NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – NATURE OF BUSINESS
INTRODUCTION
PHI
Group, Inc. (n/k/a Philux Global Group Inc) (the “Company” or “PHI”) (www.philuxglobal.com) is primarily
engaged in mergers and acquisitions, advancing PHILUX Global Funds, SCA, SICAV-RAIF, a “Reserved Alternative Investment Fund”
(“RAIF”) under the laws of Luxembourg, and establishing the Asia Diamond Exchange in Vietnam. Besides, the Company provides
corporate finance services, including merger and acquisition advisory and consulting services for client companies through our wholly
owned subsidiary PHILUX Capital Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcapital.com) and invests in selective
industries and special situations aiming to potentially create significant long-term value for our shareholders. PHILUX Global Funds
intends to include a number of sub-funds for investment in select growth opportunities in the areas of agriculture, renewable energy,
real estate, infrastructure, and the Asia Diamond Exchange in Vietnam.
BACKGROUND
Originally
incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication and
filed Articles of Domestication to become a Wyoming corporation on September 20, 2017. In the beginning, the Company was foremost engaged
in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New
York and one in California. In January 2000, the Company changed its name to Providential Securities, Inc., a Nevada corporation, following
a business combination with Providential Securities, Inc., a California-based financial services company. In February 2000, the Company
then changed its name to Providential Holdings, Inc. 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 various transactions in connection with mergers and acquisitions
advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare,
private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand
Ranch Limited, a United Kingdom corporation (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation - US, and
Philand Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation
(a Nevada corporation), and mainly focused on acquisition and development opportunities in energy and natural resource businesses.
The
Company is currently focused on PHILUX Global Funds, SCA, SICAV-RAIF by launching Philux Global Select Growth Fund and potentially other
sub-funds for investment in real estate, renewable energy, infrastructure, agriculture and healthcare and the Asia Diamond Exchange in
Vietnam. In addition, PHILUX Capital Advisors, Inc. (formerly Capital Holdings, Inc.), a wholly owned subsidiary of the Company, continues
to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting services for U.S.
and international companies. The Company has signed agreements to acquire majority equity interests in Kota Construction LLC and Kota
Energy Group LLC which are engaged in solar energy business (https://www.kotasolar.com), Tin Thanh Group, a Vietnamese joint stock
company (www.tinthanhgroup.vn) and Van Phat Dat Joint Stock Company, a Vietnamese joint stock company. In addition, the Company
is in the process of amending the Purchase and Sale Agreement that was originally signed on January 18, 2022 with Five-Grain Treasure
Spirits Co., Ltd., a Chinese baiju distiller, to collaborate in launching American-made baiju products through Empire Spirits, Inc.,
a subsidiary of the Company. The Company will relocate CO2-1-0 (CARBON) Corp., a subsidiary of the Company engaged in carbon emission
mitigation using blockchain and crypto technologies, to the United Arab Emirates. These activities are disclosed in greater detail elsewhere
in this report. 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. (a/k/a Philux Global Group, Inc.) and its active wholly owned
subsidiaries: (1) PHILUX Capital Advisors, Inc., a Wyoming corporation (100%), (2) PHI Luxembourg Development S.A., a Luxembourg corporation
(100%), (3) PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg Reserved Alternative Investment Fund (100%), (4) PHILUX Global General
Partners SA, a Luxembourg corporation (), (5) PHI Luxembourg Holding SA, a Luxembourg corporation (100%), (6) Asia Diamond Exchange,
Inc., a Wyoming corporation (100%), and (7) CO2-1-0 (Carbon) Corp. (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, 2022. 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 September 30, 2022 are not necessarily
indicative of the results to be expected for the fiscal year ending June 30, 2023.
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 September 30, 2022, the marketable securities were recorded at $546 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:
Level
1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability
to access.
Level
2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level
3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
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. On September 30, 202â, 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 September 30, 2021, the Company did not have
any 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 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
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06-Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting
For Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments
by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as
a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify
for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual
and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15,
2020. The Company intends to adopt ASU 2020-06 for the quarter beginning January 1, 2023.
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 non-public 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 non-public 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 September 30, 2022 consisted of 91 shares of Myson Group, Inc.
(formerly Vanguard Mining Corporation) which are quoted on the OTC Markets (Trading symbols “MYSN”). The fair value of the
shares recorded as of September 30, 2022 was $546.
SCHEDULE OF FAIR VALUE OF INVESTMENTS MARKETABLE EQUITY SECURITIES
| Securities available for sale | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| September 30, 2022 | |
| None | | |
$ | 546 | | |
$ | 0 | | |
$ | 546 | |
| June 30, 2022 | |
| None | | |
$ | 546 | | |
$ | 0 | | |
$ | 546 | |
NOTE
4 – PROPERTIES AND EQUIPMENT
The
Company did not have any properties or equipment as of September 30, 2022.
