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. (the "Company" or "PHI") (www.phiglobal.com) is primarily
engaged in running PHILUX Global Funds, SCA, SICAV-RAIF, a "Reserved Alternative
Investment Fund" ("RAIF") under the laws of Luxembourg, and establishing the
Asia Diamond Exchange in Vietnam. Besides, the Company provides corporate
finance services, including merger and acquisition advisory and consulting
services for client companies through our wholly owned subsidiary PHILUX Capital
Advisors, Inc. (formerly PHI Capital Holdings, Inc.) (www.philuxcap.com) and
invests in selective industries and special situations aiming to potentially
create significant long-term value for our shareholders. PHILUX Global Funds
intends to include a number of sub-funds for investment in agriculture,
renewable energy, real estate, infrastructure, and the Asia Diamond Exchange in
Vietnam.
BACKGROUND
Originally incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada
corporation, the Company applied for a Certificate of Domestication and filed
Articles of Domestication to become a Wyoming corporation on September 20, 2017.
In the beginning, the Company was foremost engaged in mergers and acquisitions
and had an operating subsidiary, Diva Entertainment, Inc., which operated two
modeling agencies, one in New York and one in California. In January 2000, the
Company changed its name to Providential Securities, Inc., a Nevada corporation,
following a business combination with Providential Securities, Inc., a
California-based financial services company. In February 2000, the Company then
changed its name to Providential Holdings, Inc. In October 2000, Providential
Securities withdrew its securities brokerage membership and ceased its financial
services business. Subsequently, in April 2009, the Company changed its name to
PHI Group, Inc. From October 2000 to October 2011, the Company and its
subsidiaries were engaged in mergers and acquisitions advisory and consulting
services, real estate and hospitality development, mining, oil and gas,
telecommunications, technology, healthcare, private equity, and special
situations. In October 2011, the Company discontinued the operations of
Providential Vietnam Ltd., Philand Ranch Limited, a United Kingdom corporation
(together with its subsidiaries Philand Ranch - Singapore, Philand Corporation -
US, and Philand Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI
Mining Corporation, a Nevada corporation), and PHI Energy Corporation (a Nevada
corporation), and mainly focused on acquisition and development opportunities in
energy and natural resource businesses.
The Company is currently focused on PHILUX Global Funds, SCA, SICAV-RAIF by
launching a number of sub-funds for investment in real estate, renewable energy,
infrastructure, agriculture and healthcare and on developing and establishing
the Asia Diamond Exchange in Vietnam. In addition, PHILUX Capital Advisors, Inc.
(formerly Capital Holdings, Inc.), a wholly owned subsidiary of the Company,
continues to provide corporate and project finance services, including merger
and acquisition (M&A) advisory and consulting services for U.S. and
international companies. No assurances can be made that the Company will be
successful in achieving its plans.
BUSINESS STRATEGY
PHI's strategy is to:
1. Identify, build, acquire, commit and deploy valuable resources with
distinctive competitive advantages;
2. Identify, evaluate, acquire, participate and compete in attractive businesses
that have large, growing market potential;
3. Build an attractive investment that includes points of exit for investors
through capital appreciation or spin-offs of business units.
3
SUBSIDIARIES:
As of December 31, 2020, the Company owned the following subsidiaries: (1)
American Pacific Plastics, Inc., a Wyoming corporation (100%), (2) American
Pacific Resources, Inc., a Wyoming corporation (100%), (3) PHILUX Capital
Advisors, Inc., a Wyoming corporation (100%), (4) PHI Vietnam Investment and
Development Company Ltd., a Vietnamese limited liability company (100%), (5)
Phivitae Healthcare, Inc. (100%), (6) PHI Luxembourg Development S.A., a
Luxembourg corporation (100%), PHILUX Global Funds SCA, SICAV-RAIF, a Luxembourg
Reserved Alternative Investment Fund (100%), PHILUX Global General Partners SA,
a Luxembourg corporation (100%), and PHI Luxembourg Holding SA, a Luxembourg
corporation (100%).
PHILUX GLOBAL FUNDS SCA, SICAV-RAIF
On June 11, 2020, the Company received the approval from the Luxembourg
Commission de Surveillance du Secteur Financier (CSSF) and successfully
established and activated PHILUX GLOBAL FUNDS SCA, SICAV-RAIF (the "Fund"),
Registration No. B244952, a Luxembourg bank fund organized as a Reserved
Alternative Investment Fund in accordance with the Luxembourg Law of July 23,
2016 relative to reserved alternative investment funds, Law of August 23, 2016
relative to commercial companies, and Modified Law of July 12, 2013 relative to
alternative investment fund managers.
The following entities have been engaged to support the Fund's operations: a)
Custodian Bank: Hauck & Aufhauser Privatbankiers AG, b) Administrative Registrar
& Transfer Agent: Hauck & Aufhauser Alternative Investment Services S.A., c)
Fund Manager: Hauck & Aufhauser Fund Services S.A., d) Fund Attorneys: DLP Law
Firm SARL and VCI Legal, e) Investment Advisor: PHILUX Capital Advisors, Inc.,
f) Fund Auditors: E&Y Luxembourg and E&Y Vietnam, g) Fund Tax Advisor: ATOZ Tax
Management, Luxembourg, h) Fund Independent Asset Valuator: Cushman & Wakefield,
Vietnam.
The Fund is an umbrella fund containing one or more sub-fund compartments
intended to invest in real estate, infrastructure, renewable energy,
agriculture, healthcare and especially the Multi-Commodities Center (MCC) in
Vietnam which will include the Asia Diamond Exchange and potentially the
proposed International Financial Center.
