PHI GROUP INC - FORM 10-Q

Attached files

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EX-31.2 - PHI GROUP INC	v223710_ex31-2.htm
EX-31.1 - PHI GROUP INC	v223710_ex31-1.htm
EX-32.1 - PHI GROUP INC	v223710_ex32-1.htm
EX-32.2 - PHI GROUP INC	v223710_ex32-2.htm
EX-21.1 - PHI GROUP INC	v223710_ex21-1.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from

Commission file number 2-78335-NY

PHI 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) 843-5450

Issuer'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 ¨

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 205,281,264 as of April 19, 2011.

PHI GROUP, INC

For the Period Ended March 31, 2011

PART I - FINANCIAL INFORMATION

Item 1- Consolidated Financial Statements – Unaudited	3

Unaudited Consolidated Balance Sheets as of March 31, 2011 and June 30, 2010	3

Unaudited Consolidated Statements of Operations for the Three Months and Nine Months Ended March 31, 2011 and 2010	4

Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2011 and 2010	5

Unaudited Notes to Consolidated Financial Statements	6

Item 2 -Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3- Quantitative and Qualitative Disclosures about Market Risk	27

Item 4- Controls and Procedures	27

PART II - OTHER INFORMATION

Item 1- Legal Proceedings	28

Item 1A- Risk Factors	30

Item 2- Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3- Defaults Upon Senior Securities	32

Item 4- Submission of Matters to a Vote of Security Holders	32

Item 5- Other Information	32

Item 6- Exhibits	32

SIGNATURES	33

Page 2 of 33

PART I - FINANCIAL INFORMATION

ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,			June 30,
	2011			2010
				Restated
ASSETS
Current assets:
Cash and cash equivalents	$	28,909		$	75,299
Accounts Receivable		6,000
Marketable securities		174,650			-
Loans receivable from related parties		200			2,120
Other current assets		780			3,477
Total current assets		210,540			80,897

Property and Equipment
Property and equipment, net		171,470			4,516
Construction in progress		1,083,534			935,076

Other assets:
Prepaid Expense		1,208			-
Other assets		198,679			-
Deposits		12,559			13,161

Total assets	$	1,677,990		$	1,033,650

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	4,255,307		$	3,584,802
Short-term notes payable		2,339,956			2,400,546
Convertible promissory note, net of discount $57,821		41,445			-
Derivative Liability		82,844			-
Due to officers		1,365,949			1,126,529
Payable to related party		235,000			235,000
Due to preferred stockholders		215,000			215,000
Unearned revenue		293,219			459,886
Other current liabilities		119,691			119,691
Shares to be issued		57,000			57,000
Total current liabilities		9,005,412			8,198,454

Stockholders' equity:
Preferred stock , $.001 par value, 100,000,000 shares authorized; none issued and outstanding		-			-
Common stock, $.001 par value; 300,000,000 shares authorized; 264,359,550 issued and 205,108,850 outstanding on March 31, 2011 and 208,068,760 issued and 198,280,961 outstanding on June 30, 2010, respectively		205,109			198,281
Treasury stock, $.001 par value, 1,330,440 shares of common stock, respectively		(1,330	)		(1,330	)
Additional paid-in-capital		20,619,959			19,827,736
Prepaid consulting		-			(5,000	)
Accumulated deficit		(27,657,540	)		(26,999,492	)
Total		(6,833,802	)		(6,979,805	)
Non-Controlling interest		(493,619	)		(184,999	)
Total stockholders' deficit		(7,327,421	)		(7,164,804	)

Total liabilities and stockholders' deficit	$	1,677,990		$	1,033,650

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

Page 3 of 33

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Month Periods						For the Nine Month Periods
	Ended March 31,						Ended March 31,
	2011			2010			2011			2010
Net revenues
Consulting and advisory fee income	$	6,000		$	6,000		$	359,317		$	18,000

Operating expenses:
Depreciation and amortization		717			2,197			2,246			10,031
Salaries and wages		74,394			94,458			225,894			278,465
Professional services, including non-cash compensation		16,180			153,608			258,915			299,490
General and administrative		88,299			47,335			253,364			340,307
Total operating expenses		179,590			297,598			740,419			928,293