NOTE
5 – OTHER ASSETS
Other
Assets comprise of the following as of September 30, 2022 and June 30, 2022
SCHEDULE OF OTHER ASSETS
| | |
September 30, 22 | | |
June 30, 2022 | |
| Investment in PHILUX Global Funds, SCA, SICAV-RAIF | |
$ | 29,250 | | |
$ | 31,161 | |
| Investment in AQuarius Power, Inc. | |
$ | 5,000 | | |
$ | 5,000 | |
| Total Other Assets | |
$ | 34,250 | | |
$ | 36,161 | |
Other
Assets as of September 30, 2022 consist of a $5,000 investment in AQuarius Power, Inc., a Texas renewable energy technology company and
$29,250 in PHILUX Global Funds.
For
the investments in PHILUX Global Funds, as of September 30, 2022, PHI Luxembourg Development SA, a Luxembourg corporation and wholly-owned
subsidiary of PHI Group, Inc. held twenty-eight ordinary shares of PHILUX Global Funds valued at EUR 28,000, PHI Luxembourg Holding SA,
a Luxembourg corporation 100% owned by PHI Group, Inc. as the ultimate beneficiary owner (UBO), held one participating share of PHILUX
Global Funds valued at EUR 1,000, and PHILUX Global General Partner SA, a Luxembourg corporation 100% owned by PHI Group, Inc. as the
ultimate beneficiary owner (UBO), held one management share of PHILUX Global Funds valued at EUR 1,000. The total holdings in PHILUX
Global Funds were equivalent to $29,250 as of September 30, 2022 based on the prevalent exchange rate at that time.
The
Company has treated all development costs of the Asia Diamond Exchange as expenses and exchanged for common shares in Asia Diamond Exchange,
Inc., a Wyoming corporation.
NOTE
6 – CURRENT LIABILITIES
Current
Liabilities of the Company consist of the followings as of September 30, 2022 and June 30, 2022.
SCHEDULE OF CURRENT LIABILITIES
| | |
| 1 | | |
| 2 | | |
| 3 | |
| Current Liabilities | |
30-Sep-22 | | |
30-Jun-22 | | |
30-Jun-21 | |
| Accounts payable | |
| 611,455 | | |
| 615,805 | | |
| 608,521 | |
| Sub-fund obligations | |
| 1,586,619 | | |
| 1,574,775 | | |
| 1,474,775 | |
| Accrued expenses | |
| 1,049,685 | | |
| 931,417 | | |
| 1,993,478 | |
| Short-term loans and notes payable | |
| 922,229 | | |
| 676,888 | | |
| 325,621 | |
| Convertible Promissory Notes | |
| 889,500 | | |
| 756,250 | | |
| 220,230 | |
| Due to officers | |
| 1,035,886 | | |
| 1,077,218 | | |
| 1,720,323 | |
| Advances from customers | |
| 660,434 | | |
| 665,434 | | |
| 582,237 | |
| Derivative liabilities | |
| 102,368 | | |
| 715,677 | | |
| - | |
| Total Current Liabilities | |
| 6,858,175 | | |
| 7,013,465 | | |
| 6,925,185 | |
ACCRUED
EXPENSES: Accrued expenses as of September 30, 2022 totaling $1,049,685 consist of $763,842 in accrued salaries and payroll liabilities
and $285,843 in accrued interest from short-term notes and convertible notes.
NOTES
PAYABLE: As of September 30, 2022, Notes Payable consist of $641,380 in short-term notes payable, $43,750 in PPP loan, $889,500 in convertible
promissory notes and $237,098 in Merchant Cash Advance loans.
ADVANCES
FROM CUSTOMERS:
As
of September 30, 2022, the Company recorded $660,434 as Advances from Customers for consulting fees previously received from a client
plus mutually agreed accrued interest. The Company was not able to complete the consulting services due to the client’s inability
to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities and Exchange Commission.
SUB-FUND
OBILGATIONS: The Company has recorded a total of $1,586,619 from partners/investors towards the expenses and capitalization for setting
up sub-funds under the master PHILUX Global Funds. These amounts are currently booked as liabilities until these sub-funds are set up
and activated, at which time the sub-fund participants will receive their respective percentages of the general partners’ portion
of ownership in the relevant sub-funds based on their actual total contributions.
NOTE
7 – 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 September 30, 2022 and June 30, 2022, the balances were $1,035,886 and $1,077,218, respectively.
