite Creek, within a precious metals belt 30-40 miles wide (N-S)fees for setting up PHILUX Global Funds and 100 miles long (E-W); coincident with the core of the Blue Mountains, along the Snake River; 3,060,000 shares of Common Stock of Vinafilms Joint Stock Company equivalent$1,605 loan to 51% of this company, valued at $1,311,419; and Contract Assets of $3,347,841 totaling $29,664,260; (2) As of June 30, 2018: $5,000 investment in Aquarius Power,American Laser Healthcare, Inc., $25,000,000 investment in 51% of twenty-one mining claims over an area of approximately 400 acres situated five miles Northeast of the town of Granite, Grant County, Oregon, U.S.A., near Granite Creek, within a precious metals belt 30-40 miles wide (N-S) and 100 miles long (E-W); coincident with the core of the Blue Mountains, along the Snake River; and Contract Assets of $697,841 totaling $25,702,841.

NOTE 76 – CURRENT LIABILITIES

Current liabilitiesLiabilities of the Company consistedconsist of the followings as of MarchDecember 31, 2019 and June 30, 2018:2019.

ACCRUED EXPENSES: Accrued expenses as of December 31, 2019 totaling $2,641,775 consist of $1,432,651 in accrued salaries and $1,209,124 in accrued interest from short-term notes and convertible notes.

NOTE 8 – LONG-TERM LIABILITIES

Long-term liabilitiesNOTES PAYABLE (NET): As of the Company consisted of the followings as of MarchDecember 31, 2019, Notes Payable consist of $337,200 in short-term notes payable and June 30, 2018:

DUE TO PREFERRED STOCKHOLDERS OF DISCONTINUED SUBSIDIARY

As of March 31, 2019, the Company recognized $215,000 Long-term Liabilities payable to holders of preferred stock of Providential Securities, Inc., a previous subsidiary of the Company that was discontinued$286,840 in the year 2000. In the early 2000’s, the Company had made an offer for these preferred stockholders to receive shares of common stock in the Company in exchange for the preferred shares in the discontinued subsidiary but only a small number of the preferred shareholders responded and accepted the offer. In more recent years, the Company has also attempted to contact these preferred shareholders from time to time but have not received further response from them. The Company has continued to accrue imputed interest expenses at 12% per annum on the balance of $215,000 on a quarterly basis.convertible promissory notes.

ADVANCES FROM CUSTOMERSCUSTOMERS:

As of September 30, 2012, theThe Company reclassified the previously recorded Unearned Revenues$430,500 as Advances from Customers becausefor $288,219 of consulting fees previously received from a client and the balance in accrued interest. The Company was not able to complete the consulting services for the related client due to itsthe client’s inability to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission. As of March 31,

SUB-FUND OBILGATIONS: During the fiscal year ended June 30, 2019, the Company received $800,000 from European Plastic Joint Stock Company towards the expenses and capitalization for setting up the energy sub-fund and $466,634 from Saigon Pho Palace Joint Stock Company towards the expenses and capitalization for setting up the real estate sub-fund respectively under the master PHILUX Global Funds. The Company has recorded $288,219these amounts as liabilities until these sub-funds are set up and activated, at which time the sub-fund participants will receive 49% of Advances from Customers as a Long-term Liability.

In September 2017, the Company signed a Settlement Agreement and agreed to pay Thinh Hung Investment Co.general partners’ portion of ownership in the relevant sub-funds for a total amountcontribution of $381,000 which includes the outstanding balance of $288,219 mentioned above and $92,781 in accrued interest that is recorded as Other Current Liability in the balance sheets of the Company as of March 31, 2019.$2,000,000 each.

NOTE 97 – DUE TO OFFICERS

Due to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, unsecured and due on demand. As of MarchDecember 31, 2019 and June 30, 2018,2019, the balances were $426,417$993,092 and $233,577,$890,897, respectively.

NOTE 108 – LOANS AND PROMISSORY NOTES

In the course of its business, the Company has obtained short-term loans from individuals and institutional investors.

During the quarter ended December 31, 2019, the Company received a $2,500 loan bearing 8% interest per annum from a shareholder .

As of MarchDecember 31, 2019, the Company had $973,310$337,200 in short-term notes payable with $2,214,980$1,201,944 accrued and unpaid interest. These notes bear interest rates ranging from 0% to 36% per annum.

During the quarter ended March 31, 2019, the Company did not issue any new convertible promissory note.