Loss from operations		(173,591	)		(291,598	)		(381,103	)		(910,293	)

Other income and (expenses)
Interest expense		(158,921	)		(158,604	)		(420,360	)		(457,712	)
Loss on equity investment		-			(13,786	)		-			(26,964	)
Loss on sale of fixed assets		-						-			(701	)
Loss on debt settlement		(16,928	)		-			(41,596	)		(2,701	)
Impairment of marketable security		-						-			(1,750,000	)
Impairment of loan receivable		-						-			(109,600	)
Change in derivative liability		2,911			-			(3,770	)		-
Other income		34,494			550			74,407			2,774
Net other expenses		(138,443	)		(171,839	)		(391,318	)		(2,344,904	)

Loss before minority interest		(312,034	)		(463,438	)		(772,421	)		(3,255,197	)
Non-Controlling interest		27,753			20,245			114,374			51,470
Net loss	$	(284,281	)	$	(443,192	)	$	(658,047	)	$	(3,203,727	)

Net loss per share:
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.02	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.02	)

Weighted average number of shares outstanding:
Basic		203,273,346			197,457,819			200,122,436			196,011,039
Diluted		203,273,346			197,457,819			200,122,436			196,011,039

Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.

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

Page 4 of 33

PHI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTH PERIODS ENDED MARCH 31, 2011 AND 2010

(UNAUDITED)

	2011			2010
Cash flows from operating activities:
Net income loss from operations	$	(658,047	)	$	(3,203,727	)
Adjustments to reconcile net loss to net cash used in operating activities:		-
Depreciation		2,246			10,031
Loss on debt settlement		41,596			2,701
Amotization of Discount		50,777			-
Change in Fair Value of Derivative liability		3,770			-
Loss on equity investment		-			26,906
Non-Controlling interest		(114,374	)		(51,470	)
Issuance of shares for consulting services		5,000			2,500
Shares issued for director fees		-			60,000
Impairment of assets		-			1,750,000
Bad debt expense		-			32,071
Marketable securities used for payments for service and fee		-			-
Marketable securities received for consulting service		(174,650	)		-
Changes in operating assets and liabilities:
(Increase) decrease on accounts receivable		(6,000	)		8,358
(Increase) decrease in other assets and prepaid expenses		(194,668	)		165,686
Increase in accounts payable and accrued expenses		658,571			930,228
Net cash used in operating activities		(385,778	)		(266,716	)

Cash flows from investing activities:
Proceeds from purchase of property and equipment		(169,200	)		23,193
Construction in progress		(148,458	)		(33,232	)
Purchase of marketable securities		-			(1,165	)
Proceeds from sale of marketable securities		-			47,443
Net cash (used in) provide by investing activities		(317,658	)		36,239

Cash flows from financing activities:
Proceeds from sale of stock of subsidiary		382,106			128,189
Purchase shares of subsidiary		(482	)
Proceeds on notes payable		250,500			122,040
Payments on notes payable		(57,000	)		(130,750	)
Borrowings from officer		115,470			150,819
Payments on advances from officer		(33,550	)		(75,124	)
Net cash provided by financing activities		657,045			195,175

Net decrease in cash and cash equivalents		(46,391	)		(35,304	)
Cash and cash equivalents, beginning of period		75,299			37,813
Cash and cash equivalents, end of period	$	28,909		$	2,509

Supplemental disclosures of cash flow information
Cash paid for taxes	$	-		$	950
Cash paid for interest	$	6,500		$	2,400

Supplemental disclosure of non-cash flow investing and financing activity
Conversion of convertible note	$	109,260		$	-

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

Page 5 of 33

PHI GROUP, INC. AND SUBSIDIARIES

NOTES 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 nine months ended March 31, 2011 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.

Page 6 of 33

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.

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 March 31, 2011, 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.

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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.

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 March 31, 2011 and June 30, 2010:

Page 8 of 33

	March 31,2011		June 30, 2010
Loans to Catalyst Resource Group	$	-	$	1,000
Loan to Vietnam Mining Corporation		100		-
Loan to Cavico Corporation		-		1,020
Loan to Catthai Corporation		100		100
	$	200	$	2,120

Theseloans are due on demand, non- interest bearing, and unsecured.

