SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended DECEMBER 31, 2010 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from 
_________
to 
_________Commission file number2-78335-NYPHI GROUP, INC.(Name of Issuer in its charter)  Nevada
     90-0114535(State of Incorporation or Organization)
     (I.R.S. Employer Identification No.)
  17011 Beach Blvd., Suite 1230, Huntington Beach, California 92647(Address of Principal Executive Offices) (Zip Code) (714) 843-5450Issuer's Telephone Number, Including Area Code (Former name, former address and former fiscal year, if changed since last report)  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 for 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
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. 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 The number of shares outstanding of the registrant's Common Stock, $0.001 par value, was 200,642,054 as of February 22, 2011.
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EXPLANATORY NOTE  We noticed that there were errors in the dated dates associated with the signatures in Item 6 (Exhibits) of Part II (Other Information) in our quarterly report for the period ended December 31, 2010 as filed on February 22, 2011 (effective February 23, 2011).  This Form 10-Q/A amends the Quarterly Report on Form 10-Q of PHI Group, Inc. (the “Company”) for the quarter ended December 31, 2010 (the “Original Filing”), filed on February 22, 2011, to correct the dated dates associated with the signatures in Item 6 (Exhibits) of Part II (Other Information). The previous dated dates of February 22, 2010  are hereby replaced with the new dated dates of February 22, 2011. There are no changes in our financial statements for the referenced quarter.  Except where indicated in this amendment, this Form 10-Q/A continues to describe the Company as of the date of the Original Filing, and does not update disclosures to reflect events that occurred after the date of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing, including any amendments to those filings.
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PHI GROUP, INC.For the Period Ended December 31, 2010PART I - FINANCIAL INFORMATION  Item 1- Consolidated Financial Statements – Unaudited Unaudited Consolidated Balance Sheets as of December 31, 2010 and June 30, 2010 Unaudited Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2010 and 2009 Unaudited Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2010 and 2009 Unaudited Notes to Consolidated Financial Statements Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3- Quantitative and Qualitative Disclosures about Market Risk Item 4- Controls and Procedures PART II - OTHER INFORMATION Item 1- Legal Proceedings Item 1A- Risk Factors Item 2- Unregistered Sales of Equity Securities and Use of Proceeds Item 3- Defaults Upon Senior Securities Item 4- Submission of Matters to a Vote of Security Holders Item 5- Other Information Item 6- Exhibits SIGNATURES
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PART I - FINANCIAL INFORMATION ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS
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PHI GROUP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(UNAUDITED)December 31,
     
     June 30,2010
     
     2010RestatedASSETSCurrent assets:Cash and cash equivalents
     $                3,116
     
     $            75,299Marketable securities
     174,650
     
     -Loans receivable from related parties
     6,200
     
     2,120Other current assets
     780
     
     3,477Total current assets
     184,746
     
     80,897Property and EquipmentProperty and equipment, net
     2,988
     
     4,516Construction in progress
     1,038,996
     
     935,076Other assets:Deposits
     13,161
     
     13,161Total assets
     $         1,239,890
     
     $       1,033,650LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilities:Accounts payable and accrued expenses
     $         4,070,198
     
     $       3,584,802Short-term notes payable
     2,337,956
     
     2,400,546Convertible promissory note, net of discount $38,378
     28,622
     
     -Derivative Liability
     58,974
     
     -Due to officers
     1,267,149
     
     1,126,529Payable to related party
     235,000
     
     235,000Due to preferred stockholders
     215,000
     
     215,000Unearned revenue
     293,219
     
     459,886Other current liabilities
     119,691
     
     119,691Total current liabilities
     8,625,810
     
     8,141,454Stockholders' deficit:Preferred stock , $.001 par value, 100,000,000 sharesauthorized; none issued and outstanding
     -
     
     -Common stock, $.001 par value; 300,000,000 shares authorized;227,945,236 issued and 200,470,090 outstanding and  198,453,375 issued and 198,280,961 outstanding, respectively
     200,470
     
     198,281Shares to be issued
     57,000
     
     57,000Treasury stock, $.001 par value, 1,330,440 shares of common stock, respectively
     (1,330)
     
     (1,330)Additional paid-in-capital
     20,257,016
     
     19,827,736Prepaid consulting
     -
     
     (5,000)Accumulated deficit
     (27,373,259)
     
     (26,999,492)Total
     (6,860,103)
     
     (6,922,805)Non-Controlling interest
     (525,817)
     
     (184,999)Total stockholders' deficit
     (7,385,921)
     
     (7,107,804)Total liabilities and stockholders' deficit
     $         1,239,890
     
     $       1,033,650The accompanying notes form an integral part of these unaudited consolidated financial statements1
     
     0PHI GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the Three Month Periods
     
     For the Six Month PeriodsEnded December 31,
     
     Ended December 31,2010
     
     2009
     
     2010
     
     2009Net revenuesConsulting and advisory fee income
     $          6,000
     
     $              6,000
     
     $      353,317
     
     $             12,000Operating expenses:Depreciation and amortization
     731
     
     3,896
     
     1,529
     
     7,834Salaries and wages
     76,154
     
     93,685
     
     151,500
     
     184,007Professional services, including non-cash compensation
     117,850
     
     28,903
     
     242,735
     
     145,882General and administrative
     70,978
     
     220,319
     
     165,065
     
     292,972Total operating expenses
     265,713
     
     346,802
     
     560,829
     
     630,694Loss from operations
     (259,714)
     
     (340,802)
     
     (207,512)
     
     (618,694)Other income and (expenses)Interest expense
     (85,456)
     
     (155,317)
     
     (261,439)
     
     (299,108)Loss on equity investment
     -
     
     (13,178)
     
     -
     
     (13,178)Loss on sale of fixed assets
     -
     
     (701)
     
     -
     
     (701)Loss on debt settlement-net
     (24,668)
     
     -
     
     (24,668)
     
     (2,701)Impairment of marketable security
     -
     
     (1,750,000)
     
     -
     
     (1,750,000)Impairment of loan receivable
     -
     
     (109,600)
     
     -
     
     (109,600)Change in derivative liability
     (8,451)
     
     -
     
     (6,681)
     
     -Other income
     27,756
     
     183
     
     39,913
     
     2,224Net other expenses
     (90,819)
     
     (2,028,614)
     
     (252,875)
     
     (2,173,065)Loss before non-controlling interest
     (350,533)
     
     (2,369,416)
     
     (460,387)
     
     (2,791,759)Non-Controlling interest
     47,514
     
     18,133
     
     86,621
     
     31,225Net loss
     $    (303,019)
     
     $      (2,351,283)
     
     $    (373,766)
     
     $      (2,760,534)-Net loss per share:Basic
     $          (0.00)
     
     $               (0.01)
     
     $          (0.00)
     
     $               (0.01)Diluted
     $          (0.00)
     
     $               (0.01)
     
     $          (0.00)
     
     $               (0.01)Weighted average number of shares outstanding:Basic
     199,053,912
     
     193,830,961
     
     198,753,644
     
     193,830,961Diluted
     199,053,912
     
     191,386,503
     
     198,753,644
     
     191,386,503The accompanying notes form an integral part of these unaudited consolidated financial statements
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PHI GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2010 AND 2009(UNAUDITED)2010
     
     2009Cash flows from operating activities:Net income loss from operations
     $      (373,766)
     
     $    (2,760,534)Adjustments to reconcile net income  to net cash used in operating activities:
     -Depreciation
     1,527
     
     7,834Loss on debt settlement
     24,668
     
     2,701Amotization of Discount
     22,435
     
     -Change in Fair Value of Derivative liability
     6,681
     
     -Loss on equity investment
     -
     
     13,178Non-Controlling interest
     (86,621)
     