During the quarter ended March 31, 2019, a number of holders of the Company’s convertible promissory notes converted certain amounts of principal and accrued interest in connection with those convertible promissory note(s) totaling 6,304,166,551 shares of Common Stock of the Company. (Note 14 – Common Stock).

As of MarchDecember 31, 2019, the Company had a net balance of $370,048$286,840 in convertible promissory notes, which included $595,207 in face value and $225,158 in note discounts.notes. The derivative liabilities associated with these notes are $637,913$364,605 and the accrued interest is $7,180 as of MarchDecember 31, 2019.

The Company relies on the results a professional, independent valuation firm to record the value of derivative liabilities, discounts, and change in fair value of derivatives in connection with these convertible notes and warrants, if any, that are related to the convertible notes. The Company intends and prefers to repay the outstanding notes in cash as much as practical.

NOTE 11 – LITIGATION

LEGAL PROCEEDING SETTLED AND UNPAID AS OF MARCH 31, 2019:

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 March 31, 2019 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated financial statements.

WILLIAM DAVIDSON VS. DOAN ET AL.

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

On July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company, reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability associated with the balance of these notes in the accompanying consolidated financial statements as of March 31, 2019.

NOTE 129 – 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 purported balance of $118,399 of payroll tax, penalties and interest.interest claimed by these agencies. The Company intends to settle these mattershas not resolved the remaining balances with the appropriate agenciesInternal Revenue Service and the State of California Employment Department as soonof December 31, 2019. As of April 12, 2021, the total balance as possible.most recently notified by the Internal Revenue Service is estimated to be $4,704.

NOTE 1310 – BASIC AND DILUTED NET PROFIT (LOSS) PER SHARE

Net loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares for the period ended March 31December 31, 2019 were the same since the inclusion of Common stock equivalents is anti-dilutive.

NOTE 1411 –STOCKHOLDER’S EQUITY

In accordance with the ArticlesAs of Incorporation and Amendments to the Articles of Incorporation filed with the Nevada Secretary of State to date,December 31, 2019, the total number of authorized capital stock of the Company is thirty-one billionwas shares with a par value of $0.001 per share, consisting of 30.5 billion30,500,000,000 shares of voting Common Stock with a par value of $0.001 per share and 500,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined by the Board of Directors of the Company.

Treasury Stock:TREASURY STOCK

The balance of treasury stock as of MarchDecember 31, 2019 was 484,767 post-split shares valued at $44,170 according to cost method.

COMMON STOCK

Common Stock:During the quarter ended MarchDecember 31, 2019, the Company issued the following amountsdid not issue any of its Common Stock for conversions of convertible promissory notes:

Conversions into Common Stock

On 2/25/2019, the Company issued 9,722,222 shares of restricted common stock of the Company to Andreas Held for cash in accordance with Rule 144.Stock.

As of MarchDecember 31, 2019, there were 6,761,268,673 shares of the Company’s common stock issued and outstanding and as of May 17, 2019, there were 8,846,086,24913,196,408,755 shares of the Company’s common stock issued and outstanding.

Preferred Stock:PREFERRED STOCK

The Company has filed Certificates of Designation and Amendments to Certificate of Designation with the Nevada Secretary of State to designate the Company’s authorized Preferred Stock. As of December 31, 2019 the designations of the Company’s Preferred Stock were as follows:

ClassCLASS A Preferred StockPREFERRED STOCK

I. DESIGNATIONS, AMOUNTS AND DIVIDENDS

1.Class A Series I Cumulative Convertible Redeemable Preferred Stock

A. Designation: Twenty million (20,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per share, are designated as Class A Series I Cumulative Convertible Redeemable Preferred Stock

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

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

2. Class A Series II Cumulative Convertible Redeemable Preferred Stock

A. Designation. Twenty-five million (25,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per share, are designated Class A Series II Cumulative Convertible Redeemable Preferred Stock (the “Class A Series II Preferred Stock”).

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

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

3. Class A Series III Cumulative Convertible Redeemable Preferred Stock

A. Designation. Fifty million (50,000,000) shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per share, are designated as Class A Series III Cumulative Convertible Redeemable Preferred Stock (the “Class A Series III Preferred Stock”).

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

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

II. CONVERSION

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

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

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

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

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

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

4. Conversion Shares.

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

III. REDEMPTION RIGHTS

The Corporation, 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, either Series I, Series II or Series III, 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.