SCHEDULE OF COMPONENTS OF DUE TO OFFICERS
| | |
| 1 | | |
| 2 | |
| Officers/Directors | |
Sep 30, 2022 | | |
Jun 30, 2022 | |
| Henry Fahman | |
| 372,536 | | |
$ | 413,868 | |
| Tam Bui | |
| 663,350 | | |
$ | 663,350 | |
| Total | |
$ | 1,035,886 | | |
$ | 1,077,218 | |
NOTE
8 – LOANS AND PROMISSORY NOTES
A. SHORT TERM NOTES PAYABLE:
In
the course of its business, the Company has obtained short-term loans from individuals and institutional investors.
As
of September 30, 2022, the Company had a total of $641,380 in short-term notes payable with $251,014 in accrued and unpaid interest,
$43,750 SBA PPP loan with $1,055 in accrued and unpaid interest and $237,098 in merchant cash advances and. These notes bear interest
rates ranging from 0% to 36% per annum.
B. CONVERTIBLE PROMISSORY NOTES OUTSTANDING AS OF SEPTEMBER 30, 2022
As
of September 30, 2022, the Company had a net balance of $889,500 in convertible promissory notes.
NOTE
9 – PAYROLL TAX LIABILITIES
As
of September 30, 2022, payroll tax liabilities were $5,747.
NOTE
10 – 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 September
30, 2022 were the same since the inclusion of Common stock equivalents is anti-dilutive.
NOTE
11 – STOCKHOLDER’S EQUITY
As
of September 30, 2022, the total number of authorized capital stock of the Company consisted of 60 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 Preferred Stock will be determined by the Board of Directors of the Company.
TREASURY
STOCK
The
balance of treasury stock as of September 30, 2022 was 484,767 shares valued at $44,170 according to cost method.
COMMON
STOCK
During
the quarter ended September 30, 2022, the Company issued a total of 2,671,263,441 shares any of its Common Stock for conversion of convertible
promissory notes and exercise of warrants and cancelled 454,758,300 shares of its Common Stock that were previously issued to Crown Bridge
Partners LLC.
As
of September 30, 2022, there were 33,645,885,430 shares of the Company’s common stock issued and outstanding.
PREFERRED
STOCK
CLASS
B SERIES I PREFERRED STOCK
As
of September 30, 2022, there were 600,000 shares of Class B Series Preferred Stock issued and outstanding.
NOTE
12 – STOCK-BASED COMPENSATION PLAN
1.
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 September 30, 2021 the Company has not issued any stock in lieu
of cash under this plan.
2.
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:
SCHEDULE
OF FAIR VALUE OF STOCK OPTION ASSUMPTIONS
| Risk-free interest rate | |
| 1.18 | % |
| Expected life | |
| 7 years | |
| Expected volatility | |
| 239.3 | % |
| Vesting is based on a one-year cliff from grant date. | |
| | |
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:
SCHEDULE
OF FAIR VALUE OF STOCK OPTION ISSUANCE DATE
| Holder | |
Issue Date | |
Maturity
Date | |
Stock Options | | |
Exercise Price | |
Fair Value at
Issuance | |
| | |
| |
| |
| | |
| |
| |
| Tam Bui | |
9/23/2016 | |
9/23/2023 | |
| 875,000 | | |
Fixed price: $0.24 | |
$ | 219,464 | |
| Frank Hawkins | |
9/23/2016 | |
9/23/2023 | |
| 875,000 | | |
Fixed price: $0.24 | |
$ | 219,464 | |
| Henry Fahman | |
9/23/2016 | |
9/23/2023 | |
| 4,770,000 | | |
Fixed price: $0.24 | |
$ | 1,187,984 | |
3.
On September 9, 2021, the Company adopted the PHI Group 2021 Employee Benefit Plan and set aside 2,600,000,000 shares of its common stock
to provide a means of non-cash remuneration to selected eligible employees and independent contractors (“Eligible Participants”)
of the Company and its subsidiaries. On September 17, 2021, the Company filed Form S-8 Registration Statement under the Securities Act
of 1933 with the Securities and Exchange Commission to register these shares for the above-mentioned plan. As of September 30, 2022 the
Company has issued a total of 2,407,196,586 shares for consulting services and salaries under the PHI Group 2021 Employee Benefit Plan.
NOTE
13– RELATED PARTY TRANSACTIONS
The
Company recognized a total of $90,000 in salaries for the President, the Chief Operating Officer and the Secretary & Treasurer of
the Company during the quarter ended September 30, 2022.
Henry
Fahman, Chairman and Chief Executive Officer, and Tam Bui, a member of the Board of Directors and Chief Operating Officer, of the Company
from time to time lend money to the Company. These loans are without interest and payable upon demand.
As
of September 30, 2022, the Company still owed the following amounts to Related Parties: