UNITED
STATES



SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-Q



[X] QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the
quarterly period ended: MARCH 31, 2015



or



[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the
transition period from ___________ to  ___________



Commission
File Number: 2-78335-NY





(Exact
name of registrant as specified in its charter)



|Nevada                                                            |  | 90-0114535                                
|----------------------------------------------------------------- |  | ------------------------------------------
|(State
    or other jurisdiction ofincorporation or organization) |  | (I.R.S.
    Employeridentification Number)
|                                                                  |  |                                           
|5348
    Vegas Drive, # 237, Las Vegas,                           |  | NV
    89108                              
|(Address
    of principal executive offices)                      |  | (Zip
    Code)                            



702-475-5430

(Registrant’s
telephone number, including area code)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.

Yes
[X] No [  ]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes
[X] No [  ]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer [  ] | Accelerated
filer [  ]       
|-------------------------------- | -----------------------------
|                                 |                              
|Non-accelerated
    filer [  ]   | Smaller
reporting company [X]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes
[  ] No [X]



Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As
of May 15, there were 9,584,675 shares of the registrant’s $0.001 par value Common Stock issued and outstanding, including
5,673,327 shares reserved for a special dividend distribution, following a 1:1,500 reverse split which came into effect March
15, 2012.


















PHI
GROUP, INC.



INDEX
TO FORM 10-Q



|PART
    I - FINANCIAL INFORMATION                                                                    |    
|----------------------------------------------------------------------------------------------------- | ---
|                                                                                                      |    
|Item
    1 - Consolidated Financial Statements – Unaudited                                            | F-1
|                                                                                                      |    
|Consolidated
    Balance Sheets as of March 31, 2015 and June 30, 2014                                | F-1
|                                                                                                      |    
|Consolidated
    Statements of Operations for the Three and Nine Months Ended March 31, 2015 and 2014 | F-2
|                                                                                                      |    
|Consolidated
    Statements of Cash Flows for the Nine Months Ended March 31, 2015 and 2014           | F-3
|                                                                                                      |    
|Notes
    to Consolidated Financial Statements                                                        | F-4
|                                                                                                      |    
|Item
    2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations    | 3  
|                                                                                                      |    
|Item
    3 - Quantitative and Qualitative Disclosures about Market Risk                               | 8  
|                                                                                                      |    
|Item
    4 - Controls and Procedures                                                                  | 9  
|                                                                                                      |    
|PART II - OTHER INFORMATION                                                                           |    
|                                                                                                      |    
|Item
    1 - Legal Proceedings                                                                        | 10 
|                                                                                                      |    
|Item
    1A - Risk Factors                                                                            | 11 
|                                                                                                      |    
|Item
    2 - Unregistered Sales of Equity Securities and Use of Proceeds                              | 13 
|                                                                                                      |    
|Item
    3 - Defaults Upon Senior Securities                                                          | 13 
|                                                                                                      |    
|Item
    4 - Submission of Matters to a Vote of Security Holders                                      | 13 
|                                                                                                      |    
|Item
    5 - Other Information                                                                        | 13 
|                                                                                                      |    
|Item
    6 - Exhibits                                                                                 | 13 
|                                                                                                      |    
|SIGNATURES                                                                                            | 14 
|                                                                                                      |    
|Exhibit
    21.1                                                                                      |    
|                                                                                                      |    
|CERTIFICATIONS                                                                                        |    



2







PART
I - FINANCIAL INFORMATION



Item
1 - Consolidated Financial Statements – Unaudited



PHI
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

(UNAUDITED)





|                                                                                                                                                                                                                                                                                 |  | March 31, 2015 |             |   | June 30, 2014 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ------------- | -
|                                                                                                                                                                                                                                                                                 |  |                |             |   | (Audited)     |  
|ASSETS                                                                                                                                                                                                                                                                           |  |                |             |   |               |  
|Current
    assets:                                                                                                                                                                                                                                                              |  |                |             |   |               |  
|Cash and cash equivalents                                                                                                                                                                                                                                                        |  | $              | 8,692       |   |               | $
|Marketable securities                                                                                                                                                                                                                                                            |  |                | 306,281     |   |               |  
|Loans receivable                                                                                                                                                                                                                                                                 |  |                | 9,235       |   |               |  
|Total
    current assets                                                                                                                                                                                                                                                         |  | $              | 324,208     |   |               | $
|                                                                                                                                                                                                                                                                                 |  |                |             |   |               |  
|Other
    assets:                                                                                                                                                                                                                                                                |  |                |             |   |               |  
|Other assets                                                                                                                                                                                                                                                                     |  |                | 78,467      |   |               |  
|Receivable from Discontinued Operations                                                                                                                                                                                                                                          |  |                | 73,043      |   |               |  
|Investments in subsidiaries                                                                                                                                                                                                                                                      |  |                | 2,550       |   |               |  
|Total
    other assets                                                                                                                                                                                                                                                           |  |                | 154,060     |   |               |  
|TOTAL
    ASSETS                                                                                                                                                                                                                                                                 |  | $              | 478,268     |   |               | $
|                                                                                                                                                                                                                                                                                 |  |                |             |   |               |  
|LIABILITIES
    AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                                                                        |  |                |             |   |               |  
|Current
    liabilities:                                                                                                                                                                                                                                                         |  |                |             |   |               |  
|Accounts payable                                                                                                                                                                                                                                                                 |  | $              | 520,991     |   |               | $
|Accrued expenses                                                                                                                                                                                                                                                                 |  |                | 4,429,750   |   |               |  
|Short-term notes payable                                                                                                                                                                                                                                                         |  |                | 1,295,008   |   |               |  
|Due to officers                                                                                                                                                                                                                                                                  |  |                | 1,870,058   |   |               |  
|Due to preferred stockholders                                                                                                                                                                                                                                                    |  |                | 215,000     |   |               |  
|Advances from customers                                                                                                                                                                                                                                                          |  |                | 563,219     |   |               |  
|Liabilities from Discontinued Operations
    & Contingencies                                                                                                                                                                                                                     |  |                | 1,045,232   |   |               |  
|Total
    Current Liabilities                                                                                                                                                                                                                                                    |  | $              | 9,939,258   |   |               | $
|                                                                                                                                                                                                                                                                                 |  |                |             |   |               |  
|Stockholders’
    equity:                                                                                                                                                                                                                                                        |  |                |             |   |               |  
|Preferred
    stock, $.001 par value, 100,000,000 shares authorized; none
    issued and outstanding                                                                                                                                                                             |  |                | -           |   |               |  
|Common stock, $.001 par value; 300,000,000
    shares authorized; 12,873,118 issued and 7,199,791 outstanding on 3/31/2015, and
    12,412,114 issued and 6,729,656 outstanding on 6/30/2014, respectively, adjusted for
    1 for 1,500 reverse split effective March 15, 2012. |  |                | 240,736     |   |               |  
|Treasury stock, $.001 par value, 2,987 shares of common stock as
    of 3/31/2015 and 6/30/2014.                                                                                                                                                                                 |  |                | (3,801      | ) |               |  
|Paid-in capital                                                                                                                                                                                                                                                                  |  |                | 28,365,304  |   |               |  
|Acc. Other Comprehensive Loss                                                                                                                                                                                                                                                    |  |                | (519,282    | ) |               |  
|Accumulated deficit                                                                                                                                                                                                                                                              |  |                | (37,543,947 | ) |               |  
|Total                                                                                                                                                                                                                                                                            |  |                | (9,460,990  | ) |               |  
|Non-Controlling interest                                                                                                                                                                                                                                                         |  |                | -           |   |               |  
|Total
    stockholders’ deficit                                                                                                                                                                                                                                                  |  | $              | (9,460,990  | ) |               | $
|                                                                                                                                                                                                                                                                                 |  |                |             |   |               |  
|TOTAL
    LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                                                                  |  | $              | 478,268     |   |               | $



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



F-1









PHI GROUP,
INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
UNAUDITED



|                                                       |  | For the Three Months Ended March 31, |           |   | For the Nine Months Ended March 31, |  
|------------------------------------------------------ |  | ------------------------------------ | --------- | - | ----------------------------------- | -
|                                                       |  | 2015                                 |           |   | 2014                                |  
|Net revenues                                           |  |                                      |           |   |                                     |  
|Revenues                                               |  | $                                    | 16,000    |   |                                     | $
|                                                       |  |                                      |           |   |                                     |  
|Operating expenses:                                    |  |                                      |           |   |                                     |  
|Salaries and wages                                     |  |                                      | 52,500    |   |                                     |  
|Professional services, including non-cash compensation |  |                                      | 40,250    |   |                                     |  
|General and administrative                             |  |                                      | 32,999    |   |                                     |  
|Total operating expenses                               |  |                                      | 125,749   |   |                                     |  
|                                                       |  |                                      |           |   |                                     |  
|Loss from operations                                   |  | $                                    | (109,749  | ) |                                     | $
|                                                       |  |                                      |           |   |                                     |  
|Other income and (expenses)                            |  |                                      |           |   |                                     |  
|Interest expense                                       |  |                                      | (81,377   | ) |                                     |  
|Net Gain (Loss) on sale of marketable securities       |  |                                      | (39,286   | ) |                                     |  
|Net Gain (Loss) on settlement of debts                 |  |                                      | (26,125   | ) |                                     |  
|Other income (expenses)                                |  |                                      | -         |   |                                     |  
|Net other expenses                                     |  |                                      | (146,787  | ) |                                     |  
|                                                       |  |                                      |           |   |                                     |  
|Net income (loss)                                      |  | $                                    | (256,537  | ) |                                     | $
|Other comprehensive Income                             |  |                                      |           |   |                                     |  
|Unrealized gain (loss) on marketable securities        |  | $                                    | (599,472  | ) |                                     | $
|Comprehensive income (loss)                            |  |                                      | (856,009  | ) |                                     |  
|Net loss per share:                                    |  |                                      |           |   |                                     |  
|Basic                                                  |  | $                                    | (0.04     | ) |                                     | $
|Diluted                                                |  | $                                    | (0.04     | ) |                                     | $
|                                                       |  |                                      |           |   |                                     |  
|Weighted average number of shares outstanding:         |  |                                      |           |   |                                     |  
|Basic                                                  |  |                                      | 6,875,395 |   |                                     |  
|Diluted                                                |  |                                      | 6,875,395 |   |                                     |  



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





F-2









PHI
GROUP, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
UNAUDITED





|                                                                              |  | For the Nine Months Ended March 31, |         
|----------------------------------------------------------------------------- |  | ----------------------------------- | --------
|                                                                              |  | 2015                                |         
|Cash flows from operating activities:                                         |  |                                     |         
|Net income (loss) from operations                                             |  | $                                   | (593,750
|Adjustments to reconcile net income to net cash used in operating activities: |  |                                     |         
|(Increase) decrease in other assets and prepaid expenses                      |  |                                     | (40,324 
|Increase (decrease) in accounts payable and accrued expenses                  |  |                                     | 353,765 
|Net cash provided by (used in) operating activities                           |  |                                     | (280,309
|                                                                              |  |                                     |         
|Cash flows from investing activities:                                         |  |                                     |         
|Investments: Cornerstone Biomass Corp. and deposit for land acquisition       |  |                                     | (10,774 
|Net cash provided by (used in) investing activities                           |  |                                     | (10,774 
|                                                                              |  |                                     |         
|Cash flows from financing activities:                                         |  |                                     |         
|Proceeds from Common Stock                                                    |  |                                     | 79,252  
|Payments on notes payable                                                     |  |                                     | -       
|Borrowings from officer                                                       |  |                                     | -       
|Acc. Other Comprehensive Loss                                                 |  |                                     | 189,900 
|Decrease in minority interest                                                 |  |                                     | -       
|Net cash provided by (used in) financing activities                           |  |                                     | 269,152 
|                                                                              |  |                                     |         
|Net decrease in cash and cash equivalents                                     |  |                                     | (21,931 
|Cash and cash equivalents, beginning of period                                |  |                                     | 30,623  
|Cash and cash equivalents, end of period                                      |  | $                                   | 8,692   
|                                                                              |  |                                     |         
|Supplemental disclosures of cash flow information                             |  |                                     |         
|Decrease in minority interest                                                 |  | $                                   | -       



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



F-3









PHI
GROUP, INC. AND SUBSIDIARIES

NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE
1–NATURE OF BUSINESS



Established
in June 1982, PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation primarily engaged in energy
and natural resources (www.phiglobal.com). The Company acquires and consolidates energy-related assets and other natural
resources, partners with international companies to develop independent power plant projects in Southeast Asia, and collaborates
with certain U.S. companies to provide renewable energy solutions using bio-mass, wind, solar power and other new technological
developments. The Company also provides corporate finance services, including merger and acquisition advisory and consulting services,
and arranges capital for energy-related, natural resource and infrastructure projects through its wholly owned subsidiary PHI
Capital Holdings, Inc. (www.phicapitalholdings.com). In addition, the Company also participates in international trade
activity. No assurances can be made that the Company will be successful in achieving its plan.



PRINCIPLES
OF CONSOLIDATION



The
consolidated financial statements include the accounts of PHI Group, Inc., its wholly-owned subsidiary PHI Capital Holdings, and
the discontinued operations Providential Securities, Inc., PHI Gold Corporation (formerly PHI Mining Group), Providential Vietnam
Ltd., and Philand Ranch Limited, 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, 2014. 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-month and six-month
periods ended March 31, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending June 30,
2015.



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.



F-4







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



Unrealized
holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of
stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings
based upon the adjusted cost of the specific security sold. As of March 31, 2015, the marketable securities were recorded at $306,281,
based upon the fair value of the marketable securities at that time (Note 3).



FAIR
VALUE OF FINANCIAL INSTRUMENTS



Fair
Value - Definition and Hierarchy



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



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



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



| | ● | Level1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has
    the ability to access.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                         
| | ● | Level2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.                    
| |   |                                                                                                                                                         
| | ● | Level3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.                                        



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



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



F-5







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,
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.



PROPERTIES
AND EQUIPMENT



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



REVENUE
RECOGNITION



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



F-6







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. 2013-11—Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward,
    a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)
    [Download]    |  | July
    2013 |  | Effective
    for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments
    are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption
    is permitted.                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|Update No. 2013-09—Fair
    Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans
    in Update No. 2011-04
    [Download]                                                                          |  | July 2013     |  | The deferral in
    this amendment is effective upon issuance for financial statements that have not been issued.                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|Update No. 2013-07—Presentation
    of Financial Statements (Topic 205): Liquidation Basis of Accounting
    [Download]                                                                                                                                                 |  | April 2013    |  | Effective for
    entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013. Early adoption
    is permitted.                                                                                                                                                                              
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|Update No. 2013-04—Liabilities
    (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation
    Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)
    [Download] |  | February 2013 |  | Effective for
    fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments
    are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter.                                                                            
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|Update 2013-02—Comprehensive
    Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
    [Download]                                                                                                                     |  | February 2013 |  | For public entities,
    the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities,
    the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted.                                                          
|                                                                                                                                                                                                                                                                        |  |               |  |                                                                                                                                                                                                                                                                                                                                                    
|Update 2013-01—Balance
    Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
    [Download]                                                                                                                                |  | January 2013  |  | An entity is required
    to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods.
    An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date
    is the same as the effective date of Update 2011-11.



The Company
has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible impact
they may have on the Company’s financial statements. In most cases, management has determined that the pronouncement has
either limited or no application to the Company and, in all cases, implementation would not have a material impact on the financial
statements taken as a whole.



F-7







NOTE
2 – LOANS RECEIVABLE FROM RELATED PARTIES



Loans receivable
from related parties consist of the following at March 31, 2015 and June 30, 2014:



|                                |  | March 31, 2015 |       |  | June 30, 2014 |  
|------------------------------- |  | -------------- | ----- |  | ------------- | -
|Loan to Catalyst Resource Group |  | $              | 4,534 |  |               | $
|Loan to Provimex                |  | $              | 2,000 |  |               | $
|Total                           |  | $              | 6,534 |  |               | $



NOTE
3–MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE



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



Marketable
securities classified as available for sale as of March 31, 2015 consisted of 12,623,419 post-split shares of Vanguard
Mining Corporation, a public company traded on the OTC Markets (Trading symbol: VNMC), and 14,200,000 shares of Agent 155
Media Corporation, a public company traded on the OTC Markets (Trading symbol: AGMC). The fair value of the shares recorded
as of March 31, 2015 was $306,281.









|                      |  | Level 1   |   |  | Level 2     |   |         |              |  |   |       | 
|--------------------- |  | --------- | - |  | ----------- | - | ------- | ------------ |  | - | ----- | 
|                      |  | Quoted    |   |  | Other       |   |         | Level 3      |  |   |       | 
|                      |  | Prices in |   |  | Significant |   |         | Significant  |  |   |       | 
|                      |  | Active    |   |  | Observable  |   |         | Unobservable |  |   |       | 
|Investments           |  | Markets   |   |  | Inputs      |   |         | Inputs       |  |   | Total | 
|Cash Equivalents      |  |           |   |  |             |   | -       |              |  |   | -     | 
|Marketable Securities |  |           |   |  |             |   | 298,241 |              |  |   | 8,040 | 
|Total                 |  | $         | - |  |             | $ | 298,241 |              |  | $ | 8,040 | 





|                      |  |          |         |  |          |   |         |            |  |   |           |  |  |          |       |  | Changes in     
|--------------------- |  | -------- | ------- |  | -------- | - | ------- | ---------- |  | - | --------- |  |  | -------- | ----- |  | ---------------
|                      |  |          |         |  |          |   |         |            |  |   |           |  |  |          |       |  | Unrealized     
|                      |  |          |         |  |          |   |         |            |  |   |           |  |  |          |       |  | Gain (Loss)    
|                      |  | Balance  |         |  | Realized |   |         | Unrealized |  |   | Net       |  |  | Balance  |       |  | for Investments
|                      |  | 06/30/14 |         |  | Gain or  |   |         | Gain or    |  |   | Purchases |  |  | 03/31/15 |       |  | still held at  
|Assets                |  | (Net)    |         |  | (Loss)   |   |         | (Loss)     |  |   | (Sales)   |  |  | (Net)    |       |  | 3/31/15        
|Marketable Securities |  |          | 261,360 |  |          |   | (47,813 | )          |  |   | 86,734    |  |  |          | 6,000 |  |                
|Total                 |  | $        | 261,360 |  |          | $ | (47,813 | )          |  | $ | 86,734    |  |  | $        | 6,000 |  |                



The change
in unrealized appreciation (depreciation) related to the Level 2 investments still held at March 31,2015 is $86,734. Level 2 securities
sold during the year were sold at net realized loss of ($47,813).



During the
quarter ended March 31, 2015, $177,725 of marketable securities was transferred from level 3 to level 2 due to reclassification
from restricted to unrestricted status and increase in market activity for these securities.



NOTE
4 – PROPERTIES AND EQUIPMENT



The
Company did not have any property or equipment at March 31, 2015 and June 30, 2014.





F-8







NOTE
5– OTHER ASSETS



The Other
Assets comprise of the following as of March 31, 2015 and June 30, 2014:



|                                        |  | March 31, 2015 |         |  | June 30, 2014 |  
|--------------------------------------- |  | -------------- | ------- |  | ------------- | -
|                                        |  |                |         |  |               |  
|Loans Receivable                        |  | $              | 66,955  |  |               | $
|Shares issued for investment            |  | $              | 3,288   |  |               | $
|Receivable from discontinued operations |  | $              | 73,043  |  |               | $
|Investment in subsidiary                |  | $              | 2,550   |  |               |  
|Deposit for land purchase               |  | $              | 8,224   |  |               |  
|Total Other Assets                      |  | $              | 154,060 |  |               | $



During
the fiscal year ended June 30, 2011, Philand Vietnam Ltd., a wholly owned subsidiary of the Philand Ranch Ltd., made a security
deposit in the amount of $172,203 to the Chu Lai Open Economic Zone Authority, Quang Nam Province, Vietnam as a guarantee for
the Pointe91 development project at Bien Rang, Chu Lai, Nui Thanh District, Quang Nam Province, Vietnam. This amount was later
transferred to Ky Ha Chu Lai Investment and Development LLC (“KHCLIDC”) as a deposit for the clearing of land and
resettlement of residents in the Pointe91 project area. As a result of the discontinuance of the Pointe91 development project,
the Company is entitled to receive the refund of the deposit amount, less any expenses incurred in connection with the land clearing
and resettlement activity, and has recorded this amount as Other Receivable. Philand Vietnam Ltd. has received repayments from
KHCLIDC totaling approximately $99,160 and still carries $73,043 as Receivable from Discontinued Operations as of March 31, 2015.



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



On
January 10, 2013, the Company issued 3,288,443 shares of its restricted Common Stock for deposit towards the total purchase price
of the 70% equity interest in PT Tambang Sekarsa Adadaya. We recorded the value of these shares at par for a total of $3,288.



During
the quarter ended March 31, 2015, the Company invested $2,550 into Cornerstone Biomass Corporation, a Florida corporation that
has been set up to own and operate a wood pellet mill project in Live Oak, Florida. In addition, the Company made a deposit in
the amount of $8,224 towards the purchase price of a 12-acre parcel of land from Klausner Holding USA, Inc.



As
of March 31, 2015, the total value of Other Assets mentioned above was $154,060.



NOTE
6 – DISCONTINUED OPERATIONS



The
Company decided to recognize the businesses of PHI Gold Corp. (formerly PHI Mining Corporation), Providential Vietnam Ltd., PHI
Energy Corp., and Philand Ranch Ltd., a United Kingdom corporation, together with its wholly-owned subsidiaries Philand Corporation
(USA), Philand Ranch Ltd. (Singapore) and Philand Vietnam Ltd. as discontinued operations as of June 30, 2012 for practical business
and accounting purposes. The Company has recorded a total of $1,045,232 for the liabilities and potential liability contingencies
and written off all non-performing assets associated with these discontinued operations in the accompanying consolidated financial
statements as of March 31, 2015.



F-9







NOTE
7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES



The
accounts payable and accrued expenses at March 31, 2015 and June 30, 2014 consist of the following:



|A/P & ACCRUED EXPENSES             |  | March 31, 2015 |           |   | June 30, 2014 |  
|---------------------------------- |  | -------------- | --------- | - | ------------- | -
|Accounts payable                   |  |                | 520,991   |   |               |  
|Accrued salaries and payroll taxes |  |                | 749,063   |   |               |  
|Accrued interest                   |  |                | 3,111,107 |   |               |  
|Accrued legal expenses             |  |                | 368,822   |   |               |  
|Accrued consulting fees            |  |                | 173,870   |   |               |  
|Other accrued expenses             |  |                | 26,888    |   |               |  
|TOTAL:                             |  | $              | 4,950,741 | $ |               | $



NOTE
8 – DUE TO OFFICER



Due to officer,
represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, except for $100,000
as described below, unsecured and due on demand. As of March 31, 2015 and June 30, 2014, the balances were $1,870,058 and $1,858,402,
respectively.



|Officers/Directors |  | March 31, 2015 |           |  | June 30, 2014 |  
|------------------ |  | -------------- | --------- |  | ------------- | -
|Henry Fahman       |  | $              | 1,568,558 |  |               | $
|Tam Bui            |  | $              | 276,500   |  |               | $
|Frank Hawkins      |  | $              | 12,500    |  |               | $
|Lawrence Olson     |  | $              | 12,500    |  |               | $
|Total              |  | $              | 1,870,058 |  |               | $



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



NOTE
9 – LOANS AND PROMISSORY NOTES



SHORT
TERM NOTES PAYABLE:



As
of March 31, 2015 and June 30, 2014, the Company had short-term notes payable amounting to $1,295,008 and $1,346,721 with accrued
interest of $3,111,107 and $3,031,931, respectively. These notes bear interest rates ranging from 6% to 36% per annum. Some of
the notes payable are secured by assets of the Company as summarized below:



|Note Balance: |         |  | Secured by:
|------------- | ------- |  | -----------
|              |         |  |            
|$             | 115,000 |  |            
|              |         |  |            
|$             | 550,000 |  |            
|              |         |  |            
|$             | 150,000 |  |            
|              |         |  |            
|$             | 100,000 |  |            



F-10







CONVERTIBLE
PROMISSORY NOTE. The last Convertible Promissory Note issued to Asher Enterprises, Inc. (“Asher”) on June 17, 2011
was $42,500, with interest of 8% per annum, due and payable March 21, 2012. This note is convertible at the election of Asher
from time to time after the issuance date, at 39% discount to the average of the lowest closing bid prices for the Company’s
common stock during the ten trading day period ending on the latest complete trading prior to the conversion date. In the event
of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes
immediately due and payable. Should that occur, the Company is liable to pay Asher 150% of the then outstanding principal and
interest. The note agreements contain covenants requiring Asher’s written consent for certain activities not in existence
or not committed to by the Company on the issue date of the note. Outstanding note principal and interest amounts accrued thereon
can be converted in whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s
common stock determined by the discount rate mentioned in the note.



Additionally,
the note contains a reset provision to the exercise price and conversion price if the Company issues equity or other derivatives
at a price less than the exercise price set forth in such warrants and note. This ratchet provision results in a derivative liability
in our financial statements.



On July
25, 2011, $10,000 principal of the convertible note issued on January 11, 2011 was converted into an equivalent of 1,550 shares
of post-split common stock of the Company (2,325,581pre-split shares).



On August
8, 2011, $12,000 principal of the convertible note issued on January 11, 2011 was converted into an equivalent of 1,633 shares
of post-split common stock of the Company (2,448,980 pre-split shares).



On August
30, 2011, $15,000 principal of the convertible note issued on January 11, 2011 was converted into an equivalent of 2,941 shares
of post-split common stock of the Company (4,411,765 pre-split shares).



On October
21, 2011, $8,000 principal of the convertible note issued on January 11, 2011 was converted into an equivalent of 2,667 shares
of post-split common stock of the Company (4,000,000 pre-split shares).



On November
22, 2011, $10,000 principal of the convertible note issued on January 11, 2011 was converted into an equivalent of 5,083 shares
of post-split common stock of the Company (7,625,000 pre-split shares).



On 01/03/2012,
$10,000 principal of the convertible note issued on June 17, 2011 was converted into an equivalent of 4,444 shares of post-split
common stock of the Company (6,666,667 pre-split shares).



On January
11, 2012, $11,000 principal of the convertible note issued on June 17, 2011 was converted into an equivalent of 5,641 shares of
post-split common stock of the Company (8,461,538 pre-split shares).



On March
01, 2012, $12,000 principal of the convertible note issued on June 17, 2011 was converted into an equivalent of 5,741 shares of
post-split common stock of the Company (8,571,429 pre-split shares).



On April
23, 2012, Asher Enterprises, Inc. converted $7,000 principal amount of the convertible note dated June 17, 2011 into 8,197 shares
of post-split common stock of the Company at the price of $0.854 per share.



During the
quarter ended March 31, 2015, Asher Enterprises, Inc. converted a total of $4,700 in principal and accrued interest into 77,049
shares of Common Stock of the Company at the price of $0.061 per share. As of March 31, 2015, the last Convertible Promissory
Note issued to Asher Enterprises, Inc. on June 17, 2011 has been paid in full.



DUE TO PREFERRED
STOCKHOLDERS:



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



F-11







The interest
expenses payable to holders of preferred stock of $381,005 and $ 361,655 have been included in accrued interest included in account
payable and accrued expenses on the balance sheets as of March 31, 2015 and June 30, 2014, respectively.



ADVANCES
FROM CUSTOMERS (PREVIOUSLY CLASSIFIED AS UNEARNED REVENUE)



The Company
has reclassified the Unearned Revenues in the amount of $563,219 as Advances from Customers because the consulting services performed
by the Company for the related customers have not been completely finished as of the date of this report due to the customers’
inability to provide GAAP-compliant audited financial statements in order to file a registration statement with the Securities
and Exchange Commission.



NOTE
10 – LITIGATION



LEGAL
PROCEEDING SETTLED AND UNPAID AS OF MARCH 31, 2015:



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. This amount
has been accrued in the accompanying consolidated financial statements.



WILLIAM
DAVIDSON VS. MARTIN 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. (N/K/A PHI Capital Holdings, 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 whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period of nineteen months
beginning September 1, 2012. William Davidson has elected to convert a portion of the total amount into common stock of PHI Group,
Inc. in lieu of cash payment and has received 100,000 pre-split shares of Vanguard Mining Corporation common stock from the Company.
The Company has accrued the remaining liabilities associated with these promissory notes in the accompanying consolidated financial
statements as of March 31, 2015.



NOTE
11 – PAYROLL LIABILITIES



The
payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the fiscal 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 alleged balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company
is currently working with the Internal Revenue Service and the State of California Employment Department to resolve the remaining
balance.



F-12







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



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



NOTE
13–STOCKHOLDER’S EQUITY



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



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



Treasury
Stock:



The
balance of treasury stock as of March 31, 2015 was 2,987 post-split shares, valued at $3,801.



Common
Stock:



On July
19, 2012, an officer of the Company converted a total of $307,000 debts owed by the Company into 1,196,424 shares of PHI Group,
Inc.’s restricted common stock.



On July
31, 2012, seven creditors of the Company converted a total of $177,333.33 debts owed by the Company into 504,865 shares of PHI
Group, Inc.’s common stock.



On November
19, 2012, the Company reserved 5,673,327 shares of its common stock for a special dividend distribution.



On November
30, 2012, four creditors of the Company converted a total of $220,079.06 debts owed by the Company into 81,737 shares of PHI Group,
Inc.’s common stock.



On January
10, 2013, the Company issued 3,288,443 shares of PHI Group, Inc.’s common stock registered in the name of the majority shareholder
of PT Tambang Sekarsa Adadaya as a deposit towards the total purchase price of the 70% equity interest in PT Tambang Sekarsa Adadaya.



On February
14, 2013, two creditors of the Company converted a total of $150,000 debts owed by the Company into 155,885 shares of PHI Group,
Inc.’s common stock.



On February
22, 2013, the Company issued 44,763 shares of PHI Group, Inc.’s common stock valued at $50,000 to an Indonesian attorney
as payment for legal services in connection with the purchase of PT Tambang Sekarsa Adadaya.



On February
22, 2013, a creditor of the Company converted a total of $33,633 debts owed by the Company into 44,844 shares of PHI Group, Inc.’s
common stock.



F-13







On April
11, 2013, a creditor of the Company converted $50,000 owed by the Company into 76,540 shares of PHI Group, Inc.’s common
stock.



On April
26, 2013, three creditors of the Company converted a total of $180,000 of debts owed by the Company into 304,913 shares of PHI
Group, Inc.’s common stock.



On May 10,
2013, the Company issued 100,887 shares of its restricted common stock for $40,000 cash under Rule 144 for working capital.



On July
1, 2013, three creditors of the Company converted a total of $177,940 of principal and interest owed by the Company into 412,569
shares of common stock of PHI Group, Inc.



On February
11, 2014, a creditor of the Company converted a total of $156,750 of debts owed by the Company into 337,097 shares of PHI Group,
Inc.’s common stock.



On August
27, 2014, a creditor of the Company converted a total of $27,706.26 of short-term notes and accrued interest owed by the Company
into 91,440 shares of PHI Group, Inc.’s common stock.



On January
22, 2015, the Company issued 77,049 shares of $0.001 par value Common Stock to Asher Enterprises, Inc. as payment in full for
the balance of principal and accrued interest from the last Convertible Promissory Note issued to Asher Enterprises, Inc. on June
17, 2011.



On February
10, 2015, the Company issued 300,000 restricted shares of its $0.001 par value Common Stock to a shareholder-investor for cash.



As of March
31, 2015, there were 7,199,791 post-split shares of the Company’s $0.001 par value Common Stock issued and outstanding,
excluding 5,673,327 shares reserved for a special dividend distribution.



On
May 15, 2015, the Company cancelled 3,288,443 shares of the Company’s $0.001 par value Common Stock that were issued
to the majority shareholder of PT Tambang Sekarsa Adadaya on January 10, 2013 as a deposit towards the total purchase price of
the 70% equity interest in PT Tambang Sekarsa Adadaya. This transaction was terminated due to unsatisfactory due diligence results.



As of May
15, 2015, there were 9,584,675 post-split shares of the Company’s $0.001 par value Common Stock issued and outstanding,
including 5,673,327 shares reserved for a special dividend distribution.



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



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



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



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



F-14







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



NOTE
14–RELATED PARTY TRANSACTIONS



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



NOTE
15–CONTRACTS AND COMMITMENTS



BUSINESS
AND FINANCIAL CONSULTING AGREEMENT WITH THINH HUNG INVESTMENT CO.



Effective
May 21, 2010 the Company signed an agreement with Thinh Hung Investment Co., Ltd., a Vietnam-based company, to assist Thinh Hung
in identifying, locating and, possibly, acquiring various business opportunities for Thinh An Co., Ltd., a subsidiary of Thinh
Hung, including but not limited to a reverse merger, a stock swap, or a business combination between Thinh An and a publicly-traded
company in the U.S. In exchange for the services rendered, the Company would receive compensation in cash from Thinh Hung and
common stock of the combined company. As of September 30, 2011, the Company has completed a stock purchase and investment agreement
between Thinh Anh Co., Ltd. and Vietnam Foods Corporation, a Nevada corporation. However, the combined company has not filed a
registration statement with the Securities and Exchange Commission to become a reporting company. The Company has recognized $26,656
as only revenues from this transaction. The balance of $293,219 was booked as Customer Advances in the liability portion of the
balance sheet.



CORPORATE
COMBINATION AGREEMENT BETWEEN PROVIMEX, INC. AND HP.ITA JSC.



On June
19, 2012, Provimex, Inc. changed its name to HP.ITA Corporation. On July 20, 2012, HP.ITA Corporation (“HPUS”) signed
a Corporate Combination Agreement to acquire all the issued and outstanding stock of HP.ITA Joint Stock Company, a company organized
and existing under the laws of Vietnam, in exchange solely for such amount of authorized but unissued common stock of HPUS that
will have been equal to 95% of all the issued and outstanding shares of HPUS’s common stock immediately following the issuance
of such shares. HPUS intends to complete the required financial audits and file a Form 10 registration statement with the Securities
and Exchange Commission to become a separate fully reporting publicly traded company in the U.S. As of the date of this report
HPUS has not filed a registration statement with the Securities and Exchange Commission.



AGREEMENT
OF PURCHASE AND SALE WITH PT. TAMBANG SEKARSA ADADAYA



On December
24, 2012, the Company signed an Agreement of Purchase and Sale with PT. Tambang Sekarsa Adadaya (“TSA”), an Indonesian
limited liability company, and the holder(s) of a minimum of seventy percent (70%) of equity ownership in TSA to acquire a seventy
percent (70%) equity interest in TSA in exchange for a total purchase price of ten million five hundred thousand U.S. dollars
($US 10,500,000) in cash and stock of the Company. TSA currently owns two coal concessions together with the operation and production
licenses (Izin Usaha Pertambangan Operasi Produksi) and the other pertinent license(s) and permits covering a total area of 9,690
hectares, purportedly containing approximately 205 million metric tonnes of indicative coal resources, in Kecamatan Baras and
Sarudu, Kabupaten Mamuju Utara, Propinsi Sulawesi Barat, Indonesia. On January 10, 2013, the Company issued 3,288,443 shares of
common stock of PHI Group, Inc. as a deposit towards the total purchase price. On March 16, 2013, the Company signed an amendment
with TSA and the majority shareholder of TSA to extend the closing date of this transaction to June 30, 2013. The Company engaged
PT Runge Indonesia, a subsidiary of RungePincockMinarco, an Australian company, to conduct the independent technical due diligence
of the TSA coal concessions and ES&P Law Firm, an Indonesia legal firm, to conduct the legal due diligence of TSA. Since the
technical, legal, and financial due diligence results were incomplete by the extension date, this transaction was terminated on
June 30, 2013. On May 14, 2015, the Company cancelled 3,288,443 shares of the Company’s $0.001 par value Common Stock that
were issued to the majority shareholder of PT Tambang Sekarsa Adadaya on January 10, 2013 as a deposit towards the total purchase
price of the 70% equity interest in PT Tambang Sekarsa Adadaya. This transaction was terminated due to unsatisfactory due diligence
results.



F-15







AGREEMENT
WITH COLEBRAND INTERNATIONAL LTD.



On January
28, 2013 the Company signed a Business Cooperation Agreement with Colebrand International Ltd., a company organized and existing
under the laws of the United Kingdom, to cooperate in international trade and financial intermediation. The term of this agreement
is two years and has been extended to December 10, 2015.



AGREEMENT
WITH PACA



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



AGREEMENT
WITH PT RAKSASA METAL AGUNG



On June
29, 2013 the Company signed a Business Cooperation Agreement with PT. Raksasa Metal Agung (“Agung”), an Indonesian
company, to co-develop gold mining projects in Central Java, Indonesia. Subsequently, Agung and the Company signed two addenda
to the Business Cooperation Agreement, dated October 7, 2013 and January 29, 2014, respectively, to set forth the capital requirements
for the gold mining projects and the profit sharing agreement. According to the addenda, the Company will be entitled to 60% and
Agung 40% of the net profits to be derived from these operations. The second addendum also allows the Company to right to assign
the responsibilities and benefits in connection with this Business Cooperation Agreement to Vietnam Mining Corporation (“VNMC”),
a Nevada corporation, or another entity. On April 29, 2014, the Company signed an Assignment Agreement to assign, convey and transfer
all rights, interests and obligations in connection with said Business Cooperation Agreement and addenda to VNMC. As part of said
Assignment Agreement, the Company also committed itself to arranging the required capital for VNMC to co-develop gold mining opportunities
in Central Java, Indonesia with Agung. VNMC agreed to issue two million shares of its $0.001 par value Common Stock to the Company
as consideration for said Assignment Agreement. As of the date of this report, the Company has not received the stock compensation
from VNMC.



WITHDRAWAL
FROM POINTE91 HOSPITALITY DEVELOPMENT PROJECT BY PHILAND RANCH LTD.



On September
20, 2013, Philand Vietnam Limited, a wholly-owned subsidiary of Philand Corporation, submitted a request to the Chu Lai Open Economic
Zone Authority (“CLOEZA”), Quang Nam Province to voluntarily withdraw from the Pointe91 hospitality development project
in Tam Quang Village, Nui Thanh District, Quang Nam Province and surrender the investment license due to changed market conditions.
After a meeting was held on October 28, 2013 among CLOEZA, Ky Ha Chu Lai Investment and Development Company (“KHCLIDC”)
and Philand Vietnam Ltd., CLOEZA agreed to Philand Vietnam Ltd.’s request for the termination of the Pointe91 development
project and instructed the appropriate CLOEZA departments and KHCLIDC to return the unspent deposits to Philand Vietnam Ltd. and
to assist it in the termination process. In November 2013, KHCLIDC and Philand Vietnam Ltd. signed a settlement agreement to terminate
the previously executed land clearance and compensation agreement between the two companies and agreed that KHCLIDC would return
VND 2,705,349,242 from the deposit amount to Philand Vietnam Ltd.



F-16







AGREEMENT
WITH NE NORD ENERGY JOINT STOCK COMPANY



On November
14, 2013 the Company signed a Business Cooperation and Investment Agreement with NE Nord Energy Joint Stock Company, a Vietnamese
company, to cooperate, co-develop, invest or cause to be invested in, produce, market and sell LED lighting, solar energy, kinetic
power supply system, renewable energy, and other energy-related products and services in geographical areas and markets that deem
economically beneficial to both parties. The term of this agreement is two years.



BUSINESS
AND FINANCIAL CONSULTING AGREEMENT WITH ASIA GREEN CORP.



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



STOCK PURCHASE
AGREEMENTS FOR COMMON STOCK OF VIETNAM MINING CORPORATION



On January
24, 2014 the Company signed stock purchase agreements to acquire a total of fourteen million shares of common stock of Vietnam
Mining Corporation (“VNMC”), a Nevada corporation, from two individuals for a total purchase price of $141,175.00.
The closing of these transactions is scheduled to occur on the twentieth business day following VNMC’s regaining current
and good standing status with the State of Nevada, OTC Markets, its transfer agent(s), Depository Trust Corporation, and other
pertinent entities. During the quarter ended December 31, 2014, the Company converted the partial payment of $20,000 previously
deposited towards the purchase price for 8,750,000 shares of VNMC into 1,983,340 shares of pre-split VNMC stock and terminated
the balance of the referenced Stock Purchase Agreements.



CONSULTING
ENGAGEMENT AGREEMENT WITH VIETNAM MINING CORPORATION (n/k/a VANGUARD MINING CORPORATION)



On January
24, 2014 PHI Capital Holdings, Inc., a wholly-owned subsidiary of the Company, signed a Consulting Engagement Agreement with Vietnam
Mining Corporation, k/n/a Vanguard Mining Corporation (“VNMC”), a Nevada corporation, to assist VNMC to regain its
current and good standing status with the pertinent regulatory agencies in the United States and certain private service providers
and to seek new business opportunities for VNMC. PHI Capital Holdings is entitled to receive four million pre-split shares of
restricted common stock of VNMC pursuant to the provisions of Rule 144 as compensation for the services rendered. The term of
this agreement is six months. During the quarter ended March 31, 2015, PHI Capital Holdings received sixteen million post-split
shares of Common Stock of VNMC as compensation for the services rendered.



MEMORANDUM
OF UNDERSTANDING WITH PT CENDRAWASIH INTERNATIONAL



On January
29, 2014 the Company signed a Memorandum of Understanding (“MOU”) with PT Cendrawasih International, an Indonesian
company, to co-develop an 8,100-hectare gold concession in Kecamatan Kotannopan and Tambangan, Kabupaten Mandailing Natal, Sumatra
Utara, Indonesia. The estimated amount of gold deposits in this concession area is between 400,000 to 1,000,000 ounces, subject
to independent verification. Both parties agree to sign a definitive agreement containing representations, warranties, covenants
and indemnities customary for a transaction of this time within 30 days following the date of the MOU. The MOU also allows the
Company the right to assign the responsibilities and benefits in connection with project to Vietnam Mining Corporation, a Nevada
corporation, or another entity. On April 29, 2014, the Company signed an Assignment Agreement to assign, convey and transfer all
rights, interests and obligations in connection with said MOU to VNMC. As part of said Assignment Agreement, the Company also
committed itself to arranging the required capital for VNMC to co-develop the 8,100-hectare gold concession with PT Cendrawasih
International. VNMC agreed to issue three million pre-split shares of its $0.001 par value Common Stock to the Company as consideration
for said Assignment Agreement. As of the date of this report, the Company has not received the stock compensation from VNMC.



F-17







FUNDING
AGREEMENT REGARDING PETROBRAS BONDS



On February
4, 2014 the Company signed a Funding Agreement with The Dieterich Group and Robert M. Terry to provide up to $300,000, more likely
increasing to $400,000 in funding, on a best efforts and non-exclusive basis to underwrite the collection efforts being undertaken
on a series of 500 bonds originally issued by Petrobras, a Brazilian corporation focused on oil and gas exploration and development.
These bonds are currently owned and controlled by Starboard Financial, a Nevada LLC. In the most recent valuation report, each
of these bonds had a published discounted value of $750,000 including 7% interest through February 2008 and a possible published
redemption face value of $2,300,000. According to the Funding Agreement, the Company will receive a total recovery of 10 times
its investment in funding and 12.5% of the net proceeds, assuming the entire funding is provided by the Company and/or its investors,
from the bond collections after deduction of trading or selling expenses, and expenses of the Brazilian agents once Starboard
Financial and Brazilian parties have received the first $20,000,000 recovered.



ASSIGNMENT
OF BUSINESS COOPERATION AGREEMENT WITH PT RAKSASA METAL AGUNG TO VANGUARD MINING CORPORATION



On April
29, 2014, the Company signed an Assignment Agreement to assign, convey and transfer all rights, interests and obligations in connection
with the Business Cooperation Agreement between PT Raksasa Metal Agung and the Company to Vanguard Mining Corporation (f/k/a Vietnam
Mining Corporation), a Nevada corporation. As part of said Assignment Agreement, the Company also committed itself to arranging
the required capital for VNMC to co-develop gold mining opportunities in Central Java, Indonesia with PT Raksasa Metal Agung.
VNMC agreed to issue two million pre-split shares of its $0.001 par value Common Stock to the Company as consideration for said
Assignment Agreement. The Company has not received the stock compensation from VNMC as of the date of this report.



ASSISTING
VANGUARD MINING CORPORATION (F/K/A VIETNAM MINING CORPORATION) IN ACQUISITION OF LIMESTONE CONCESSION IN INDONESIA



During the
quarter ended June 30, 2014, the Company provided consulting service and assisted Vietnam Mining Corporation (N/K/A Vanguard Mining
Corporation; Trading Symbol: “VNMC”) to acquire a 75% equity interest in PT Mega Kencana Persada (“MKPI”),
an Indonesian company which owns of limestone tenement of approximate 330 hectares with an IUP Exploration License No. 540/112/K/2012
dated January 27, 2012, in Desa Sipapaga, Kecamatan Panyabungan, Kabupaten Mandailing Natal, Sumatra Utara, Republic of Indonesia.
The estimated amount of limestone deposits in this concession area is between 150,000,000 metric tons, subject to independent
verification. The Company also committed itself to arranging the required capital for VNMC to develop this limestone concession
with MKPI. VNMC agreed to issue three million pre-split shares of its $0.001 par value Common Stock to the Company as consideration
for this transaction. As of the date of this report, the Company has not received the stock compensation from VNMC as of the date
of this report.



CONSULTING
AGREEMENT WITH INDEPENDENT SENIOR GEOLOGIST



On April
30, 2014, the Company signed a consulting agreement with an independent senior geologist for certain necessary technical services
that will be required in connection with the review, survey, evaluation, and recommendation of mining opportunities and mineral
assets, including but not limited to gold, copper, limestone, coal, manganese, and iron ores in Indonesia and elsewhere that may
be approved and adopted by the Company. The term of the agreement is two years. The Company agreed to pay the consultant one million
shares of Common Stock of Vietnam Mining Corporation (N/K/A Vanguard Mining Corporation) for the duration of the agreement.



F-18







BUSINESS
COOPERATION AGREEMENT WITH DAYAK UNITED ENERGY, LLC.



On August
25, 2014, the Company signed a business cooperation agreement with Dayak United Energy, LLC, a Nevada limited liability company
(“DUE”), to cooperate with each other to arrange financing, mine, market and sell coal products from DUE’s current
joint operation contracts with mine owners in Kalimantan as well as other joint operation contracts that DUE will be able to secure
in the future. In addition, both parties may from time to time cooperate with each other and jointly engage in other business
activities that deem mutually desirable and beneficial to both parties.



BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH PT. RAY WOLTER ENERGI



On September
10, 2014 the Company signed a Business Cooperation and Investment Agreement with PT. Ray Wolter Energi (RWE), a member of Raywolter
Group, a company duly organized and existing under and by virtue of the laws of Republic of Indonesia, to primarily cooperate
with each other with respect to (1) developing two 225-MW thermal power plants in East Kalimantan, two 50-MW thermal power plants
in North Sulawesi, two 50-MW thermal power plants in Nusa Tenggara Timur, (2) manufacturing and installing 1,000 electricity transmission
towers, in addition to communications towers, across Indonesia, and (3) mining coal to supply to Indonesian domestic and export
customers, as well as other pertinent business activities that are deemed beneficial to both parties. PHI shall utilize its best
efforts to invest and/or cause to be invested in RWE and/or its respective projects and to provide and/or cause to be provided
best possible technologies and engineering, procurement and construction (EPC) services to jointly develop, construct and operate
the projects mentioned herein. RWE and PHI will enter into a separate definitive agreement which includes specific terms and conditions,
obligations, benefits, representations, warranties, covenants, and indemnities customary for a transaction of this type with respect
to each of the projects mentioned herein. Moreover, RWE and PHI may from time to time cooperate with each other and jointly engage
in other business activities that deem mutually acceptable and beneficial to both parties.



ASSUMPTION
OF DEBT BY AGENT155 MEDIA CORP.’S OFFICER.



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



BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH PT. RARA JAYA ABADI



On January
7, 2015, the Company signed a Business Cooperation and Investment Agreement with PT. Rara Jaya Abadi (“RJA”), a company
duly organized and existing under and by virtue of the laws of Republic of Indonesia, to primarily cooperate with each other with
respect to acquire 70% of equity ownership in PT BHT which holds 3 IUP Operasi Produksi coal mining licenses and port license
together with its own jetty and to expand the total area to become an Integrated Mining Area to include (a) offices of port officer,
inspection, bank, dormitory, canteen etc., (b) additional 5 sets of conveyors with capacity of ‎1,000 MT /hour, (c) additional
2 units of crusher with capacity of 2,000 MT /hour, (d)‎ back loading, and (e) other supporting facilities. The purpose of
the expansion is to increase loading capacity to approximately 50,000 MT per day, or 500,000 MT per month, up to 7,000,000 MT
per year to supply coals to Indonesian domestic and export customers.



RJA and
the Company will enter into a definitive agreement which includes specific terms and conditions, obligations, benefits, representations,
warranties, covenants, and indemnities customary for a transaction of this type with respect to each of the projects mentioned
herein. In addition, RJA and the Company may from time to time cooperate with each other and jointly engage in other business
activities that deem mutually acceptable and beneficial to both parties.



F-19







BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH AG MATERIALS, LLC.



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



PURCHASE
AND SALE AGREEMENT WITH PT MEGA KENCANA PERSADA



On March
16, 2015 the Company signed an Agreement of Purchase and Sale, to be effective as of April 1, 2015, with PT Mega Kencana Persada
(“MKPI”), an Indonesian company, and its majority shareholders (the “Shareholders”) to acquire a seventy-five
percent (75%) equity ownership of and the rights to explore and mine the limestone tenement of approximate 330 hectares with an
IUP Exploration License No. 540/112/K/2012 dated January 27, 2012, in Desa Sipapaga, Kecamatan Panyabungan, Kabupaten Mandailing
Natal, Sumatra Utara, Republic of Indonesia, in exchange for $950,000 in cash and $3,800,000 in the Company’s Class A Preferred
Stock valued at $1.00 per share. The Closing date shall be within sixty (60) days following the signing of the Purchase and Sale
Agreement, unless extended in writing by MKPI, the Shareholders and PHI Group, Inc.



NOTE
16–GOING CONCERN UNCERTAINTY



As shown
in the accompanying consolidated financial statements, the Company has an accumulated deficit of $37,543,947 as of March 31, 2015
and a loss from operations in the amount of $593,750 for the nine months ended March 31, 2015. 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 has taken action to strengthen the Company’s working capital
position and generate sufficient cash to meet its operating needs through June 30, 2015 and beyond. In the next twelve months,
the Company plan to continue focusing on energy and natural resources, including investing in and developing coal assets, independent
power plant projects, renewable energy, and industrial minerals, as well as engaging in international trade. PHI Capital Holdings,
Inc., the Company’s wholly owned subsidiary, will also continue to provide corporate and project finance services, including
merger and acquisition advisory and consulting services for companies in a variety of industries and arranging funding for energy-related,
natural resource and infrastructure projects. The Company anticipated generating more revenues through its proposed mergers and
acquisitions as well as other business activities mentioned herein. No assurances could be made that management would be successful
in achieving its plan. The president and chairman of the Company has committed to funding the Company’s operations from
various sources for the next 12 months.



NOTE
17 – SUBSEQUENT EVENT



BUSINESS
COOPERATION AND INVESTMENT AGREEMENT WITH CV BERKAT DO’A MAMA



On May 1,
2015, the Company signed a Business Cooperation and Investment Agreement (“BCIA”) with CV Berkat Do’A Mama,
an Indonesian company, to: (1) develop and mine a 6,200-hectare coal concession with estimated deposits of 33-55 million MT in
Kabupaten Kapuas, Central Kalimantan, (2) build a 30-MW coal-fired power plant in Kota Jayapura, Provinsi Papua, Indonesia, (3)
potentially build a mine-mouth coal-fired power plant in Kabupaten Kapuas, Central Kalimantan, and (4) supply coals to the Indonesian
domestic market and other countries, particularly Vietnam, Thailand, Malaysia, Japan, India and China. The BCIA calls for PHI
Group, Inc. to sign a conditional Purchase and Sale Agreement within twenty one days after the signing of the BCIA to acquire
a 70% equity ownership of CV Berkat Do’A Mama, to start a drilling program two weeks after the signing of the conditional
Purchase and Sale Agreement, and to sign the definitive Purchase and Sale Agreement thirty days after the drilling and boring
results are confirmed.



F-20







CONSULTING
ENGAGEMENT AGREEMENT WITH MYSON INVESTMENT AND IMPORT EXPORT JSC



On May 7,
2015, PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, signed a Consulting Engagement Agreement with Myson
Investment and Import Export Joint Stock Company (“Myson JSC”), a Vietnamese company, to provide consulting services
to and assist Myson JSC to become a fully reporting public company in the U.S. Stock Market. PHI Capital Holdings will be entitled
to receiving cash to defray the costs associated with the services to be rendered and common stock in the new public company under
Rule 144.



BUSINESS
COOPERATION AGREEMENT WITH KHM JOINT STOCK COMPANY



On May 8,
2015, the Company signed a Business Cooperation Agreement with KHM JSC, a Vietnamese company, to develop and expand international
markets for KHM’s mineral products, particularly exports of reclamation sand and granite to Singapore through Primearth
Resources Asia Pte Ltd, another strategic partner of the Company’s.



The Company
has been granted the first right of refusal by KHM to purchase approximately 102 million cubic meters of sand and 40 million cubic
meters of granite over the course of several years for exports to Singapore and other Asian markets.



CANCELLATION
OF STOCK PREVIOUSLY ISSUED FOR ACQUISITION



On May 14,
2015, the Company cancelled 3,288,443 shares of the Company’s $0.001 par value Common Stock that were issued to the majority
shareholder of PT Tambang Sekarsa Adadaya on January 10, 2013 as a deposit towards the total purchase price of the 70% equity
interest in PT Tambang Sekarsa Adadaya. This transaction was terminated due to unsatisfactory due diligence results.



F-21







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



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



INTRODUCTION



Established
in June 1982, PHI Group, Inc. (the “Company” or “PHI”) is a Nevada corporation primarily engaged in energy
and natural resources (www.phiglobal.com). The Company acquires and consolidates energy-related assets and other natural
resources, partners with international companies to develop independent power plant projects in Southeast Asia, and collaborates
with certain U.S. companies to provide renewable energy solutions using bio-mass, wind, solar power and other new technological
developments. The Company also provides corporate finance services, including merger and acquisition advisory and consulting services,
and arranges capital for energy-related, natural resource and infrastructure projects through its wholly owned subsidiary PHI
Capital Holdings, Inc. (www.phicapitalholdings.com). In addition, the Company also participates in international trade
activity. No assurances can be made that the Company will be successful in achieving its plan.



BACKGROUND



PHI Group,
Inc. (“PHI”), formerly Providential Holdings, Inc., was organized under the laws of the State of Nevada on June 8,
1982 under the name of JR Consulting, Inc. Following the acquisition of Providential Securities, Inc., a California-based brokerage
firm, the Company changed its name to Providential Securities, Inc. (Nevada) on January 12, 2000. Subsequently, the Company changed
its corporate name to Providential Holdings, Inc. on February 9, 2000 and to PHI Group, Inc. on April 13, 2009. Prior to the corporate
combination agreement with Providential Securities, Inc., JR Consulting had an operating subsidiary, Diva Entertainment, Inc.,
which operated two modeling agencies, one in New York and one in California. In October 2000, Providential Securities withdrew
its securities brokerage membership and ceased its financial services business. From October 2000 to October 2011, the Company
was engaged in mergers and acquisitions advisory and consulting services, real estate and hospitality development, mining, oil
and gas, telecommunications, technology, healthcare, private equity, and special situations. Since October 2011, the Company has
primarily focused on energy and natural resources, including investing in coal assets, international trade, independent power
plant projects, renewable energy, and industrial minerals. PHI Capital Holdings, Inc., the Company’s wholly owned subsidiary,
continues to provide corporate and project finance services, including merger and acquisition advisory and consulting services
for companies in a variety of industries and arranging funding for energy-related, natural resource and infrastructure projects.



BUSINESS
STRATEGY



PHI Group
Inc.’s strategy is to:



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



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



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



SUBSIDIARY:



Since October
2011 the Company has divested its holdings in certain subsidiaries that are not directly related to energy and natural resources
in order to focus on its new scope of core business. As of the date of this report, PHI Capital Holdings, Inc. is the only active
wholly owned operating subsidiary of the Company.





3







PHI CAPITAL
HOLDINGS, INC. (formerly Providential Capital, Inc.)



In May 2003,
the Company formed a division under the name of Providential Capital to provide financial products and services for the micro-small
cap arenas and manage the Company’s proprietary merger and acquisition activities. In September 2004, Providential Capital,
Inc. was incorporated under the laws of the State of Nevada as a wholly owned subsidiary of the Company to provide merger and
acquisition advisory services, consulting services, project financing, and capital market services to clients in North America
and Asia. In May 2010, Providential Capital changed its name to PHI Capital Holdings, Inc. This subsidiary has successfully managed
merger plans for several privately held and publicly traded companies and continues to focus on serving the Pacific Rim markets
in the foreseeable future.



DISCONTINUED
OPERATIONS:



The Company
has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited (together with its subsidiaries Philand Ranch
Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (formerly PHI Mining Corporation), and
PHI Energy Corporation as of June 30, 2012. (Note 6)



SPIN-OFF
SUBSIDIARIES:



HP.ITA
CORPORATION (FORMERLY PROVIMEX, INC.)



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



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



Touchlink
Communications was formed on July 7, 2003 as a division of the Company to provide point-of-sale (POS) terminals and prepaid calling
cards to retailers, convenient stores and non-profit organizations across the US. This subsidiary was later incorporated as a
Nevada corporation in February 2004 under the name of Touchlink Communications, Inc. as a wholly owned subsidiary of the Company
to provide long distance services to residential and business customers in the United States. The Company has declared a 15% stock
dividend of Touchlink Communications, Inc. to shareholders of record as of September 15, 2004. On November 03, 2008, this subsidiary
changed its name to Vietnam Media Group, Inc. with the intent to develop a multi-media business in Vietnam and subsequently resumed
the corporate name of Touchlink Communications, Inc. in February 2011. On April 11, 2014 this subsidiary changed its name to Asia
Green Corporation (“AGC”) and entered into a business combination agreement with Asia Green Limited Liability Company,
a Vietnam-based company, to become a holding company for agroforestry and afforestation business in Vietnam and Southeast Asia.
On July 28, 2014 AGC changed its corporate name to Omni Resources, Inc. to pursue a new business venture. The Company anticipates
holding about 10% equity interest in Omni Resources, Inc. following its recapitalization plan.



STOCK
OWNERSHIPS:



As
of March 31, 2015 the Company owned 22,535,714 shares of Catalyst Resource Group, Inc. common stock, or equivalent to 2.56%.





4







VANGUARD
MINING CORPORATION (FORMERLY VIETNAM MINING CORPORATION)



Since June
2010, the Company has provided consulting and advisory services to Vanguard Mining Corporation (formerly Vietnam Mining Corporation)
and has been compensated with Common Stock of Vanguard Mining Corporation in lieu of cash for services rendered. As of March 31,
2015, the Company owned 12,623,419 post-split shares of Vanguard Mining Corporation, or equivalent to 8.73%



CRITICAL
ACCOUNTING POLICIES



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



Valuation
of Long-Lived and Intangible Assets



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



Income Taxes



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



RESULTS
OF OPERATIONS



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



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



5







Three
months ended March 31, 2015 compared to the three months ended March 31, 2014



Total
Revenues:



During the
quarter ended March 31, 2015, the Company generated $16,000 in revenues from consulting and advisory services, as compared to
$54,960 in revenues for the same period ended March 31, 2014.



Operating
Costs and Expenses:



Total operating
expenses were $125,749 and $139,040 for the three months ended March 31, 2015 and 2014, respectively. The decrease in total operating
expenses is primarily due to a decrease in general and administrative expenses, offset by an increase in professional services.
General and administrative expenses were $32,999 and $54,440 for the three months ended March 31, 2015, and 2014, respectively.
The decrease in general and administrative expenses between the two comparable periods was primarily due to decreases in expenditures
associated with advertising, filing fees, and transfer agent services.



Other
Income and Expenses:



Total other
expenses were $146,787 for the three months ended March 31, 2015 compared to $81,923 for the three months ended March 31, 2014.
The increase in other expenses was mainly due to the increases in loss on sale of marketable securities and loss on settlement
of debts during the current period.



Interest
expense was $81,377 and $81,142 for the three months ended March 31, 2015 and 2014, respectively.



Net Loss:



Net loss
for the three months ended March 31, 2015 was $256,537 as compared to a net loss of $166,003 for the same period in 2014, which
is equivalent to ($0.04) per share for the current period and ($0.03) per share for the same period in 2014, both based on the
weighted average number of basic and diluted shares outstanding after adjusting for the 1 for 1,500 reverse split effected on
March 15, 2012. The increase in net loss between the two comparable periods is primarily due to the increase in professional service
expenses and increases in loss on sale of marketable securities and loss on settlement of debts during the current period as compared
to corresponding previous period.



Nine
months ended March 31, 2015 compared to nine months ended March 31, 2014



Total
Revenues:



The Company
generated $31,096 from consulting and advisory services for the nine months ended March 31, 201 and $54,960 from consulting services
for the corresponding period in 2014.



Operating
Costs and Expenses:



Total operating
expenses were $308,519 and $274,923 for the nine months ended March 31, 2015, and 2014, respectively. The increase in total operating
expenses during the current period is primarily due to the increase in professional services, offset by a decrease in general
and administrative expenses during the current period. Salaries and wages were $157,500 for both the nine-month periods ended
March 31, 2015 and March 31, 2014. General and administrative expenses were $78,031 during the nine months ended March 31, 2015
as compared to $85,523 during the same corresponding period in 2014.



6







Other
Income and Expenses:



Interest
expense was $242,517 and $242,606 for the nine months ended March 31, 2015, and 2014, respectively. During the nine months ended
March 31, 2015, the Company recorded a loss on sale of marketable securities of $47,813 and a loss on settlement of debts of $25,845
versus a gain of $372,278 on settlement of debts during the same period ended March 31, 2014.



Net Income
(Loss):



Net loss
for the nine months ended March 31, 2015 was $593,750 as compared to net loss of $90,731 for the same period in 2014, which is
equivalent to ($0.09) per share for the current period and ($0.01) per share for the same period in 2014, based on the revised
weighted average number of basic and diluted shares outstanding for each period, after adjusting for 1 for 1,500 reverse stock
split in March 2012.



CASH
FLOWS



The Company’s
cash and cash equivalents balance were $8,692 as of March 31, 2015, as compared to $13,789 in cash and cash equivalents balance
as of March 31, 2014.



Net cash
used in the Company’s operating activities during the nine-month period ended March 31, 2015 was $280,309, compared to net
cash used in operating activities of $951,538 during the nine-month period ended March 31, 2014. This represents a decrease of
$671,229, or (70.54%) in net cash used in operating activities between the nine-month periods ended March 31, 2015 and 2014. The
underlying reason for the decrease was primarily due to a increase in other assets and prepaid expenses in the amount of $40,324
and an increase in accounts payable and accrued expense of $353,765 during the nine-month period ended March 31, 2015, as compared
to a decrease in other assets and prepaid expenses in the amount of $2,864 and a decrease in accounts payable and accrued expenses
of $863,672 during the nine months ended March 31, 2014.