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.

Marketable securities classified as available for sale consisted of the following as of March 31, 2011:

During the period ended March 31, 2011, the company we received 1,746,500 shares of Vietnam Mining Corporation that were earned for the consulting services. The fair value of shares received was $174,650 as of March 31, 2011

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2011 and June 30, 2010 consists of the following:

	March 31,2011			June 30, 2010
Equipment	$	89,691		$	89,691
Furniture and Fixtures		59,115			59,115
Automobiles		227,200			58,000
Subtotal		376,006			206,806
Less Accumulated Depreciation		(204,536	)		(202,290	)
Total net fixed assets	$	171,470		$	4,516

Depreciation expenses were $2,246 and $10,031 for the nine-month periods ended March 31, 2011 and 2010, 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 $1,083,534 as of March 31, 2011. The costs included interest capitalized of $400,513.

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NOTE 7 - OTHER ASSETS

During the quarter ended March 31, 2011, Philand Vietnam Ltd., a wholly owned subsidiary of the Philand Ranch Ltd., made a security deposit in the amount of $172,203 to the Chu Lai Open Economic Zone Authority, Quang Nam Province, Vietnam as a guarantee for its Pointe91 development project at Bien Rang, Chu Lai, Nui Thanh District, Quang Nam Province, Vietnam. During the quarter ended March 31, 2011, the Company signed a consulting agreement to assist Agent155 Media Corp., a Delaware corporation, with respect to its corporate restructuring and business combination with Freshwater Technologies, Inc., a Nevada corporation. As part of the restructuring requirements, the Company made a payment to Manning Elliot LLP in the amount of $24,476 on behalf of Freshwater Technologies, Inc. to facilitate the transaction between Agent155 Media Corp. and Freshwater Technologies, Inc.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The accounts payable and accrued expenses at March 31, 2011 and June 30, 2010 consist of the following:

	March 31, 2011		June 30, 2010
Accounts Payable & Accrued Expense	$	1,355,143	$	1,462,010
Accrued Salaries & Payroll Taxes		333,517		292,519
Accrued Interest		2,007,693		1,267,207
Accrued legal		385,084		385,084
Accrued consulting fees		173,870		177,981
	$	4,255,307	$	3,584,801

NOTE 9 – 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 as described below, unsecured, and due on demand. As of March 31, 2011 and June 30, 2010, the balances were $1,365,949 and 1,126,529, respectively.

NOTE 10 - LOANS AND PROMISSORY NOTES

SHORT TERM NOTES PAYABLE:

As of March 31, 2011 and June 30, 2010, the Company had short term notes payable amounting $2,337,956, and $2,400,546 with accrued interest of $2,007,694and $1,267,207 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 $610,956 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. shares
		500,000 Catthai Corporation shares
$	550,000	35,000 Cavico Corp. shares
		500,000 Catthai Corporation shares
$	150,000	1,500,000 PHI Gold Corp. shares
$	100,000	1,500,000 PHI Gold Corp. shares

Page 10 of 33

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.

During the third quarter, the remaining $32,000 principal of the convertible notes issued in May 10, 2010 has been converted into 4,638,760 shares.

On January 24, 2011, the Company issued a second Convertible Promissory Note to Asher for $55,000 under similar terms and conditions.

The value of the derivative liability at March 31, 2011 is $82,844.

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 March 31, 2011.

The interest payable to holders of preferred stock of $277,805 and $258,455 has been included in accrued interest included in account payable and accrued expenses on the balance sheets as of March 31, 2011 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 March 31, 2011.

OTHER CURRENT LIABILITIES

Other current liabilities for the nine months ended March 31, 2011 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.

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NOTE 11 - LITIGATION

LEGAL PROCEEDING SETTLED AND UNPAID AS OF MARCH 31, 2011:

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. 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 March 31, 2011.

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 March 31, 2011.

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 March 31, 2011.

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 March 31, 2011.

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 March 31, 2011.

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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 March 31, 2011.

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. (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 March 31, 2011.

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 March 31, 2011 (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 March 31, 2011.

NOTE 12 - 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 March 31, 2011 were the same since the inclusion of Common stock equivalents is anti-dilutive.

NOTE 13 - 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.