     (31,225)Issuance of shares for  consulting services
     5,000
     
     -Impairment of assets
     -
     
     1,750,000Bad debt expense
     -
     
     32,071Marketable securities received for consulting service
     (174,650)
     
     -Changes in operating assets and liabilities:Increase on accounts receivable
     -
     
     3,358(Increase) decrease in other assets and prepaid expenses
     (1,384)
     
     158,326Increase  in accounts payable and accrued expenses
     418,806
     
     603,333Net cash used in operating activities
     (157,305)
     
     (220,958)Cash flows from investing activities:Proceeds from sales of property and equipment
     -
     
     23,193Construction in progress
     (103,920)
     
     (22,058)Net cash provide by (used in) investing activities
     (103,920)
     
     1,135Cash flows from financing activities:Purchase of subsidiary shares
     (347)Proceeds from sale of stock of subsidiary
     17,106
     
     140,000Proceeds on notes payable
     165,500
     
     100,340
     
     
     
     
     
     Philand 105,500 + Asher 35,000+ David Le 25,000 = 165,500Payments on notes payable
     (27,000)
     
     (83,050)
     
     
     
     
     
     
     Robert Stevenson 2000+ John Nguyen 25,000 = 27,000Borrowings from officer
     63,330
     
     85,550
     
     
     
     
     
     
     
     Phi Group 55330+ Philand 8000 = 63330Payments on advances from officer
     (29,550)
     
     (57,905)Net cash provided by  financing activities
     189,039
     
     184,935Net decrease in cash and cash equivalents
     (72,185)
     
     (34,888)Cash and cash equivalents, beginning of period
     75,301
     
     37,813Cash and cash equivalents, end of period
     $            3,116
     
     $             2,925Supplemental disclosures of cash flow informationCash paid for taxes
     $                    -
     
     $                950Cash paid for interest
     $            6,500
     
     $             2,400The accompanying notes form an integral part of these unaudited consolidated financial statements
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PHI GROUP, INC. AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 - NATURE OF BUSINESS PHI GROUP, INC. (formerly Providential Holdings, Inc.), ("PHI") is engaged in a number of business activities, specifically merger and acquisition advisory services, real estate development, and mining. The Company acquires and consolidates special opportunities in selective industries to create additional value, acts as an incubator for emerging companies and technologies, and provides financial consultancy and M&A advisory services to U.S. and foreign companies. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of PHI Group, Inc., and its subsidiaries, Providential Securities, Inc., PHI Capital Holdings, Inc., Provimex, Inc., PHI Energy Corporation (formerly Providential Energy Corporation), Touchlink Communications, 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. Providential Securities, Inc., Provimex, Inc., PHI Energy Corporation, and Touchlink Communications are inactive. 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, 2010. 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 six months ended December 31, 2010 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2011. 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.
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Each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is quoted on either the “Pink Sheets” or the OTC Bulletin Board. As such, each investment is accounted for in accordance with the provisions of SFAS No. 115. Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder's equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold. On December 31, 2010, the marketable securities have been recorded at $174,650 based upon the fair value of the marketable securities. (Note 4) FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is 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. 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 EQUIPMENTS 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. DERIVATIVES Derivative instruments are recognized as either assets or liabilities and are measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. 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. RECENT ACCOUNTING PRONOUNCEMENTS In April 2010, the FASB issued Accounting Standards Update 2010-13 (ASU 2010-13), "Compensation - Stock Compensation (Topic 718)." This Update provides amendments to Topic 718 to clarity that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise
qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The provisions of ASU 2010-13 are not expected to have a material effect on the Company's consolidated financial statements.
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In July 2010, the FASB issued an accounting update to provide guidance to enhance disclosures related to the credit quality of a company's financing receivables portfolio and the associated allowance for credit losses. Pursuant to this accounting update, a company is required to provide a greater level of disaggregated information about its allowance for credit loss with the objective of facilitating users' evaluation of the nature of credit risk inherent in the company's portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit losses, and the changes and reasons for those changes in the allowance for credit losses. The revised disclosures as of the end of the reporting period are effective for the Company beginning in the second quarter of fiscal 2011, and the revised discourses related to activities during the reporting period are effective for the Company beginning in the third quarter of fiscal 2011. The Company is currently evaluating the impact of this accounting update on its financial disclosures.  NOTE 2 - NASD EXAMINATION AND DISCONTINUANCE OF PROVIDENTIAL SECURITIES, INC. After the completion of a routine audit of Providential Securities, Inc. (“Providential”) in July and August 2000, the National Association of Securities dealers, Inc. alleged that Providential violated certain provisions of the NASD’s Conduct Rules 2120, 2330, 2110 and 3010, and Rules 15c2-4, 10b-5, 10b-9 and 15c3-3 of the Securities and Exchange Commission. Without admitting or denying any of the allegations, Providential Securities, Inc. and Henry Fahman voluntarily submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which was accepted by NASD Regulation, Inc. on October 27, 2000. Providential Securities, Inc. was censured, fined $115,000 and required to offer rescission to those public customers who participated in the Providential Private Placement. In addition, Henry Fahman was banned, in all capacities, from associating with any NASD member. Based upon the above mentioned circumstances, Providential Securities, Inc. withdrew its membership from the NASD and ceased its securities brokerage operation in October 2000. The fine of $115,000 is included in accrued expenses in the accompanying consolidated financial statements. The Company has offered all Preferred Stock holders rescission on their investment. During the year ended June 30, 2004, $235,000 from the amount due to Preferred Stock Holders plus $105,600 in related interest payable totaling $340,600 was paid either in cash or with the issuance of common stock. The balance of unredeemed preferred shares and the related interest has been included in current liabilities on the accompanying consolidated financial statements.  NOTE 3 – LOANS RECEIVABLE FROM RELATED PARTIES Loans receivable from related parties consist of the following at December 31, 2010 and June 30, 2010: December 31, 2010
     
     June 30, 2010Loan to Catalyst Resource Group
     $                     6,000
     
     $              1,000Loan to Vietnam Mining Corporation
     100
     
     -Loan to Cavico Corporation
     -
     
     1,020Loan to Catthai Corporation
     100
     
     100$                     6,200
     
     $              2,120
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NOTE 4- 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 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. As of December 31, 2010, we recorded $174,650 from 1,746,500 shares of Vietnam Mining Corporation that were earned for the consulting services.  NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment at December 31, 2010 and June 30, 2010 consists of the following: December 31, 2010
     
     
     June 30, 2010Equipment
     $
     89,691
     
     $
     89,691Furniture and Fixtures
     
     59,115
     
     
     59,115Automobiles
     
     58,000
     
     
     58,000Subtotal
     
     206,806
     
     
     206,806Less Accumulated Depreciation
     
     (203,818)
     
     
     (202,290)Total net fixed assets
     $
     2,988
     
     $
     4,516
  Depreciation expenses were $1,528 and $7,834for the six-month periods ended December 31, 2010 and 2009, respectively.  NOTE 6 - CONSTRUCTION IN PROGRESS Construction in progress represents the costs incurred by PhiLand Corporation, a subsidiary of the Company for real estate development amounting to $1,038,996 as of December 31, 2010. The costs included interest capitalized of $355,975.  NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES The accounts payable and accrued expenses at December 31, 2010 and June 30, 2010 consist of the following:
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December 31, 2010
     
     June 30, 2010Accounts Payable & Accrued Expense
     $                       1,365,010
     
     $            1,462,010Accrued Salaries & Payroll Taxes
     321,657
     
     292,519Accrued Interest
     1,824,575
     
     1,267,207Accrued legal
     385,084
     
     385,084Accrued consulting fees
     173,870
     
     177,981$                       4,070,196
     
     $            3,584,801
  NOTE 8 – DUE TO OFFICERS Due to officer, represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, except for $100,000 which bears 36%,interest rate, unsecured and due on demand. As of December 31, 2010 and June 30, 2010, the balances were $1,267,149 and $1,128,369, respectively.  NOTE 9 - LOANS AND PROMISSORY NOTES SHORT TERM NOTES PAYABLE: As of December 31, 2010 and June 30, 2010, the Company had short term notes payable amounting $2,337,956, and $2,398,706 with accrued interest of $1,713,815 and $1,367,980 respectively. These notes bear interest rates ranging from 6% to 36% per annum. $1,727,000 of these short term notes are past due and $492,796 are due on demand. Some of the notes payable are secured by assets of the Company as summarized below: Note balance
     Secured by$
     115,000
     400,000 Catalyst Resource Group, Inc. shares500,000 Catthai Corporation shares$
     550,000
     35,000 Cavico Corp. shares500,000 Catthai Corporation shares$
     150,000
     1,500,000 PHI Gold Corp. shares$
     100,000
     1,500,000 PHI Gold Corp. shares
    The Convertible Promissory Note issued to Asher Enterprises, Inc. (“Asher”) on May 10, 2010 is $ 50,000, net of discount $18,500. This convertible note is due and payable on February 14, 2011 with interest of 8% per annum. This note is convertible at the election of Asher from time to time after the issuance date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 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 agreement contains covenants requiring Asher’s written consent for certain activities not in existence or not committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $50,000, and certain guarantees to third-party liabilities. Outstanding note principal and interest accrued thereon can be converted in whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s common stock determined by 65% of the average of the three lowest closing trading prices of the Company’s common stock during the ten trading days prior to the date the conversion notice is sent by Asher.
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On October 8, 2010, the Company issued a second Convertible Promissory Note to Asher for $35,000 under similar terms and conditions. As of December 31, 2010,  Asher has converted $18,000 of the first Convertible Promissory Note into 2,289,129 shares of common stock of the Company. DUE TO PREFERRED STOCKHOLDERS: The Company classified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock due to non compliance of preferred shares subscription agreement. This amount was past due as of December 31, 2010. The interest payable to holders of preferred stock of $271,355 and $258,455 has been included in accrued interest included in account payable and accrued expenses on the balance sheets as of December 31, 2010 and June 30, 2010, respectively. UNEARNED REVENUE  The Unearned Revenue of $293,219 is the consulting fee for the service performed by the Company that has not been completed as of December 31, 2010.  The Company is going to provide its clients on going public in the US stock markets and arrange funding after going public. OTHER CURRENT LIABILITIES Other current liabilities for the six months ended December 31, 2010 are $119,691, which includes an overpayment of $89,691 received by the Company for the exercise of stock options during the year ended June 30, 2004 and $30,000 for a refundable deposit in connection with a consulting agreement between the Company and its client. These amounts are shown as other current liabilities on the consolidated financial statements.   NOTE 10 - LITIGATION LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2010: 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 complaintwith 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. The Company has paid $2,500 and is subject to an entry of judgment for $79,000. The settlement amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010. CONSECO FINANCE VENDOR SERVICES CORPORATION FKA GREEN TREE VENDOR SERVICES CORPORATION VS. PROVIDENTIAL SECURITIES, INC., HENRY D. FAHMAN AND TINA T. PHAN In September 1997 Providential Securities, Inc. entered into a written Lease Agreement to lease certain items of equipment from Green Tree Vendor Services, in return for which Providential Securities, Inc. agreed to pay thirty-
six monthly installments, each in the amount of $1,552. On or about September 12, 2000, and subsequently, Providential Securities, Inc. was unable to make the monthly payments to Claimant due to the lack of revenues following the interruption and subsequent closure of its securities brokerage operations. (See Note 3) Claimant filed a complaint for money with the Superior Court of the State of California, County of Orange (Case No. 01CC02613) on February 23, 2001 seeking $39,102 plus interest thereon at the legal rate from September 12, 2000. The claimant entered a judgment against Providential Securities, Inc., Henry Fahman and Tina Phan for $48,933. The judgment amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010.
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PENDING LITIGATION: NGON VU VS. PROVIDENTIAL SECURITIES, INC. Claimant was a former employee of Providential Securities, Inc. who was laid off in 2000 due to closure of business. The Claimant complained to the Department of Industrial Relations (DIR) for allegedly unpaid vacation and salaries. On June 13, 2001, the DIR filed a request to enter a judgment against Providential Securities, Inc. for $9,074 including wages and interest, penalty, post hearing and filing fee. The sought amount of $9,074 has been accrued in the accompanying consolidated financial statements as of December 31, 2010. VERIO VS. PROVIDENTIAL SECURITIES, INC. On or about April 1, 2003, Verio, Inc. filed a judgment against Providential Securities, Inc., a wholly-owned subsidiary of the Company which was discontinued in October 2000, for a total of $9,141. This sum consists of $6,800 for services allegedly rendered by Verio, Inc. to Providential Securities, Inc. in 2000 and $2,341 for legal costs. Both amounts have been accrued in the accompanying consolidated financial statements as of December 31, 2010. DOW JONES & COMPANY, INC. VS. PROVIDENTIAL SECURITIES, INC. AND PROVIDENTIAL HOLDINGS, INC. On March 19, 2002 Dow Jones & Company filed a complaint with the Superior Court of California, County of Orange, West Justice Center (Case No. 02WL1633), against Providential Securities, Inc., the discontinued operations of the Company, and Providential Holdings, Inc. for $9,973 plus prejudgment interest at the rate of ten (10%) per annum from November 1, 2000, reasonable attorneys’ fees and other and further relief. This claim is in connection with services allegedly rendered by the Plaintiff to Providential Securities, Inc. prior to November 2000. The Company intends to settle this case. The sought amount of $9,973 (excluding interest) has been accrued in Accrued Expenses in the accompanying consolidated financial statements as of December 31, 2010. KEY EQUIPMENT FINANCE, INC., VS. 49-6215601204 PROVIDENTIAL SECURITIES, INC.; HENRY D. FAHMAN; TINA T. PHAN, CASE NO 06WL00289 On January 18, 2006 Key equipment Finance filed a suit in the Superior Court of the State of California, County of Orange –West District claiming breach of the terms of lease agreement by failure to make the monthly installment due although demand therefore was made. The remaining balance due and owing to plaintiff under the lease is $14,439 plus interest from the date of default. The plaintiff also claiming for breach of guaranty, common counts, unjust enrichment and cost of law suit and any other relief the Court may deem just and proper. The sought amount of $14,439 has been accrued in the accompanying consolidated financial statements as of December 31, 2010. DAVIDSON VS. DOAN ET AL.
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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, HRCiti Corporation, and Providential Capital, Inc. (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.  This amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010. NASD CASE: After the completion of a routine audit of Providential Securities, Inc. in July and August 2000, the National Association of Securities Dealers, Inc. alleged that Providential violated certain provisions of the NASD's Conduct Rules. As a result, without admitting or denying any of the allegations, Providential Securities, Inc. withdrew its membership from the NASD in October 2000 and ceased its securities brokerage operation. $127,305, including $115,000 fine charged by NASD, is included in accrued expenses in the accompanying consolidated financial statements as of December 31, 2010 (Note 2). ARBITRATION CASES: The Company had four arbitration cases from day-traders against Providential Securities, Inc., a discontinued stock brokerage operation of the Company. The total amount of damages for these cases, which were closed as of June 30, 2001, was $54,505. This amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010.  NOTE 11 - BASIC AND DILUTED NET 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 number of shares for the period ended December 31, 2010 were the same since the inclusion of Common stock equivalents is anti-dilutive.  NOTE 12 - STOCKHOLDER'S EQUITY Effective April 13, 2009, the Company amended its articles of incorporation to change its par values of preferred and common stock to $0.001. The Company has 400,000,000 authorized capital stock, consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. The effect of the change has been reflected retroactively in the consolidated financial statements. Treasury Stock: The balance of treasury stock as of December 31, 2010 was 1,330,440 shares valued at $1,330. Common Stock: During the six months ended December 31, 2010 the company issued 2,289,129 shares of common stock valued at $46,594 as partial payments for the first Asher Enterprises Convertible Promissory Note.
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Shares to be Issued: On June 6, 2006, Luberski Inc. transferred and subsequently sold 1,000,000 shares of common stock of Providential Holdings, which belonged to the officer of the Company and were given to Luberski, Inc. as collateral for the loan. As of June 30, 2007, the Company agreed to pay back 1,000,000 shares valued at $57,000 to the officer and recorded the transaction as shares to be issued.  NOTE 13 - STOCK BASED COMPENSATION PLAN Stock-Based Compensation: On February 7, 2005, the Company adopted a stock-based compensation plan and set aside 14,000,000 shares of common stock for selected eligible participants of the Company and subsidiaries, and certain independent contractors providing certain services to the Company. Prior to July 1, 2006, the Company measured stock compensation expense using the intrinsic value method of accounting in accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations (APB No. 25). The company adopted SFAS No. 123-R effective July 1, 2006 using the modified prospective method. Warrants: During the quarter ended September 30, 2006, the Company issued 250,000 stock warrants with a term of 5 years and a three year vesting period. The following assumptions were used in the Black-Scholes pricing model: Risk-free interest rate
     4.64%Expected life
     5.00 yearsExpected volatility
     198%Expected dividend yield
     0%Warrants outstanding
     Exercise Price
     Aggregate Intrinsic ValueOutstanding, June 30, 2010
     250,000
     $0.02
     $3,750Granted
     -
     