Cash used
in investing activities for the nine-month period ended March 31, 2015 as $10,774, compared to cash provided by investing activities
of $50,000 for the nine-month period ended March 31, 2014.



Cash provided
by financing activities was $269,152 for the nine-month period ended March 31, 2015, as compared to cash provided by financing
activities of $915,328 for the nine-month ended March 31, 2014. The underlying reason for the decrease of $646,176, or (70.60%)
in cash provided by financing activities in the current period was mainly due to the fact that there is no reduction in minority
interest during the current period, as compared to an elimination of minority interest of $704,205 during the nine-month period
ended March 31, 2014.



HISTORICAL
FINANCING ARRANGEMENTS



SHORT TERM
NOTES PAYABLE:



In the course
of its business, the Company has obtained short-term loans from individuals and institutional investors and also from time to
time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. As of March 31, 2015 and June
30, 2014, the Company had short-term notes payable amounting to $1,295,008 and $1,346,721 with accrued interest of $3,111,107
and $2,874,509, respectively. These notes bear interest rates ranging from 6% to 36% per annum. Some of the notes payable are
secured by assets of the Company as summarized below:



|Note Balance: |         |  | Secured by:
|------------- | ------- |  | -----------
|              |         |  |            
|$             | 115,000 |  |            
|              |         |  |            
|$             | 550,000 |  |            
|              |         |  |            
|$             | 150,000 |  |            
|              |         |  |            
|$             | 100,000 |  |            



7







CONVERTIBLE
PROMISSORY NOTE. The last Convertible Promissory Note issued to Asher Enterprises, Inc. (“Asher”) on June 17, 2011
was $42,500, with interest of 8% per annum, due and payable March 21, 2012. During the quarter ended March 31, 2015, Asher Enterprises,
Inc. converted a total of $4,700 in principal and accrued interest into 77,049 shares of Common Stock of the Company at the price
of $0.061 per share. As of March 31, 2015, this note has been paid in full.



FINANCIAL
PLANS



LIQUIDITY
AND CAPITAL RESOURCES



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



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



Management
has taken action and formulated plans to strengthen the Company’s working capital position and generate sufficient cash
to meet its operating needs through June 30, 2015 and beyond. The working capital cash requirements for the next 12 months following
the end of the current quarter would be generated from operations, sale of marketable securities and additional financing.



AVAILABLE
FUTURE FINANCING ARRANGEMENTS: The Company is in the process raising a total of $60 million by offering 40 million investment
units each consisting of one share of Class A cumulative convertible redeemable preferred stock and one warrant to purchase common
stock of the company under the auspices of Rule 506(c), Regulation D of the Securities Act of 1933. The Class A preferred stock
pays twelve percent (12%) non-compounding cumulative dividends per annum, is convertible into the Company’s common stock
after one year at 25% discount to the market price of the common stock at the time of conversion, and is redeemable at 120% premium
by the Company after two years since the date of issuance. Each warrant will entitle holder to buy one share of the Company’s
common stock at 25% discount to the market price of the Company’s common stock at the time of exercise starting one year
and ending five years after issuance. The Company will set aside a sinking fund for dividend payments for the first year.



In
addition, the Company has engaged a number of investment banking firms and also worked directly with institutional lenders to
arrange financing for potential acquisitions. The Company believes it will be able to secure the required financing arrangements;
however, no assurances could be made that management would be successful in achieving its plan.



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



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



Currency
Fluctuations and Foreign Currency Risk



Some of
our operations are conducted in Vietnam and Indonesia using Vietnamese Dong and Indonesian Rupiahs, which are the official currencies
of these countries. The effect of the fluctuations of exchange rates is considered minimal to our business operations.



8







Interest
Rate Risk



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



Valuation
of Securities Risk



Since majority
of our income is paid with the marketable securities, the value of our assets may fluctuate significantly depending on the market
value of the securities we hold.



ITEM
4. CONTROLS AND PROCEDURES



Evaluation
of Disclosure and Procedures



As of March
31, 2015, the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer
reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Exchange Act
Rule 13a-15(e) and 15d-15(e). As of the end of the period covered by this report, based on that evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring
that material information that the Company must disclose in the reports that it files or submits under the Securities Exchange
Act of 1934, as amended, the “Exchange Act”, is recorded, processed, summarized, and reported on a timely basis, and
that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated
and communicated to the Company’s chief executive officer and chief financial officer as appropriate to allow timely decisions
regarding required disclosure.



Changes
in Internal Controls



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



Management’s
Report on Internal Control over Financial Reporting



Our management
is responsible for establishing and maintaining adequate internal control over financial reporting at PHI Group. Internal control
over financial reporting is a process designed by or under the supervision of our chief executive officer/acting chief financial
officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance
with GAAP. A company’s internal control over financial reporting includes policies and procedures that (1) pertain to the
maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of our assets,
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management
and board of directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of our assets that could have a material effect on our financial statements.



Our management
assessed the effectiveness of PHI Group’s internal control over financial reporting as of March 31, 2015. In making this
assessment, our management used the criteria established in the Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).



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



9







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



|● | Ineffective
    control over the financial statements closing process;                                                                                                 
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                        
|● | Insufficient
    personnel with an appropriate level of accounting knowledge, experience with the Company and/or industry, and training in
    the application of GAAP;
|  |                                                                                                                                                                        
|● | Lack
    of segregation of duties; and                                                                                                                                 
|  |                                                                                                                                                                        
|● | Inadequate
    monitoring of non-routine and non-systematic transactions.                                                                                              



PART
II - OTHER INFORMATION



ITEM
1. LEGAL PROCEEDINGS



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



LEGAL
PROCEEDING SETTLED AND UNPAID AS OF MARCH 31, 2015:



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. This amount
has been accrued 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. As of March 31, 2015, William Davidson has converted a portion of the total amount
into common stock of PHI Group, Inc. in lieu of cash payment and received 100,000 shares of pre-split stock of Vanguard Mining
Corporation from the Company. The Company has accrued the potential liabilities associated with these promissory notes in the
accompanying consolidated financial statements as of March 31, 2015.



10







ITEM
1A. RISK FACTORS



RISK
FACTORS



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



General
Risks Related to Our Business



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



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



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



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



Acquisitions
involve a number of special risks, including:



| | ● | failure
    of the acquired business to achieve expected results;                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                         
| | ● | diversion of management’s
    attention;                                                                                
| |   |                                                                                                                         
| | ● | failure to retain
    key personnel of the acquired business;                                                           
| |   |                                                                                                                         
| | ● | additional financing,
    if necessary and available, could increase leverage, dilute equity, or both;                  
| |   |                                                                                                                         
| | ● | the potential
    negative effect on our financial statements from the increase in goodwill and other intangibles; and  
| |   |                                                                                                                         
| | ● | 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.



11







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



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



Risks
associated with coal business



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



Risks
Related to Our Securities



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



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



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



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



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



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



12







These regulations
require broker-dealers to:



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



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



*Provide
certain written disclosures to the purchaser.



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



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



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



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



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



ITEM
3. DEFAULTS UPON SENIOR SECURITIES



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



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



None



ITEM
5. OTHER INFORMATION



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



ITEM
6. EXHIBITS



The following
exhibits are filed as part of this report:



|Exhibit
    No. |  | Description                                                                                                                                
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                            
|21.1            |  | Subsidiaries
    of registrant                                                                                                             
|                |  |                                                                                                                                            
|31.1            |  | Certification
    by Henry D. Fahman, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                  
|                |  |                                                                                                                                            
|31.2            |  | Certification
    by Henry D. Fahman, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                  
|                |  |                                                                                                                                            
|32.1            |  | Certification
    by Henry D. Fahman, Chief Executive Officer of the Registrant, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                |  |                                                                                                                                            
|32.2            |  | Certification
    by Henry D. Fahman, Chief Financial Officer of the Registrant, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



13







SIGNATURES



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



|PHI
    GROUP, INC.    |                               
|---------------------- | ------------------------------
|                       |                               
|Date:
    May 15, 2015 |                               
|                       |                               
|By:                    | /s/
    Henry D. Fahman       
|                       | Henry D. Fahman,
    President



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



|SIGNATURE                 |  | TITLE                                          |  | DATE            
|------------------------- |  | ---------------------------------------------- |  | ----------------
|                          |  |                                                |  |                 
|/s/
    Henry D. Fahman   |  | Chairman/President/Chief
    Financial Officer |  | May
    15, 2015
|HENRY
    D. FAHMAN       |  |                                                |  |                 
|                          |  |                                                |  |                 
|/s/
    Tina T. Phan      |  | Treasurer                                      |  | May 15, 2015    
|TINA
    T. PHAN          |  |                                                |  |                 
|                          |  |                                                |  |                 
|/s/
    Tam T. Bui        |  | Director                                       |  | May 15, 2015    
|TAM
    T. BUI            |  |                                                |  |                 
|                          |  |                                                |  |                 
|/s/
    Frank     Hawkins |  | Director                                       |  | May 15, 2015    
|FRANK
    HAWKINS         |  |                                                |  |                 



14