IV. LIQUIDATION

Upon the occurrence of a Liquidation Event (as defined below), the holders of Class A Preferred Stock are entitled to receive net assets on a pro rata basis. As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the holders of the Class A Preferred Stock receive securities of the surviving corporation having substantially similar rights as the Class A Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least a majority of the voting securities of the successor corporation immediately thereafter (the “Permitted Merger”), unless the holders of the shares of Class A Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially all, or any material part of, the Corporation’s assets, unless the holders of Class A Preferred Stock elect otherwise.

V. RANK

All shares of the Class A Preferred Stock shall rank (i) senior to the Corporation’s Common Stock and any other class or series of capital stock of the Corporation hereafter created, (ii)pari passuwith any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Class A Preferred Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Class A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.

VI. VOTING RIGHTS

1. Class A Series I, II and III Preferred Stock of PHI Group, Inc. shall have no voting rights.

VII. PROTECTION PROVISIONS

So long as any shares of Class A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the majority written consent of the holders of Class A Preferred Stock, alter or change the rights, preferences or privileges of the Class A Preferred Stock so as to affect adversely the holders of Class A Preferred Stock.

VIII. MISCELLANEOUS

A. Status of Redeemed Stock: In case any shares of Class A Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock, and shall no longer be designated as Class A Preferred Stock.

B.Lost or Stolen Certificates: Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificates if the holder of Class A Preferred Stock contemporaneously requests the Corporation to convert such holder’s Class A Preferred Stock into Common Stock.

C.Waiver: Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Class A Preferred granted hereunder may be waived as to all shares of Class A Preferred Stock (and the holders thereof) upon the majority written consent of the holders of the Class A Preferred Stock.

D.Notices: Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in the same manner as set forth in this Section.

If to the Corporation:

PHI GROUP, INC.

5348 Vegas Drive # 237

Las Vegas, NV 89108

Telephone: 702-475-5430

Facsimile: 702-472-8556

If to the holders of Class Preferred Stock, to the address to be listed in the Corporation’s books and Records.

ClassCLASS B Preferred StockPREFERRED STOCK

Class B Series I Preferred Stock

A. Designation: Two hundred thousand shares of the authorized 500,000,000 shares of Preferred Stock, with a par value of $0.001 per share, are designated as Class B Series I Preferred Stock.

B. Number of Shares: The number of shares of Class B Series I Preferred Stock authorized will be two hundred thousand shares.

C. Dividend: None

D. Voting rights: Except as provided by law, the shares of Class B Series I Preferred Stock shall have the same right to vote or act on all matters on which the holders of Common Stock have the right to vote or act and the holders of the shares of Class B Series I shall be entitled to notice of any stockholders’ meeting or action as to such matters on the same basis as the holders of Common Stock, and the holders of Common Stock and shares of Class B Series I shall vote together or act together thereon as if a single class on all such matters; provided, in such voting or action each one share of Class B Series I shall be entitled to one hundred thousand votes.

As of MarchDecember 31, 2019, the following amounts of Preferred Stock were issued and outstanding:

Class A Series II Preferred Stock: 10,000,000 shares.

Class A Series III Preferred Stock: 50,000,000 shares.

During the quarter ended December 31, 2019, the Company issued 60,000 shares of Class B Series I Preferred Stock: 120,000 shares.Stock at par value to members of the Board of Directors of the Company. As of December 31, 2019 there were 180,000 shares of Class B Series I Preferred Stock issued and outstanding.

AMENDMENTS TO ARTICLES OF INCORPORATION:

On October 29, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 3,000,000,000 shares with a par value of $0.001 per share, consisting of 2,800,000,000 shares of voting Common Stock with a par value of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On November 11,08, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 4,000,000,000 shares with a par value of $0.001 per share, consisting of 3,800,000,000 shares of voting Common Stock with a par value of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On November 27, 2018, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 5,000,000,000 shares with a par value of $0.001 per share, consisting of 4,800,000,000 shares of voting Common Stock with a par value of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On January 03, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to 7,000,000,000 shares with a par value of $0.001 per share, consisting of 6,900,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On February 19, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to ten billion shares with a par value of $0.001 per share, consisting of 9.8 billion shares of voting Common Stock with a par value of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On February 27, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to fifteen billion shares with a par value of $0.001 per share, consisting of 14.8 billion shares of voting Common Stock with a par value of $0.001 per share and 200,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

On March 29, 2019, a Certificate of Amendment to Articles of Incorporation of PHI Group, Inc. was filed with the Nevada Secretary of State to amend Article V of the Articles of Incorporation to change the authorized capital stock of the Corporation to thirty-one billion shares with a par value of $0.001 per share, consisting of 30.5 billion shares of voting Common Stock with a par value of $0.001 per share and 500,000,000 shares of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

DOMESTICATION IN THE STATE OF WYOMING

On September 20, 2017, the Company applied for a Certificate of Domestication and filed Articles of Domestication with the office of the Secretary of State of Wyoming to re-domicile the Company’s jurisdiction to the State of Wyoming.