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Treasury Stock:

The balance of treasury stock as of March 31, 2011 was 1,330,440 shares valued at $1,330.

Common Stock:

During the nine months ended March 31, 2011 the company issued 6,827,889 shares of common stock valued at $109,260 in settlement of Asher Enterprise Convertible Promissory Notes.

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 14 - 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 years

Expected volatility		198	%

Expected dividend yield		0	%

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Following is a summary of the warrant activity for the year ended March 31, 2011:

	Warrants outstanding		Exercise Price		Aggregate Intrinsic Value
Outstanding, June 30, 2010		250,000	$	0.015		3000
Expired		-		-		-
Outstanding, March 31, 2011		250,000	$	0.015		1,250

Exercise Price				Total Warrants Outstanding				Remaining Life (Years)				Total Exercise Price				Warrants Exercisable				Exercise Price
$	0.015				250,000				0.5			$	0.015				250,000			$	0.015

NOTE 15- LOSS ON SETTLEMENT OF DEBTS

During the nine month period ended March 31, 2011, the Company settled some note payable principal and related accrued interest balances of $109,260 by issuance 6,827,889 shares of its common stock and shares of a subsidiary for the fair value of $67,664. As a result, the Company recorded a loss $41,596 on settlement of debts for the nine month period ended March 31, 2011. For the same period in the prior year, the Company recorded a loss of $2,701 on settlement of debts.

NOTE 16 - RELATED PARTY TRANSACTIONS

The Company accrued $157,500 salaries for the President and the Secretary of the Company during the nine-month periods ended March 31, 2011 and 2010.

NOTE 17- 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 March 31, 2011, the Company has not completed the contemplated business combination for Thinh An and has not recognized any revenues from this transaction.

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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.

Future commitments under operating leases are as follows for the twelve months ending March 31:

2012		88,515
2013		91,614
2014		15,355
2014		-
Total minimum lease payments	$	195,484

NOTE 18 - GOING CONCERN UNCERTAINTY

As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of 27,657,540 and negative cash flow from operations amounting $385,777 for the nine-month period ended March 31, 2011. 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 Company’s commitment with Vietnamese governmental authorities to carry out the development of Pointe91 real estate project in Chu Lai, Quang Nam Province, Vietnam. 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. In the next twelve months, the Company will continue to focus on the following business activities: (1) mergers and acquisitions and consulting services through is subsidiaries PHI Capital Holdings, Inc. and PHI Vietnam Holdings; (2) mining through its majority owned subsidiary PHI Gold Corporation and minority interest in Tricon Gold Corporation; (3) energy and oil and gas through PHI Energy Corporation and PHI Oil and Gas Ltd; (4) real estate development through Philand Ranch Ltd, Philand Corporation, and Philand Vietnam Ltd; and (5) other special situations that may have the potential to create substantial shareholder value. The Company anticipates generating more revenues through its proposed mergers and acquisitions as well as other business activities mentioned herein. 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 19 - CONTROLLING INTERESTS IN SUBSIDIARIES

The Company had controlling interests in a number of its subsidiaries. The balance of controlling interest as of March 31, 2011 and June 30, 2010 was as follows:

Subsidiaries	Non- controlling interest %			Non-controlling interest at March 31, 2011
Philand Ranch Limited		43.53	%	$	(112,218	)
Phi Gold Corp (f/k/a PHI Mining Group)		21.39	%		(381,401	)
				$	(493,619	)

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Subsidiaries	Non- controlling interest %			Non-controlling interest at June 30, 2010
Philand Ranch Limited		24.50	%	$	(80,347	)
Phi Gold Corp (f/k/a PHI Mining Group)		17.29	%		(104,651	)
				$	(184,998	)

(A)Philand Ranch Limited

For the nine month periods ended March 31, 2011 and 2010 Philand Ranch Limited had net loss of $254,419 and $221,625.

(B)Phi Gold Corp (f/k/a PHI Mining Group)

For the nine months periods ended March 31, 2011 and 2010 PHI Gold Corp (f/k/a PHI Mining Group) had net loss of $16,951 and $23,430, respectively.

NOTE 20 - 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 its 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, 2010
	As originally filed			As restated			Change
Deposit		20,016			13,161			6,854
Investment under the equity method		44,846			-			44,846
Shares to be issued		63,854			57,000			6,854
Additional paid-in-capital		18,409,229			19,827,736			(1,418,507	)
Accumulated deficit		(26,963,783	)		(26,999,492	)		35,709
Non-controlling interest		1,242,646			(184,999	)		1,427,645
Total stockholders’ deficit		(7.056,103	)		(7,107,804	)		51,701
Total liabilities and stockholders’ equity/(deficit)		1,085,351			1,033,650			51,701

NOTE 21 – 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 April 4, 2011. The transaction closed with the issuance shares of the Companies, subsidiary Philand Ranch. Maisy Mae Mining Inc. carries on a placer mining business in the Yukon Territory on a mine known as the Maisy Mae Creek Mine.

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On Apil 8, 2011, PHI Energy Corporation signed an Asset Purchase Agreement with PT. Dian Anugrah Pratama (“DAP”), an Indonesia corporation, to acquire an estimated mineable reserve of ten million (10,000,000) metric tons of coal located in an area of approximately 423 hectares, at Kecamatan Kapur IX, Kabupaten Lima Puluh Kota, Propinsi Sumatera Barat, Indonesia, from DAP in exchange for 20,000,000 shares of common stock of PHI Energy Corporation. Subsequently, on May 10, 2011 PHI Energy signed an Agreement of Purchase and Sale with DAP, which superseded and replaced all prior arrangements and understandings with DAP, whereby PHI Energy Corporation will buy total estimated mineable reserves of thirty-three million (33,000,000) metric tons of coal from DAP in exchange for $3,000,000 in cash and 47,000,000 in common stock of PHI Energy Corporation. This transaction is scheduled to close on May 31, 2011. PHI Energy Corporation agrees to file a registration statement to register 4,700,000 shares of its common stock within two months following the closing of this transaction for the benefits of DAP, PHI Group Inc. and all related shareholders.

On April 25, 2011, PHI Medical Ltd., a wholly owned subsidiary of Philand Ranch Ltd., changed its name to PHI Oil and Gas, Ltd., a Singapore public company limited by shares, to focus on oil and gas business.

On April 27, 2011, PHI Oil and Gas Ltd. signed a Business Cooperation with AXN Group, LLC, a Delaware corporation, to cooperate in oil and gas activities whereby AXN Group and its affiliates will own 70%, PHI Group will own 15% and PHILand Ranch will own 15% of PHI Oil and Gas Ltd. PHI Oil and Gas Ltd. will be responsible for listing its shares on the Singapore Stock Exchange as soon as practical, but no later than six months following the acquisition of any oil and gas properties, assets or businesses through arrangements with AXNG. PHI Group intends to continue to pursue its healthcare initiatives in Southeast Asia through a strategic alliance to be announced in the future.

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

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

INTRODUCTION

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.

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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;

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.

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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.

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.

On April 25, 2011, PHI Medical Ltd. (formerly known as Philand Ranch Ltd., a Singapore public company limited by shares), a wholly owned subsidiary of the United Kingdom-registered Philand Ranch Limited, changed its name to PHI Oil and Gas, Ltd. to focus on oil and gas business activities.

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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 March 31, 2011 and 2010, 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 March 31, 2011 or 2010.

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 into an 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.

On Apil 8, 2011 PHI Energy Corporation signed an Asset Purchase Agreement with PT. Dian Anugrah Pratama (“DAP”), an Indonesia corporation, to acquire an estimated mineable reserve of ten million (10,000,000) metric tons of coal located in an area of approximately 423 hectares, at Kecamatan Kapur IX, Kabupaten Lima Puluh Kota, Propinsi Sumatera Barat, Indonesia, from DAP in exchange for 20,000,000 shares of common stock of PHI Energy Corporation. Subsequently, on May 10, 2011 PHI Energy signed an Agreement of Purchase and Sale with DAP, which superseded and replaced all prior arrangements and understandings with DAP, whereby PHI Energy Corporation will buy total estimated mineable reserves of thirty-three million (33,000,000) metric tons of coal from DAP in exchange for $3,000,000 in cash and 47,000,000 in common stock of PHI Energy Corporation. This transaction is scheduled to close on May 31, 2011. PHI Energy Corporation agrees to file a registration statement to register 4,700,000 shares of its common stock within two months following the closing of this transaction for the benefits of DAP, PHI Group Inc. and all related shareholders. (Subsequent Event, Note 20). This subsidiary did not generate any revenue during the three-month periods ended March 31, 2011 or 2010.

NON-CONTROLLING 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 March 31, 2011 the Company owned 32,539,822 shares of Catalyst Resource Group, Inc. common stock, or equivalent to 33.80%.

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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 received 1,746,500 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.

Valuation of Long-Lived and Intangible Assets

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

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of March 31, 2011, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

RESULTS OF OPERATIONS

The following is a discussion and analysis of our results of operations for the three-month and nine-month periods ended March 31, 2011 and 2010, our financial condition at March 31, 2011 and factors that we believe could affect our future financial condition and results of operations. Historical results may not be indicative of future performance.

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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 March 31, 2011 compared to the three months ended March 31, 2010

Total Revenues:

Total revenues were $6,000 and $6,000 for the three months ended March 31, 2011, and 2010, respectively from management services. No consulting revenue was generated in the three months ended March 31, 2011.

Operating Costs and Expenses:

Total operating expenses were $179,590 and $297,598 for the three months ended March 31, 2011, and 2010, respectively. The decrease is primarily due to the decrease in professional expenses. Professional services were $16,180 and $153,608 for the comparable periods. General and administrative expenses were $88,299 and $47,335 for the comparable periods. The increase in general and administrative expenses between the two comparable periods was due to an increase in expenditures associated with travel and investor relations. During the current three months, the Company recorded salaries and wages of $74,394 as compared to $94,458 in the three months of the previous fiscal year. The decrease in salaries and wages for the period ended March 31, 2011 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 $138,443 for the three months ended March 31, 2011 compared to $ 171,839 for the three months ended March 31, 2010. 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 $158,921 and $158,604 for the three months ended March 31, 2011, and 2010, respectively.

Net Income and Loss:

Net loss for the three months ended March 31, 2011 was $284,281as compared to net loss $443,192 for the same period in 2010, which is equivalent to $(0.00) per share for the current period and $(0.00) per share for the same period in 2010, 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 professional expenses $117,428 the three-month period ended March 31, 2011 compared to the same period in 2010, a decrease in total operating expenses of $108,008 in the three-month period ended March 31, 2011 compared to the same period in 2010, and net other income of $34,494 in the three-month period ended March 31, 2011 compared to net other income of $550 in the three-month period ended March 31, 2010.

Nine months ended March 31, 2011 compared to the nine months ended March 31, 2010

Total Revenues:

Total revenues were $359,317 and $18,000 for the nine months ended March 31, 2011, and 2010, respectively. The increase of revenues for the nine months ended March 31, 2011 was due to the consulting services completed during this period compared to none in the comparable period in the previous year.

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Operating Costs and Expenses:

Total operating expenses were $740,419 and $928,293 for the nine months ended March 31, 2011, and 2010, respectively. The decrease is primarily due to decreases in salaries and wages and general. Professional services were $268,915 and $299,490 for the comparable periods. During the current nine months the company recorded salaries of $225,894 as compared to $278,465 of salaries in the nine months last year. General and administrative expense was decreased by $86,943 during the nine months ended March 31, 2011 due to decrease in provision for bad debt and loan receivable in the current period.

Other Income and Expenses:

Interest expense was $420,360 and $457,712 for the nine months ended March 31, 2011, and 2010, respectively. During the nine months ended March 31, 2011, the Company recorded a loss on debt settlement of $41,596 as compared to $ 2,701 on debt settlement in the same period last year. The company also recorded a loss of $0 on the investment in Catalyst Resource Group during the nine months ended March 31, 2011 as compare to 26,906 for the same period in 2010. 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 nine months ended March 31, 2011 was $74,407 as compared to $2,774 for the same period in 2010.

Net Loss:

Net loss for the nine months ended March 31, 2011 was $658,047 compared to net loss of $3,203,727 for the same period in 2010, which is equivalent to $(0.00) per share for the current period and $(0.00) per share for the same period in 2010, based on the weighted average number of basic and diluted shares outstanding.

LIQUIDITY AND CAPITAL RESOURCES

The Company had consolidated cash of $28,909 and $75,299 as of March 31, 2011 and 2010, respectively.

The Company's operating activities used $385,777 and $ 266,716 in the nine months ended March 31, 2011 and 2010, respectively.

Cash used in investing activities was $317,658 for the nine months ended March 31, 2011 as compared to cash used in investing of $36,239 for the same period in 2010, respectively.

Cash provided by financing activities was $657,044 for the nine months ended March 31, 2011, as compared to $195,174 for the nine months ended March 31, 2010. The increase in cash provided by financing activities is mainly, due to an increase on notes payable between the nine-month periods ended March 31, 2011 and 2010, 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.

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COMPANY'S PLAN OF OPERATION FOR NEXT 12 MONTHS

For the next twelve months, the Company intends to focus on the following business activities: (1) mergers and acquisitions and consulting services through is subsidiaries PHI Capital Holdings, Inc. and PHI Vietnam Holdings; (2) mining through its majority owned subsidiary PHI Gold Corporation and minority interest in Tricon Gold Corporation; (3) energy and oil and gas through PHI Energy Corporation and PHI Oil and Gas Ltd; (4) real estate development through Philand Ranch Ltd, Philand Corporation, and Philand Vietnam Ltd; and (5) other special situations including but not limited to reforestation, healthcare, waste management, pulp and paper that may have the potential to create substantial shareholder value. There is no guaranty that the Company will be successful in any of its plans.

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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure and Procedures

As of March 31, 2011 , 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.

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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.

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 MARCH 31, 2011:

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 March 31, 2011.

CONSECO FINANCE VENDOR SERVICES CORPORATION FKA GREEN TREE VENDOR SERVICES CORPORATION VS. PROVIDENTIAL SECURITIES, INC., HENRY D. FAHMAN AND TINA T. PHAN

PENDING LITIGATION:

NGON VU VS. PROVIDENTIAL SECURITIES, INC.

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VERIO VS. PROVIDENTIAL SECURITIES, INC.

DOW JONES & COMPANY, INC. VS. PROVIDENTIAL SECURITIES, INC. AND PROVIDENTIAL HOLDINGS, INC.

KEY EQUIPMENT FINANCE, INC., VS. 49-6215601204 PROVIDENTIAL SECURITIES, INC.; HENRY D. FAHMAN; TINA T. PHAN, CASE NO 06WL00289

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 March 31, 2011.

NASD CASE:

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ARBITRATION CASES:

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 as to the Company's ability to integrate successfully any operations, personnel, services or products that have been acquired or might be acquired in the future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the Company's business, financial condition and operating results.

Acquisitions involve a number of special risks, including:

failure of the acquired business to achieve expected results;

diversion of management’s attention;

failure to retain key personnel of the acquired business;

additional financing, if necessary and available, could increase leverage, dilute equity, or both;

the potential negative effect on our financial statements from the increase in goodwill and other intangibles; and

the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

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

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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 March 31, 2011, 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 be subject to the "penny stock" rules and regulations. Broker-dealers who sell penny stocks to certain types of investors are required to comply with the Commission's regulations concerning the transfer of penny stock.

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 INFORMATION

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

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

Exhibit No.		Description

21.1		Subsidiaries of registrant

31.1		Certification by Henry D. Fahman, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Henry D. Fahman, 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: May 23, 2011
By: /s/ Henry D. Fahman
Henry D. Fahman, President

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

SIGNATURE	TITLE	DATE

/s/ Henry D. Fahman
HENRY D. FAHMAN	Chairman/President/Acting Chief Financial Officer	May 23, 2011

/s/ Tina T. Phan	Secretary & Treasurer	May 23, 2011
TINA T. PHAN

/s/ Tam T. Bui	Director	May 23, 2011
TAM T. BUI

/s/Frank Hawkins	Director	May 23, 2011
FRANK HAWKINS

/s/Paul K. Nguyen	Director	May 23, 2011
PAUL K. NGUYEN

/s/ Lawrence G. Olson	Director	May 23, 2011
LAWRENCE G. OLSON

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