     -Forfeited
     -
     
     -Exercised
     -
     
     -Outstanding, December 31, 2010
     250,000
     $0.015
     $3,750
    Following is a summary of the warrant activity for the year ended December 31, 2010:   Risk-free interest rate
     4.64%Expected life
     5.00 yearsExpected volatility
     198%Expected dividend yield
     0%Warrants outstanding
     Exercise Price
     Aggregate Intrinsic ValueOutstanding, June 30, 2010
     250,000
     $0.02
     $3,750Expired
     -
     -
     -Outstanding, December 31, 2010
     250,000
     $0.02
     -
  Exercise Price
     
     Total
Warrants
Outstanding
     
     Remaining Life
(Years)
     
     Total
Exercise Price
     
     Warrants
Exercisable
     
     Exercise Price$0.015
     
     250,000
     
     0.67
     
     $0.015
     
     250,000
     
     $0.015
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NOTE 14- LOSS ON SETTLEMENT OF DEBTS During the six month period ended December 31, 2010, the Company settled some note payable principal and related accrued interest balances of $49,444 by issuance 2,240,089 shares of its common stock and shares of subsidiary for the fair value of $74,112.  As a result, the Company recorded a loss $24,668 on settlement of debts for the six month period ended December 31, 2010. For the same period in the prior year, the Company recorded a loss of $2,701 on settlement of debts.  NOTE 15 - RELATED PARTY TRANSACTIONS The Company accrued $105,000 salaries for the President and the Secretary of the Company during the six-month periods ended December 31, 2010 and 2009.  NOTE 16- CONTRACTS AND COMMITMENTS  AGREEMENT WITH HAWK ASSOCIATES, INC.  On August 11, 2006, the Company entered into an investor relations consulting agreement with Hawk Associates, Inc., a Florida corporation, to be effective September 1, 2006. According to the agreement, Hawk Associates will provide investor relations consulting services to the Company for a period of six months, after which the agreement will automatically renew monthly until notice is provided by one of the parties to the other. The Company agrees to pay Hawk Associates $4,500 per month for the investor relations consulting services and Hawk Associates will be issued warrants to purchase 250,000 common shares of the Company based on the closing price of $0.015 per share as of September 1, 2006. These warrants will be valid until August 30, 2011.  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 December 31, 2010, the Company has not completed the contemplated business combination for Thinh An and has not recognized any revenues from this transaction. OFFICE SPACE LEASE  The Company signed on a 5 year lease agreement for the corporate office effective May 1, 2008. The monthly rental is $6,690.70 and will be increased by 3.5% per annum commencing in the thirteenth month of the initial lease term and continuing annually thereafter.  Theleases for offices in Vietnam are for 12 months starting January 2008 and July 2008, respectively.  The monthly rental is approximately $450 per month.
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Future commitments under operating leases are as follows for the twelve months ending December 31: 2011                                                           86,007 2012                                                          89,017 2013                                                          76,777 2014- Total minimum lease payments$251,801  NOTE 17 - GOING CONCERN UNCERTAINTY As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $27,373,259 and negative cash flow from operations amounting $157,305 for the six-months period ended December 31, 2010.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.The company currently has a significant asset balance labeled construction in progress, this balance is subject to the renewal with Vietnamese governmental authorities.Management has taken action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2011 and beyond. The Company also anticipates generating more revenue through its proposed mergers and acquisitions. No assurances can be made that management will be successful in achieving its plan. The president and chairman of the Company has committed to funding the Company's operations for the next 12 months.  NOTE 18 -CONTROLLING INTERESTS IN SUBSIDIARIES The Company had controlling interests in a number of its subsidiaries. The balance of non-controlling interests as of December 31, 2010 and June 30, 2010 was as follows:  Subsidiaries
     
     Non-controlling interest %
     
     Non-controlling interest at December 31, 2010Philand Ranch Limited
     
     41.72%
     
     $ (217,938)Phi Mining
     
     17.29%
     
     (307,879)$(525,817)
   Subsidiaries
     
     Non-controlling interest %
     
     Non-controlling interest at June 30, 2010Philand Ranch Limited
     
     24.50%
     
     $(80,347)Phi Mining
     
     17.29%
     
     (104,651)$(184,998)
   (A)
     Philand Ranch Limited
  For the six month periods ended December 31, 2010 and 2009 Philand Ranch Limited had net loss of $203,200 and $133,443. The related non-controlling interest was $84,785 and $ 29,571 respectively.   (B)
     Phi Mining
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For the six months ended December 31, 2010 and 2009 Phi Mining had net loss of $10,623 and $12,845. The related non-controlling interest was $1,837and $1,654 respectively.  NOTE 19 - RESTATEMENT   Subsequent to the fiscal year ended June 30, 2010 , the company discovered errors in the calculation of the minority interest and in the valuation of it’s investment account.  The table below reflects the adjustments made by the company.  These adjustments have been carried forward into the financial statements contained in this filing.   June 30, 2010
     
     June 30, 2010As originally filed
     
     As restated
     
     ChangeDeposit
     
     20,016
     
     13,161
     
     6,854Investment under the equity method
     
     44,846
     
     -
     
     44,846Shares to be issued
     
     63,854
     
     57,000
     
     6,854Additional paid-in-capital
     
     18,409,229
     
     19,827,736
     
     (1,418,507)Accumulated deficit
     
     (26,963,783)
     
     (26,999,492)
     
     35,709Non-controlling interest
     
     1,242,646
     
     (184,999)
     
     1,427,645
   NOTE 19 – SUBSEQUENT EVENT  On October 28, 2010, PHI Gold Corporation (formerly PHI Mining Group, Inc.) signed an agreement with CCHI Canadian Holdings Inc., a New Brunswick corporation, Canada, to acquire all the issued and outstanding stock of Maisy Mae Mining Inc., a New Brunswick corporation, Canada, with 100% owned by CCHI Canadian Holdings, Inc. The purchase price was $ 3,500,000, payable in a combination of cash and marketable securities. The transaction was closed effective January 14, 2011 with the issuance of shares of the Company’s subsidiary Philand Ranch Ltd. and the receipt of all the issued and outstanding stock of Maisy Mae Mining Inc.  Maisy Mae Mining Inc. carries on a placer mining business in the Yukon Territory on a mine known as the Maisy Mae Creek Mine.   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.
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INTRODUCTION PHI Group, Inc. ("PHI"), formerly Providential Holdings, Inc., through its wholly-owned and majority-owned subsidiaries engages in a number of diverse business activities including merger and acquisition advisory services, consulting, real estate development, mining, independent energy, import and export, fund management, and multimedia and maintains minority interests in various companies operating in the areas of infrastructure, construction, natural resources, finance, manufacturing, services and retail. The Company provides financial consultancy and M&A advisory services to U.S. and foreign companies and invests in selective businesses that may create long-term shareholder value. No assurances can be made that management 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. From its inception through September 7, 1995, the Company generated nominal revenues and did not actively engage in business. 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 membership and ceased its securities brokerage business.  BUSINESS RESTRUCTURING  Following the termination of its securities brokerage operations in October 2000, the Company restructured its primary scope of business to engage in merger and acquisition advisory services, with particular emphasis on: (1) Consulting and Financial services (2) Real estate development, (3) Independent Energy and Resources, and (4) Special Situations. The Company has continued to increase its focus on real estate development activity in Vietnam and Southeast Asia through Philand Ranch Limited, a majority-owned subsidiary of the Company, on mining activity through PHI Gold Corporation (formerly PHI Mining Group, Inc.), a majority-owned subsidiary of the Company, and on assisting Vietnamese companies to go public in the U.S. stock market and investing in Vietnam through PHI Capital Holdings, Inc. and Providential Vietnam, Ltd., both of which are wholly-owned subsidiaries of the Company. Events and developments relating to these areas are described in more detail below.   BUSINESS STRATEGY  PHI GROUP INC.’s strategy is to:  1. Identify, build, acquire, commit and deploy valuable resources with distinctive competitive advantages;
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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 4. Build an attractive investment that includes points of exit for investors through capital appreciation or spin-offs of  business units.   SUBSIDIARIES: PHILAND RANCH LIMITED and PHILAND CORPORATION Philand Ranch Limited is a company registered under the laws of England and Wales. On June 5, 2009, Philand Ranch Limited acquired all the issued and outstanding common stock of PhiLand Corporation in exchange for the same amount of ordinary shares of Philand Ranch Limited. Philand Corporation, a Nevada corporation, was incorporated in July 2007 to manage the real estate development project in South Hoi An, Quang Nam Province, Vietnam.  In July 2007, PHI Group, Inc. entered into a principle agreement with the People’s Committee of Quang Nam Province, which allows the Company to lease approximately 8,000 acres of land in South Hoi An, Quang Nam Province, Vietnam to develop an integrated tourism zone under a 70-year lease term.  The total cost of the land lease once it is signed will be $250,250,000 which can be paid over a period of time to be determined by both parties. As of the date of this report, the Company has not made any payment towards the lease. On December 14, 2007, PhiLand Corporation was granted Investment License No.333043000025 by the Authority of Chu Lai Open Economic Zone, Quang Nam Province, Vietnam and formed PhiLand Vietnam, Ltd., a wholly-owned subsidiary of PhiLand Corporation, to manage Pointe 91, its first development project of a 118-acre  residential community and resort in Bien Rang, Nui Thanh District, Quang Nam Province, Vietnam. PhiLand Corporation has engaged Urban Arena to coordinate and provide survey, site plan and architectural designs for Pointe91; CB Richard Ellis Vietnam, Ltd. to provide marketing and selling of the residential units; and Mayer Brown JSM for legal representation in connection with our real estate development activities. During the year ended June 30, 2009, 3,500,000 shares of PhiLand Corporation were issued to employees and consultants of the Company.  244,286 shares which were owned by the Company were sold to individuals for $140,000 and 900,000 shares which were owned by the Company were exchanged with 23,285,714 shares of Jeantex Group, Inc and 29,000 shares which were owned by the Company were exchanged for the payment of note of $29,000.  In addition, during the year ended June 30, 2009, 208,000 shares of PhiLand Corporation were issued for cash in the amount of $24,000 and 200,000 shares were issued for consulting service. The total of 5,081,287 shares held by minority shareholders makes up approximately 21% of outstanding shares.  As a result of the stock exchange between Philand Corporation and Philand Ranch Limited in June 2009, the Company received 18,734,753 shares of ordinary stock of Philand Ranch Limited.  Philand Ranch Limited ordinary shares are listed on the Open Market Segment of the Frankfurt Stock Exchange under the symbol 1P8.F, WKN A0RPEA.  On   October 24, 2009, Philand Corporation signed an agreement with EMHI Land Corporation, a Nevada corporation, to co-develop a 300-500 hectare township to be anchored with a GMG-branded theme park in South Hoi An, Quang Nam Province, Vietnam.  On October 31, 2009, Philand Corporation, a wholly-owned subsidiary of the Company, signed an agreement with Paul Cham Group Company, Ltd., a company organized and existing under the laws of the Kingdom of Cambodia, (“PaulCham) to co-develop and resort and residential project on Koh Tonsay Island, Kep Province, Kingdom of Cambodia. The investment license has been granted to PaulCham under a ninety-nine year lease covering an area of approximately 200 hectares for this development project, which includes a casino. The capital contributions for and ownership structure in this co-development project will be determined and agreed upon by both parties following a mutually acceptable feasibility study.  On May 14, 2010 Philand Ranch Ltd. entered into a EUR 50 Million Subscription Commitment with an international emerging markets fund for working capital, general corporate purposes, and acquisitions. According to the Subscription Commitment, the fund is committed to buying shares of ordinary stock of Philand Ranch based upon a per share purchase price equal to ninety percent (90%) of the average closing bid price during the fifteen (15)
consecutive trading days following the purchase date.  As of the date of this report, Philand Ranch Ltd. has received but not signed the definitive documentation for the closing of this Subscription Commitment. The success of the Pointe91 and other projects of Philand Ranch is dependent upon its ability to raise the required capital and to execute its business plan. On October 22, 2010, Philand Vietnam Ltd., a wholly owned subsidiary of Philand Ranch Ltd., submitted the implementation schedule for Pointe91 as required by the Chu Lai Open Economic Zone Authority of Quang Nam Province.
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On September 08, 2010, Philand Ranch Ltd. entered into a business and investment cooperation agreement with Huong Viet International Investment and Trade Company, Ltd. to co-develop a 2.5-hectare mixed use project entitled “HH3” in South An Khanh, Lang Hoa Lac, Hoai Duc, Hanoi, Vietnam and a 60-hectare ecological tourism and entertainment zone in Tuan Chau, Quoc Oai, Hanoi, Vietnam.  As of the date of this report, Philand Ranch Ltd. has not made any capital contribution to these projects.  PHI GOLD CORPORATION (FORMERLY PHI MINING GROUP, INC.) and INDOCHINA RESOURCES, INC. (FORMERLY INDOCHINA MINING CORPORATION) In March 2007, the Company received 900,000 shares, valued at $675,000, of Bio-Warm, which subsequently acquired 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company (DDMMCT) and changed its name to DDC Industries, Inc. The Company received these shares for advisory services completed earlier in that month. In June 2007, the Company received 3,763,753 shares of DDC Industries for services performed in the merger of Bio-Warm Corp. and DDMMCT which was closed on March 30, 2007 and received the remaining 3,763,753 shares during the year ended June 30, 2008 per the agreement, which in total, is equivalent to 20% of all issued and outstanding shares of DDC Industries, Inc. The merger agreement with DDMMCT was rescinded on November 18, 2008 in entirety and shareholders of DDMMCT agreed to return 28,610,025 shares of 30,110,025 issued shares. On December 1, 2008, DDC Industries Inc. changed its name to PHI Mining Group, Inc. The common stock of PHI Mining Group, Inc. is currently trading on the Pink Sheets under the symbol “PHIG”. On December 1, 2008, Indochina Mining Corporation entered into stock purchase agreement with PHI Mining Group (formerly DDC Industries, Inc.) to exchange all of its capital stock with the same number of newly issued shares of PHI Mining Group. The Company currently owns approximately 78.61% of PHI Mining Group. For the three-month periods ended December 31, 2010 and 2009, this subsidiary did not generate any sales. On October 28, 2010, PHI Mining Group entered into an agreement to acquire all the issues and outstanding stock of Maisy Mae Mining Inc., a New Brunswick corporation with a placer mining business in the Yukon Territory, Canada on a mine known as the Maisy Mae Creek mine. The purchase was made in exchange for cash and marketable securities. On January 28, 2011, PHI Mining Group changed its name to PHI Gold Corporation to focus on gold mining. IndoChina Mining Corporation, a Nevada corporation, was incorporated on March 20, 2008 to engage in mining in the wider region of Indochina. The Company has entered into agreements with Phu Yen Minerals Joint Stock Company, with Mr. Chinnawat Chaikijjanuwat of Thailand, and with Truong Son Group of Vietnam to cooperate in the exploration and processing of diatomite, marbles, and lead and zinc, respective.  Indochina Mining has not perfected its interest in these joint venture companies. On January 14, 2011, Indochina Mining entered into an agreement with AXN Group, LLC, a Delaware company, to cooperate in assembling and operating a portfolio of industrial minerals and natural resources in the wider Indochina region including Vietnam, Laos, Cambodia, Myanmar, Thailand and the Malaysian Peninsula. According to the agreement, AXN Group will own 11,200,000 shares, equivalent to 50%, of Indochina Resources stock. In addition, PHI Gold Corporation will distribute 3,000,000 shares of Indochina Resources stock to its shareholders of record as of February 28, 2011. Indochina Resources will register with the Securities and Exchange Commission to become a separate publicly traded company focused on industrial minerals and natural resources. On January 28, 2011, Indochina Mining changed its name to Indochina Resources, Inc.
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PHI CAPITAL HOLDINGS, INC. (formerly Providential Capital, Inc.)  In May 2003, the Company formed a wholly-owned subsidiary 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.  Providential Capital has mainly focused its attention on the underserved segment of smaller companies in the U.S. and abroad. Providential Capital began providing merger and acquisition advisory services to its clients since the fourth quarter of the fiscal year ended June 30, 2003.  On May 11, 2010, Providential Capital changed its name to PHI Capital Holdings, Inc. The Company has successfully managed merger plans for several privately held and publicly traded companies and continues to focus on the Pacific Rim markets in the next twelve months.  PROVIDENTIAL VIETNAM LTD.  Providential Vietnam is a Vietnamese corporation and wholly-owned subsidiary of PHI Group, Inc. This subsidiary started operation in May 2008 to provide M&A advisory services, financial and management consulting, corporate restructuring, and investment banking services to companies in Vietnam.  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 has declared a 15% stock dividend of Provimex, Inc. to shareholders of record as of September 15, 2004 and currently owns 85% of Provimex, Inc. For the three-month periods ended December 31, 2010 and 2009, this subsidiary did not generate any sales. 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. Touchlink Communications signed an agreement with KAGRO (Korean American Grocer Association) to provide pre-paid services to its member stores in the US and Canada. 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 and currently owns 85% of Touchlink Communications. On November 03, 2008, Touchlink Communications, Inc. changed its name to Vietnam Media Group, Inc. to focus on multi-media business. This subsidiary did not have any activities during the three-month periods ended December 31, 2010 or 2009.  PHI ENERGY CORPORATION (FORMERLY PROVIDENTIAL ENERGY CORPORATION) On May 9, 2005, the Company formed Providential Oil & Gas, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, to begin investigating a number of lease properties in the US and abroad. On November 25, 2005, Providential Oil & Gas signed an agreement with Terra-Firma Gas & Oil, LLC, a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty four gas wells in Crockett County, West Texas. As of the date of this report, this subsidiary has not begun drilling any of the gas wells in conjunction with Terra-Firma Gas & Oil under the agreement. Effective June 1, 2006, Providential Oil & Gas amended its Articles of Incorporation and changed its corporate name to Providential Energy Corporation (“PEC”) with an intention to broaden its scope of business to include alternative energy. During the Fiscal Year ended June 30, 2007 Providential Energy Corporation entered into a Business Cooperation Agreement with Unitex Energy, LLC, a Texas Limited Liability Company, to establish PhiTex Energy Group, Inc., a Nevada corporation, in order to acquire and develop oil and gas properties. Providential Energy Corporation currently owns 87.75% stock of PhiTex Energy Group. In September 2007, Providential Energy Corp entered into an agreement to form a joint-venture company, WRCP PEC
Mining Corporation (CPMC), with WRC Partners (WRCP), in order to acquire up to 2,700 acres of mineral, oil and gas rights near Bakersfield, California for development. According to the agreement, Providential Holdings will be responsible for taking CPMC public and will manage the public company related activities required to be in full compliance with regulatory and market demands and Providential Energy Corporation will own up to a maximum of 40% of the equity interest in CPMC.
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On January 14, 2011, Providential Energy Corporation entered intoan agreement with AXN Group, LLC (AXNG), a Delaware corporation, to recapitalize and engage in coal mining and trading. According to the agreement,AXNG and PEC will organize and arrange for sale and purchase of coal and other energy-related commodities between international sellers and buyers through PEC. In particular, PEC will engage in coal mining in and coal trading in Southeast Asia, China, India, South America and South Africa.  As part of the restructuring, AXNG will own 68% of PEC, PHI Group will own 27%, and 5% will be distributed as a special dividend to shareholders of PHI Group. PHI Group will be responsible for listing PEC shares on the OTCBB or a senior exchange in the U.S. stock market after six months of successful operations. On January 28, 2011, Providential Energy Corporation changed its name to PHI Energy Corporation. (Subsequent Event, Note 19).  This subsidiary did not generate any revenue during the three-month periods ended December 31, 2010 or 2009.  MINORITY INTERESTS:  CATALYST RESOURCE GROUP, INC. (formerly JEANTEX GROUP, INC.)  On May 13, 2005, Providential Capital, Inc., a wholly-owned subsidiary of the Company, entered into a business consulting agreement with Lexor Holdings, Inc. to provide merger and acquisition advisory services to Lexor Holdings, Inc. with regard to a proposed merger between Lexor Holdings, Inc. and SB Chemical Co., Ltd., a Republic of Korea corporation. According to this agreement, the Company would be entitled to an additional 14% equity interest in Lexor Holdings, Inc. following the consummation of a merger between Lexor Holdings, Inc. and SB Chemical Co, Ltd. or another established business entity.  On June 22, 2005, Lexor Holdings, Inc. entered into a Stock Purchase Agreement with Jeantex, Inc., a California corporation and Susan Shin, an individual who is the president and sole shareholder of Jeantex Pursuant to the terms of the Agreement, Lexor acquired 100% of the issued and outstanding equity interests of Jeantex in exchange for 56,350,000 shares of Lexor restricted common stock.  The Stock Purchase Agreement was closed on June 29, 2005. PHI Group, Inc. received 7,300,000 shares of restricted common stock of Lexor for services rendered in connection with this transaction. Lexor Holdings, Inc. has changed its corporate name to Jeantex Group, Inc. following the merger with Jeantex, Inc.  During the year ended June 30, 2009, 23,285,714 shares of Jeantex Group, Inc. were exchanged with 900,000 shares of PhiLand Corporation which were owned by the Company. In April 2010, Jeantex Group, Inc. changed its corporate name to Catalyst Resource Group, Inc. and its trading symbol to “CATA”.  As of December 31, 2010 the Company owned 32,539,822 shares of Catalyst Resource Group, Inc. common stock, or equivalent to 33.80%.  VIETNAM MINING CORPORATION  As a result of a merger between Vietnam-based Linh Thanh Quang Binh Exploiting and Processing High Calcium Carbonate Powder Joint Stock Company and Vietnam Mining Corporation that was closed on June 28, 2010, the Company received1,746,500 shares of common stock of Vietnam Mining Corporation. These shares represent approximately 5% of ownership in Vietnam Mining Corporation. 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.
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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 December 31, 2010, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets. RESULTS OF OPERATIONS The following is a discussion and analysis of our results of operations for the three-month and six-month periods ended December 31, 2010 and 2009, our financial condition at December 31, 2010 and factors that we believe could affect our future financial condition and results of operations. Historical results may not be indicative of future performance. This discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q. Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). All references to dollar amounts in this section are in United States dollars. Three months ended December 31, 2010 compared to the three months ended December 31, 2009 Total Revenues: Total revenues were $6,000 and $6,000 for the three months ended December 31, 2010, and 2009, respectively from management services. No consulting revenue was generated in the three months ended December 31, 2010.
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Operating Costs and Expenses: Total operating expenses were $265,713 and $346,802 for the three months ended December 31, 2010, and 2009, respectively. The decrease is primarily due to the decrease in general and administrative expenses. Professional services were $117,850 and $28,903 for the comparable periods. General and administrative expenses were $70,979 and $220,319 for the comparable periods. The decrease in general and administrative expenses between the two comparable periods was due to a decrease in expenditures associated with travel and investor relations. During the current three months, the Company recorded salaries and wages of $76,154 as compared to $93,685 in the three months of the previous fiscal year. The decrease in salaries and wages for the period ended December 31, 2010 was due to the reduction of staff during this period compared to that of the comparable previous period. Other Income and Expenses: Total other expense was $90,819 for the three months ended December 31, 2010 compared to $ 2,028,614 for the three months ended December 31, 2009. The decrease in other expense was due primarily to the decrease in impairment of marketable security $ 1,750,000 and impairment of loan. Interest expense was $85,456 and $155,317 for the three months ended December 31, 2010, and 2009, respectively. The decrease in interest expense for the period ended December 31, 2010 was due to the capitalization of interest expense on construction in progress. Net Income and Loss: Net loss for the three months ended December 31, 2010 was $303,019 as compared to net loss $2,351,283 for the same period in 2009, which is equivalent to $(0.00) per share for the current period and $(0.01) per share for the same period in 2009, both based on the weighted average number of basic and diluted shares outstanding. The decrease net loss between the two comparable periods  is primarily due to a decrease in impairment of marketable security $1,750,000 and impairment of loan receivable $109,600 in the three-month period ended December 31, 2010 compared to the same period in 2009, a decrease in total operating expenses of $81,089 in the three-month period ended December 31, 2010 compared to the same period in 2009, and net other income of $27,756 in the three-month period ended December 31, 2010 compared to net other income of $183 in the three-month period ended December 31, 2009. Six months ended December 31, 2010 compared to the six months ended December 31, 2009  Total Revenues: Total revenues were $353,317 and $12,000 for the six months ended December 31, 2010, and 2009, respectively.The increase of revenues for the six months ended December 31, 2010 was due to the consulting services completed during this period compared to none in the comparable period in the previous year. Operating Costs and Expenses:  Total operating expenses were $560,829 and $630,694 for the six months ended December 31, 2010, and 2009, respectively. The decrease is primarily due to decreases in salaries and wages and general. Professional services were $242,735 and $145,882 for the comparable periods. During the current six months the company recorded salaries of $151,500 as compared to $184,007 of salaries in the six months last year. General and administrative expense was decreased by $127,907 during the six months ended December 31, 2010 due to decrease in provision for bad debt and loan receivable in the current period.
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Other Income and Expenses:  Interest expense was $261,439 and $299,108 for the six months ended December 31, 2010, and 2009, respectively.  During the six months ended December 31, 2010, the Company recorded a loss on debt settlement of $24,668 as compared to $ 2,701 on debt settlement in the same period last year.  Impairment of marketable security and loan receivable was zero as compare to $1,859,600 in the same period last year.  Other income for the six months ended December 31, 2010 was $39,913 as compared to $2,224 for the same period in 2009.   Net Loss:  Net loss for the six months ended December 31, 2010 was $373,776 compared to net loss of $2,760,534 for the same period in 2009, which is equivalent to $(0.00) per share for the current period and $(0.01) per share for the same period in 2009, based on the weighted average number of basic and diluted shares outstanding. LIQUIDITY AND CAPITAL RESOURCES The Company had consolidated cash of $3,116 and $2,925 as of December 31, 2010 and 2009, respectively. The Company's operating activities used $157,305 and $220,958 in the six months ended December 31, 2010 and 2009, respectively. Cash used in investing activities was $103,920 for the six months ended December 31, 2010 as compared to cash used in investing of $1,135 for the same period in 2009, respectively. Cash provided by financing activities was $189,039 for the six months ended December 31, 2010, as compared to $184,935 for the six months ended December 31, 2009. The increase in cash provided by financing activities is mainly, due to an increase of $138,500 from net proceeds on notes payable between the six-month periods ended December 31, 2010 and 2009, respectively. The Company’s operations are currently financed through various loans and sale of marketable securities. Management has taken action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs. In addition, the Company also anticipates generating more revenue through its proposed mergers and acquisitions. 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. COMPANY'S PLAN OF OPERATION FOR NEXT 12 MONTHS For the next twelve months, the Company intends to: (1) emphasize on M&A advisory services for small and mid-sized companies in the US and the Pacific Rim; (2) focus on the development of the real estate program in central Vietnam, including the Pointe 91 luxury hotel resort and premium residential community at Bien Rang, the co-development of residential projects in Hanoi and Hochiminh City, and the co-development of Koh Tonsay Island resort in Kep Province, Cambodia, through the Company’s majority-owned subsidiary, PhiLand Ranch Limited; (3)  develop gold mining business inNorth America and other regions of the world through the Company’s majority-owned subsidiary PHI Gold Corporation;  develop industrial minerals through Indochina Resources, Inc..; develop coal and energy-related business with AXN Group, LLC through PHI Energy Corporation;  and (4) engage in other special situations that may create significant value for the Company’s shareholders. There is no guaranty that the Company will be successful in any of its plans.
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FINANCIAL PLANS Management has taken action and is formulating additional plans to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2011 and beyond. Among the actions to be taken, the Company intends to raise additional capital from the US and international markets and is currently in the process of attaining additional financing. In addition, the Company also anticipates generating more revenue through its proposed mergers and acquisitions. No assurances can be made that management will 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 using Vietnamese Dong, which is the official currency of Vietnam. The effect of the fluctuations of exchange rates is considered minimal to our business operations. Interest Rate Risk We do not have significant interest rate risk, as most of our debt obligations are primarily short-term in nature to individuals, with fixed interest rates. Valuation of Securities Risk Since majority of our income is paid with the marketable securities, the value of our assets may fluctuate significantly depending on the market value of the securities we hold. ITEM4. CONTROLS AND PROCEDURES Evaluation of Disclosure and Procedures As of December 31, 2010 , 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.
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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. The majority of the legal proceedings and arbitration cases are related to the discontinued operations of Providential Securities, Inc. since 2000. LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2010: 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. The settlement amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010. CONSECO FINANCE VENDOR SERVICES CORPORATION FKA GREEN TREE VENDOR SERVICES CORPORATION VS. PROVIDENTIAL SECURITIES, INC., HENRY D. FAHMAN AND TINA T. PHAN In September 1997 Providential Securities, Inc. entered into a written Lease Agreement to lease certain items of equipment from Green Tree Vendor Services, in return for which Providential Securities, Inc. agreed to pay thirty-six monthly installments, each in the amount of $1,552. On or about September 12, 2000, and subsequently, Providential Securities, Inc. was unable to make the monthly payments to Claimant due to the lack of revenues following the interruption and subsequent closure of its securities brokerage operations. (See Note 3) Claimant filed a complaint for money with the Superior Court of the State of California, County of Orange (Case No. 01CC02613) on February 23, 2001 seeking $39,102 plus interest thereon at the legal rate from September 12, 2000. The claimant entered a judgment against Providential Securities, Inc., Henry Fahman and Tina Phan for $48,933. The judgment amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010. PENDING LITIGATION: NGON VU VS. PROVIDENTIAL SECURITIES, INC. Claimant was a former employee of Providential Securities, Inc. who was laid off in 2000 due to closure of business. The Claimant complained to the Department of Industrial Relations (DIR) for allegedly unpaid vacation and salaries. On June 13, 2001, the DIR filed a request to enter a judgment against Providential Securities, Inc. for $9,074 including wages and interest, penalty, post hearing and filing fee. The sought amount of $9,074 has been accrued in the accompanying consolidated financial statements as of December 31, 2010. VERIO VS. PROVIDENTIAL SECURITIES, INC. On or about April 1, 2003, Verio, Inc. filed a judgment against Providential Securities, Inc., a wholly-owned subsidiary of the Company which was discontinued in October 2000, for a total of $9,141. This sum consists of
$6,800 for services allegedly rendered by Verio, Inc. to Providential Securities, Inc. in 2000 and $2,341 for legal costs. Both amounts have been accrued in the accompanying consolidated financial statements as of December 31, 2010.
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DOW JONES & COMPANY, INC. VS. PROVIDENTIAL SECURITIES, INC. AND PROVIDENTIAL HOLDINGS, INC. On March 19, 2002 Dow Jones & Company filed a complaint with the Superior Court of California, County of Orange, West Justice Center (Case No. 02WL1633), against Providential Securities, Inc., the discontinued operations of the Company, and Providential Holdings, Inc. for $9,973 plus prejudgment interest at the rate of ten (10%) per annum from November 1, 2000, reasonable attorneys’ fees and other and further relief. This claim is in connection with services allegedly rendered by the Plaintiff to Providential Securities, Inc. prior to November 2000. The Company intends to settle this case. The sought amount of $9,973 (excluding interest) has been accrued in Accrued Expenses in the accompanying consolidated financial statements as of December 31, 2010. KEY EQUIPMENT FINANCE, INC., VS. 49-6215601204 PROVIDENTIAL SECURITIES, INC.; HENRY D. FAHMAN; TINA T. PHAN, CASE NO 06WL00289 On January 18, 2006 Key equipment Finance filed a suit in the Superior Court of the State of California, County of Orange –West District claiming breach of the terms of lease agreement by failure to make the monthly installment due although demand therefore was made. The remaining balance due and owing to plaintiff under the lease is $14,439 plus interest from the date of default. The plaintiff also claiming for breach of guaranty, common counts, unjust enrichment and cost of law suit and any other relief the Court may deem just and proper. The sought amount of $14,439 has been accrued in the accompanying consolidated financial statements as of December 31, 2010. 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, 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. The Company has accrued the potential liabilities associated with these promissory notes in the accompanying consolidated financial statements as of December 31, 2010. NASD CASE: After the completion of a routine audit of Providential Securities, Inc. in July and August 2000, the National Association of Securities Dealers, Inc. alleged that Providential violated certain provisions of the NASD's Conduct Rules. As a result, without admitting or denying any of the allegations, Providential Securities, Inc. withdrew its membership from the NASD in October 2000 and ceased its securities brokerage operation. $127,305, including $115,000 fine charged by NASD, is included in accrued expenses in the accompanying consolidated financial statements as of December 31, 2010. ARBITRATION CASES: The Company had four arbitration cases from day-traders against Providential Securities, Inc., a discontinued stock brokerage operation of the Company. The total amount of damages for these cases, which were closed as of June 30, 2001, was $54,505. This amount has been accrued in the accompanying consolidated financial statements as of December 31, 2010.
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ITEM 1A. 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 and founder. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future. Our service strategy in merger and acquisition involves a number of risks and we have a limited history of successful acquisitions. Even when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive as management may have projected. The Company is in the process of evaluating various opportunities and negotiating to acquire other companies and technologies. Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion of management's attention from other business concerns, amortization of acquired intangible assets and potential loss of key employees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given asto 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 orliabilities. 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.
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Our businesses are currently focused in Vietnam, and any adverse change to the economy or business environment in Vietnam could significantly affect our operations, which would lead to lower revenues and reduced profitability. Our operations are currently concentrated in Vietnam. Because of this concentration in a specific geographic location, 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 Vietnam generally, or in any of the other markets that we serve, could adversely affect our business, results of operations and financial condition. 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. Our executive officers/directors and principal stockholders who hold 5% or more of the outstanding common stock owned as of December 31, 2010, in the aggregate, approximately 28% of our outstanding common stock. These stockholders will be able 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. We do not 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 OTC Bulletin Board 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 besubject to the "penny stock" rules and regulations. Broker-dealers who sell penny stocks to certain types of investors are required to comply with the Commission's regulations concerning the transfer of penny stock. These regulations require broker-dealers to: *Make a suitability determination prior to selling penny stock to the purchaser; *Receive the purchaser's written consent to the transaction; and *Provide certain written disclosures to the purchaser. These requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities. Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly for us. It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to
obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly-traded companies to obtain.
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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 INFORMATIONNone, except as may be noted elsewhere in this report.ITEM 6. EXHIBITSThe 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, 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 Executive Officer of the Registrant, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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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: February 22, 2011By: /s/ Henry D. FahmanHenry D. Fahman, President In accordance with the Exchange Actof 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. SIGNATURETITLEDATE  /s/ Henry D. Fahman HENRY D. FAHMAN               Chairman/President/Acting Chief Financial Officer                   February 22, 2011  /s/ Tina T. PhanSecretary & Treasurer                                                                     February 22, 2011 TINA T. PHAN  /s/ Tam T. BuiDirector                                                                                              February 22, 2011 TAM T. BUI  /s/Frank HawkinsDirector                                                                                            February 22, 2011 FRANK HAWKINS  /s/Paul K. NguyenDirector                                                                                            February 22, 2011 PAUL K. NGUYEN  /s/ Lawrence G. OlsonDirector                                                                                               February 22, 2011 LAWRENCE G. OLSON
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