On September 20, 2017, the Company filed Articles of Amendment with the Wyoming Secretary of State to amend the authorized capital of the Company as follows:

“The total number of shares into which the authorized capital stock of the corporation is divided is one billion shares, consisting of: nine hundred million shares of voting Common Stock with a par value of $0.001 per share; fifty million shares of non-voting Class A Series I Preferred Stock with a par value of $5.00 per share; twenty-five million shares of non-voting Class A Series II Preferred Stock with a par value of $5.00 per share; twenty million shares of non-voting Class A Series III Preferred Stock with a par value of $5.00 per share and five million shares of voting Class A Series IV Preferred Stock with a par value of $5.00 per share. The relative rights, preferences, limitations and restrictions associated with the afore-mentioned shares of Class A Preferred Stock will be determined by the Board of Directors of the corporation.”

On June 25, 2020, the Company filed Articles of Amendment with the Wyoming Secretary of State to amend the authorized capital of the Company as follows:

Total authorized capital: Forty billion shares of Common Stock with a par value of $0.001 per share and five hundred million shares of Preferred Stock with a par value of $0.001 per share.

The rights and terms associated with the shares of Preferred Stock will be determined by the Board of Directors of the Corporation.

The Company continued to operate as a Nevada corporation until June 30, 2020.

NOTE 1512 –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 March 31, 2018 the Company has not issued any stock in lieu of cash under this plan.

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

Annual attrition rates were used in the valuation since ongoing employment was condition for vesting the options.

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

NOTE 1613 –RELATED PARTY TRANSACTIONS

The Company accrued $52,000$52,500 in salaries for the President and the Secretary & Treasurer of the Company during the quarters ended MarchDecember 31, 2019 and MarchDecember 31, 2018.

During the quarter ended December 31, 2018, the Company received $200,000 from Tam Bui, a director of the Company, as a short-term loan to be paid on demand.

NOTE 1714 –CONTRACTS AND COMMITMENTS

EQUITY LINE FACILITY - INVESTMENT AGREEMENT WITH AZURE CAPITAL, INC.

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

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

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

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

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

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

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

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

The Company has filed a S-1 Registration Statement with the Securities and Exchange Commission to include 7,936,600 shares of its Common Stock for issuance in connection with the first tranche of the Equity Line Facility. The S-1 Registration Statement, as amended, was declared effective by the Securities and Exchange Commission on January 11, 2018. The Company has not accessed the Equity Line Facility and intends to do so only when the Company’s stock prices reach levels that its management deems appropriate.

BUSINESS CONSULANCY AND STRUCTURING AGENCY AGREEMENT TO SET UP INSTITUTIONAL BANK FUNDS IN LUXEMBOURG

On November 30, 2017, the Company signed an agreement with a structuring agent and legal experts to set up a bank fund in Luxembourg in order to provide financing for the Company’s and its clients’ projects.

The Reserved Alternative Investment Fund (RAIF) can be established under the form of common funds (“FCP”), investment companies with variable capital (“SICAV”) or under the form that does not have to have the legal form of a SICAV or an FCP. There will be no restriction in terms of eligible assets. RAIFs are free to introduce any kind of assets and financial instruments in their investment policy. According to the Luxembourg Law of July 12, 2013, RAIFs must entrust their assets to a Luxembourg custodian bank for safekeeping and must appoint an approved statutory auditor.

One of the distinctive advantages of RAIF is that it may have various sub-funds, each corresponding to a distinct part of the assets and liabilities of the RAIF. As such, sub-funds can be established under a RAIF umbrella to target different investment opportunities in a variety of industries as desired.

