Company: PHIL
Filing Date: 2025-02-19
Form Type: 10-Q
Source: 0001493152-25-007556
Chunk: 130

Company: PHI GROUP INC
Filing Date: 2025-02-19
Form: 10-Q
Item: Part II, Item 1
Chunk 130
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    the
    high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

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

Risks
associated with private equity (PE) funds

There
are, broadly, five key risks to private equity investing:

1.
Operational risk: The risk of loss resulting from inadequate processes and systems supporting the organization. It is a
key consideration for investors regardless of the asset classes that funds invest into.

2.
Funding risk: This is the risk that investors are not able to provide their capital commitments and is effectively the
‘investor default risk’. PE funds typically do not call upon all the committed investor capital and only draw capital once
they have identified investments. Funding risk is closely related to liquidity risk, as when investors are faced with a funding shortfall,
they may be forced to sell illiquid assets to meet their commitments.

3.
Liquidity risk: This refers to an investor’s inability to redeem their investment at any given time. PE investors
are ‘locked-in’ for between five and ten years, or more, and are unable to redeem their committed capital on request during
that period. Additionally, given the lack of an active market for the underlying investments, it is difficult to estimate when the investment
can be realized and at what valuation.

13

4.
Market risk: There are many forms of market risk affecting PE investments, such as broad equity market exposure, geographical/sector
exposure, foreign exchange, commodity prices, and interest rates. Unlike in public markets where prices fluctuate constantly and are
marked-to-market, PE investments are subject to infrequent valuations and are typically valued quarterly and with some element of subjectivity
inherent in the assessment. However, the market prices of publicly listed equities at the time of sale of a portfolio company will ultimately
impact realization value.

5.
Capital risk: The capital at risk is equal to the net asset value of the unrealized portfolio plus the future undrawn