On February 21, 2018, the Company signed an amendment to the Business Consultancy and Structuring Agency Agreement to be solely responsible for all the costs of Euros 3,500,000 associated with establishing the RAIF. On October 4, 2018, a Payment Agreement was signed by the structuring agent and the Company calling for an additionalextra amount of Euros 1,500,000 to be paid to the structuring agent by November 15, 2018. As of the date of this report, the Company has not fully met its contractual obligationsThe master Luxembourg RAIF fund named “PHILUX Global Funds SCA, SICAV – RAIF” was registered and activated with the Structuring Agency, but expects to resolve this matter as soon as possible.

On December 03, 2018, the Company successfully established PHI Luxembourg Development S.A. as the mother holding company in Luxembourg for PHILUX Global Funds and a number of sub-funds under the same umbrella. PHI Luxembourg Development S.A. is in the process of activating four initial sub-funds for investments in green energy, sustainable agriculture, real estate and a diamond exchange in Asia.

AGREEMENT BETWEEN AMERICAN PACIFIC RESOURCES, INC. AND GILDEXSHOP

On February 28, 2018, American Pacific Resources, Inc. (“APRI”), a subsidiary of the Company, signed a Business Cooperation with GildexShop Pte Ltd. (“GLDX”), a company to be established in Singapore. According to the agreement, APRI and GLDX will primarily cooperate with each other to accomplish the following objectives:

1. Capitalization of APRI: GLDX will issue and circulate a certain amount of cryptocurrency tokens using blockchain technology in order to raise capital for APRI to implement its business plan.

2.Using APRI’s assets as guarantee for GLDX ICO’s: APRI agrees to guarantee the value of the GLDX ICO tokens pursuant to the following terms and conditions:

a. In the event the trading prices of GLDX ICO tokens fall below their original purchase prices anytime after GLDX tokens are listedCommission de Surveillance du Secteur Financier (CSSF) on a reputable cryptocurrency exchange, APRI agrees to guarantee the value of all such GLDX ICO tokens that are purchased by investors by allowing the token holders to exchange the original purchase prices of such ICO tokens for gold from APRI at 50% discount to the Market Price (as defined herein) of gold at the time of exchange. Market Price shall mean the 10-day average closing spot price of gold on the London Metal Exchange (LME) immediately prior to the date of the request for exchange by the ICO token holders.

b. Holders of GLDX ICO tokens may select one of the following options for the receipt of the APRI gold guarantee:

(i). Receipt of physical gold bar(s) from APRI or its affiliate(s).

(ii). Receipt of Ethereum or alternatively acceptable crytocurrencies equivalent to the value of the original ICO purchase prices.

(iii) Receipt of cash through wire transfer to token-holder’s bank account after sale of the guarantee gold position(s).

3. GLDX shall be responsible for providing the required capital for APRI to set up the processing facilities to recover gold and other precious metals from its Gold Assets. The amounts of capital to be provided to APRI by GLDX will be done in tranches and based on a schedule of funding and use of proceeds to be determined and agreed upon by both APRI and GLDX.

4. APRI covenants and warrants that it shall sell refined gold and other products of precious metals from its Gold Assets to GLDX at 50% discount to Market Price as defined above until GLDX has recovered at least twice the amount(s) of its capital investment in APRI or the end of the five-year term of this Agreement, whichever occurs later.

5. Compliance with Various Jurisdictions and the Requirements of the U.S. Securities and Exchange Commission: GLDX shall strictly comply with the requirements of the appropriate jurisdictions with respect to the offerings of its GLDX ICO tokens and shall not offer any of such tokens to U.S. investors unless and until it has met all the requirements of the U.S. Securities and Exchange Commission in connection with the offering and sale of the tokens.

As of the date of this report, APRI has not received any capital contribution from GLDX.

AGREEMENT WITH PHUONG HOANG INVESTMENT AND DEVELOPMENT LLC TO GROW SACHA INCHI IN THUA THIEN HUE PROVINCE, VIETNAM

In March 2018, the Company signed a Business Cooperation Agreement with Phuong Hoang Investment and Development LLC, a company registered in Ha Tinh Province, Vietnam, to grow a total of 2,000 hectares (approximately 4,940 acres) of sacha inchi in the province of Thua Thien Hue for export to the U.S. and European markets.

Originally from the Amazon rainforest and the high Andes Mountains of Peru, sacha inchi has been part of the Inca diet for 3,000 years. The sacha inchi plant, plukenetia volubilis, a rainforest vine, with star-shaped seed pods, is currently cultivated primarily in parts of Southeast Asia and South America. Sacha inchi has been recognized for a number of health benefits such as complete protein, weight loss, heart health, bone health, and skin and hair health.

According to the agreement, the Company will be responsible for providing the required capital for this project and will own 75% equity interest in the joint venture company.

AGREEMENT WITH CLIENT-PARTNER FOR PARTICIPATION IN LUXEMBOURG RESERVED ALTERNATIVE INVESTMENT FUND

On March 27, 2018, Thanh Vu, an individual, (“TV”) signed an agreement with the Company to participate in a Luxembourg Reserved Alternative Investment Fund (“RAIF”). According to the agreement, TV will pay the Company $2,000,000 in fees to participate in the RAIF, of which $500,000 is due upon the signing and $1,500,000 to be paid fifteen days after the signing of the agreement. The Company recorded $2,000,000 as Contract Assets, of which $1,212,159 was recognized as revenue during the fiscal year ended June 30, 2018, thus leaving $697,841 as the remaining Contract Assets, offset by $697,841 as Contract Liabilities as of December 31, 2018. TV shall be entitled to all the benefits in connection with the RAIF, including but not limited to voting rights, profit sharing, cash and securities dividends, as well as other benefits related to ownership in the fund.

JOINT BUSINESS COOPERATION AGREEMENT WITH INDONESIAN AND GERMAN COMPANIES

On April 5, 2018, the Company signed a Joint Business Cooperation Agreement with PT Mega Kencana Persada, an Indonesian company with principal address at No 2, Jln Kepodang Raya K9, Jakarta Selatan 15412, Indonesia, (hereinafter referred to as “MKP”), and Smartway GmbH, a company organized and existing under the laws of Federal Republic of Germany, with principal address at Liszstr. 17, D-53115, Bonn, Germany (hereinafter referred to as “SMW” to primarily cooperate with one other to develop certain joint business opportunities, particularly research and development in the Indonesian maritime commuter segment, including application of SMW’s logistical technology for optimized inter-provincial ferry operations and digital online payment system for maritime passengers. Moreover, the parties may from time to time cooperate with each other and jointly engage in other business activities that deem mutually desirable and beneficial to all parties.

The Parties agree that:

a) MKP shall be responsible for conducting all research and development, field survey, data collection and capturing business opportunities and securing local government licensing requirements.

b) SMW shall provide or cause to be provided system technologies to support market segments submitted by MKP with respect to the Indonesian maritime transportation, land transportation, and online payment for Indonesian overseas travel.

c) PHI shall provide assistance with respect to financing, capitalization, investor and public relations, business development, going public, corporate governance, growth and expansion strategy and other pertinent corporate activities that deem beneficial to the scope of business cooperation mentioned herein.

d) MKP, PHI and SMW agree to form a Singaporean company as the holding company (“HoldCo”) for the contemplated business activities mentioned herein.

e) The roles, responsibilities and benefits of each party in connection with the scope of business mentioned herein will be determined by HoldCo.

As of the date of this report, the parties herein have not implemented this program.

BUSINESS COOPERATION AGREEMENT WITH FINTECH GREEN INVESTMENT JSC

On May 21, 2018, the Company signed a Business Cooperation Agreement with Fintech Green Investment JSC to cooperate with other with respect to the following areas:

a) PHI will discuss and negotiate with FGI to consider an acquisition of a majority equity interest in FGI and/or exchange of ownership between TNB and PHI by way of stock swap to form a strategic alliance between the two companies;

b) PHI will invest or cause to be invested in FGI and assist FGI to access funding sources to implement FGI’s business plan;

c) PHI will assist FGI to become a publicly traded company in the United States Stock Market and other international exchanges as deems appropriate to enable FGI to access international capital markets to further its development and growth;

d) PHI will cooperate with FGI to set up additional cryptocurrency mining facilities in selective geographical areas and assist FGI to promote and advertise its business on a global basis;

e) PHI and FGI may jointly develop, manufacture and market other products and/or engage in other business activities that may be of mutual interest to both parties.

As of the date of this report, the parties herein have not implemented this program.

BUSINESS COOPERATION AGREEMENT WITH REGENT BLOCKHAIN GROUP, LTD.

On July 22, 2018, the Company signed a Business Cooperation Agreementwith Regent Blockchain Group, Ltd. (“RBG”), a Filipino company, to form a joint venture company to develop and operate an offshore financial center and blockchain businesses, including but not limited to Apps, ICO’s and cryptocurrency exchanges. The joint venture company will be located in the Cagayan Economic Zone, Lai-lo Municipality, Cagayan, Philippineshttp://ceza.gov.ph/. RBG and PHI will specifically cooperate with each other with respect to the following areas:

1. PHI and RBG will form a joint venture company (the “JV”) to be located in the Cagayan Economic Zone, Lai-lo Municipality, Cagayan, Philippines, for the purposes of developing and operating an offshore financial center and blockchain businesses including but not limited to Apps, ICO’s and cryptocurrency exchanges.

2. PHI initially will invest or cause to be invested $4,000,000 for a fifty-one percent ownership and management rights of the JV and will assist the JV to access funding sources to implement its business plan. This initial investment can be in cash or stock of PHI, to be determined by both parties prior to the closing of the Definitive Agreement as mentioned in Article II below.

3. RBG will contribute the required license(s) from the Filipino government, particularly Cagayan Economic Zone Authority, towards the JV for the operations of the offshore financial center and blockchain businesses.

4. PHI will, at the appropriate time, spin off the JV company as a new public company in the United States Stock Market and other international exchanges as deems desirable to enable it to access international capital markets to further its development and growth. The capital structure of the JV prior to the spinoff will be determined by both parties and further detailed in the Definitive Agreement.

5. PHI and RBG may jointly develop, manufacture and market other products and/or engage in other business activities that may be of mutual interest to both parties.

As of the date of this report, the parties herein have not implemented this program.

BUSINESS COOPERATION AGREEMENT WITH BAO LAM LLC TO GROW SACHA INCHI IN VIETNAM CENTRAL HIGHLANDS

On July 2, 2018, the Company signed Business Cooperation Agreement Bao Lam LLC, a company registered in Dak Lak Province, Vietnam, to grow a total of 1,000 hectares (approximately 2,470 areas) of sacha inchi in the province of Dak Lak and Dak Nong Province, Vietnam for export to the U.S. and European markets.

According to the agreement, the Company will be responsible for providing the required capital for this project and will own 75% equity interest in the joint venture company.11, 2020, Registration No. B244952.

ACQUISITION OF 51% EQUITY INTEREST IN VINAFILMS JOINT STOCK COMPANY

On August 06, 2018, signed a Business Cooperation Agreement with Vinafilms JSC (Công ty Cổ phần Màng Bao Bì Tân Vinh Nam Phát), a Vietnamese joint stock company, with principal business address at Lot G9, Road No. 9, Tan Do Industrial Zone, Duc Hoa Ha Village, Duc Hoa District, Long An Province, Vietnam, hereinafter referred to as “VNF” and its majority shareholder, to exchange fifty-one percent ownership in VNF for Preferred Stock of PHI. According to the Agreement, PHI will be responsible for filing a S-1 Registration Statement with the Securities and Exchange Commission for American Pacific Plastics, Inc., a subsidiary of PHI that holds the 51% equity ownership in VNF, to become a fully-reporting public company in the U.S. Stock Market.

On September 20, 2018, a Stock Swap Agreement was signed by and between Ms. Do Thi Nghieu, the majority shareholder holding 76% of ownership in VNF, and PHI to exchange 3,060,000 shares of ordinary stock of VNF owned by Ms. Do Thi Nghieu for 50 million shares of Class A Series III Cumulative, Convertible, Redeemable Preferred Stock of PHI. ThisThough this transaction was technically closed on September 28, 2018. The2018, the Company expects to consolidate VNF’s operating results with PHI’s afterdid not recognize the completionoperations of Vinafilms JSC in its consolidated financial auditsstatements as of VNF according to the U.S. Generally Accepted Accounting PrincipalsDecember 31, 2019 and will not do so until a GAAP audit of Vinafilms JSC financial statements are conducted and completed by a PCAOB-registered auditing firm. As of the date of this report, the financial audits of VNF have not been completed. The Company plans to consolidate VNF’s operating results with its own for the fiscal year ending June 30, 2019.

AGREEMENTS WITH SAIGON PHO PALACE JSC

On October 16, 2018, the Company signed a Business Cooperation Agreement with Saigon Pho Palace Joint Stock Company (“SGP”), a Vietnamese company, and its majority shareholder to acquire a 51% ownership in SGP in exchange for Preferred Stock of PHI Group, Inc. or a promissory note that may be convertible into shares of a subsidiary of the Company. On October 22, 2018, a Stock Swap Agreement was signed among the Company, SGP and Le Minh Quy, its majority shareholder and Chairman, to exchange 15,300,000 shares of Common Stock of SGP held by him for shares of Preferred Stock or a Convertible Promissory Note of the Company. The amount of Preferred Stock or the value of the Convertible Promissory Note will be determined and agreed upon by the parties following the results of a valuation of SGP by an independent business valuation firm. On November 5, 2018, the Company formed a special purpose vehicle “American Saigon Palace Group,” a Wyoming corporation, as the holding company for the 51% ownership in SGP.The Company expects to be able to report consolidated operating results from SGP after the closing of the Stock Swap Agreement, and, subject to meeting all necessary compliance requirements, intends tofile a registration statement with the U.S. Securities and Exchange Commission to take ASPG public in the U.S. Stock Market at the appropriate time in the future. The majority shareholder of SGP will have the option to convert the Preferred Stock or the convertible note of PHI Group into 80% stock of American Saigon Palace Group when this subsidiary has become a fully reporting publicly traded company in the U.S. Stock Market. The closing of this transaction is subject to the completion of an independent valuation of SGP by Grant Thornton Vietnam.

On October 16, 2018, Saigon Pho Palace also signed an agreement for participation in a sub-fund of the Luxembourg Institutional Bank Fund with the Company. According to the agreement, SGP will contribute $2,000,000 as a founding partner in a sub-fund and will have the priority to use capital from this sub-fund for priority investment projects. The Company has recorded $2,000,000 as Contract Assets, of which $200,000 was recognized as revenue during the quarter ended December 31, 2018 and $150,000 was recognized as revenue during the quarter ended March 31, 2019 thus leaving $1,650,000 as the remaining Contract Assets, offset by $1,650,000 as Contract Liabilities as of March 31, 2019.

On December 01, 2018, PHI Capital Holdings, Inc., a wholly-owned subsidiary of PHI Group, Inc., signed a consulting service agreement with DIO Group Joint Stock Company to provide consulting services on a non-exclusive basis to take DIO Group public on the U.S. Nasdaq Stock Market and assist DIO Group in its capitalization plan. DIO Group has agreed to set aside a budget of $4,000,000 and allocate fifteen percent of the new public company’s stock for PHI Capital Holdings, Inc. and its service providers in connection with this agreement. The consulting service agreement was amended on March 8, 2019 to include an extension the payment of the consulting service fees. As of the date of this report, DIO Group has not made any payment to the Company according to the agreement.

On February 13, 2019, European Plastic Joint Stock Company, a Vietnamese company, signed an agreement with PHI Group, Inc. to participate in an energy sub-fund of PHILUX Global Funds, a master Luxembourg bank fund scheduled to be activated in the first calendar quarter of 2019. According to the agreement, European Plastic Co. will contribute $2,000,000 as a general partner in the energy sub-fund and hold 49.50% of the general partner shares in this subfund. European Plastic Co. is the developer of two solar energy projects in Phu Yen Province, Vietnam. On March 5, 2019, both parties agreed to amend the total amount to be paid by European Plastic Company to be $1,800,000 for its agreement to expedite the second installment payment towards the contract. As of March 31, 2019, the Company has received a total of $800,000 from European Plastic Company towards the total contract amount.

On March 4, 2019, PHI Luxembourg Development S.A., a wholly-owned subsidiary of the Company, signed a Memorandum of Agreement with Building and Construction Material One-Member Limited Liability Company No. 27 (“COMA27”), a company belonging to the Ministry of Construction of Vietnam, for COMA27 to participate 15% in a Public Private Partnership in connection with the development and establishment of the Asia Diamond Exchange in Vietnam.

NOTE 1815 –GOING CONCERN UNCERTAINTY

As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $41,554,550$42,376,931 as of MarchDecember 31, 2019 and total stockholders’ deficit of $2,503,736.$5,465,852. For the nine monthsquarter ended MarchDecember 31, 2019, the Company incurred a net loss of $1,003,251$226,348 as compared to a net loss in the amount of $1,673,680$407,042 during the same period ended March 31, 2018.December 30, 2019. These factors as well as the uncertain conditions that the Company faces in its day-to-day operations with respect to cash flows create an uncertainty as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management believeshas taken action to strengthen the Company will be able toCompany’s working capital position and generate sufficient cash to meet its operating needs through June 30, 20192021 and beyond.