DEVELOPMENT OF THE ASIA DIAMOND EXCHANGE IN VIETNAM
Along with the establishment of PHILUX Global Funds, since March 2018 the
Company has worked closely with the Authority of Chu Lai Open Economic Zone and
the Provincial Government of Quang Nam, Vietnam to develop the Asia Diamond
Exchange. Quang Nam Provincial Government has agreed to allocate more than 200
hectares in the sanctioned Free-Trade Zone near Chu Lai Airport, Nui Thanh
District, Quang Nam Province in Central Vietnam for us to set up a
multi-commodities center which would include the Asia Diamond Exchange.
Recently, another opportunity has arisen with the start of construction of the
new international airport in Long Thanh District, Dong Nai Province near Ho Chi
Minh City in Southern Vietnam. In December 2020, the Vietnamese central
government designated 1,200 hectares of land in Bau Can village, Long Thanh
District, Dong Nai Province as a new industrial zone. We are in the process of
applying for 600 hectares close to the Long Thanh International Airport to
develop Long Thanh Multi-Commodities Logistics Center (LMLC. On June 04, 2021,
the Company incorporated Asia Diamond Exchange, Inc., a Wyoming corporation, ID
number 2021-001010234, as the holding company for the Asia Diamond Exchange to
be established in Vietnam.
PHILUX CAPITAL ADVISORS, INC.
PHILUX Capital Advisors, Inc. was originally incorporated under the name of
"Providential Capital, Inc." in 2004 as a Nevada corporation and wholly owned
subsidiary of the Company to provide merger and acquisition (M&A) advisory
services, consulting services, project financing, and capital market services to
clients in North America and Asia. In May 2010, Providential Capital, Inc.
changed its name to PHI Capital Holdings, Inc. It was re-domiciled as a Wyoming
corporation on September 20, 2017 and changed its name to "PHILUX Capital
Advisors, Inc." on June 03, 2020. This subsidiary has successfully managed
merger plans for several privately held and publicly traded companies and
continues to focus on serving the Pacific Rim markets in the foreseeable future.
This subsidiary currently serves as the investment advisor to "PHILUX Global
Funds SCA, SICAV-RAIF," a Luxembourg Reserved Alternative Investment Fund
established by PHI Luxembourg Development S.A.
4
AMERICAN PACIFIC RESOURCES, INC.
American Pacific Resources, Inc. ("APR") is a Wyoming corporation established in
April 2016 to serve as a holding company for various natural resource projects.
On September 2, 2017, APR entered into an Agreement of Purchase and Sale with
Rush Gold Royalty, Inc. ("RGR"), a Wyoming corporation, to acquire a 51%
ownership in twenty-one mining claims over an area of approximately 400 acres in
Granite Mining District, Grant County, Oregon, U.S.A., in exchange for a total
purchase price of twenty-five million U.S. Dollars ($US 25,000,000) to be paid
in a combination of cash, convertible demand promissory note and PHI Group,
Inc.'s Class A Series II Convertible Cumulative Redeemable Preferred Stock
("Preferred Stock"). This transaction was closed effective October 3, 2017.
Following the first amendment dated April 19, 2018 and the second amendment
dated September 29, 2018 retroactively effective April 20, 2018, to the
afore-mentioned Agreement of Purchase and Sale, PHI Group, Inc. paid ten million
shares of its Class A Series II Convertible Cumulative Redeemable Preferred
Stock, a convertible demand promissory note and cash totaling $25,000,000 to
Rush Gold Royalty, Inc. As of June 30, 2020, the Company has recorded $462,000
paid for this transaction as expenses for research and development in connection
with the Granite Mining Claims project. The value of these mining claims is
expected to be adjusted later after a new valuation of these mining assets is
conducted by an independent third-party valuator.
SPECIAL STOCK DIVIDEND FROM AMERICAN PACIFIC RESOURCES, INC. SUBSIDIARY
On April 23, 2018, the Company's Board of Directors passed a resolution to
declare a twenty percent (20%) special stock dividend from its holdings of
Common Stock in American Pacific Resources, Inc., a subsidiary of the Company,
to shareholders of Common Stock of the Company as follows: (a) Declaration date:
April 23, 2018; (b) Record date: May 31, 2018; (c) Payment date: October 31,
2018; (d) Dividend ratio: All eligible shareholders of Common Stock of the
Company as of the Record date shall be entitled to receive two (2) shares of
Common Stock of American Pacific Resources, Inc. for every ten (10) shares of
Common Stock of PHI Group, Inc. held by such shareholders as of the referenced
Record date. The payment date was rescheduled for a number of times due to
various uncontrollable factors.
Most recently, on June 25, 2021, the Board of Directors of PHI Group, Inc.,
adopted a resolution to further extend the Record Date to December 31, 2021 and
amend the provisions for the afore-mentioned stock dividend as follows: (a)
Eligible shareholders: In order to be eligible for the above-mentioned special
stock dividend, the minimum amount of Common Stock of PHI Group, Inc. each
shareholder must hold as of December 31, 2021 (the New Record Date) is two
thousand (2,000) shares; (b) Dividend ratio: All eligible shareholders of Common
Stock of the Company as of the new Record Date will be entitled to receive one
(1) share of Common Stock of American Pacific Resources, Inc. for every two
thousand (2,000) shares of Common Stock of PHI Group, Inc. held by such
shareholders as of the new Record date; and (c) Payment Date: the Payment Date
for the distribution of the special stock dividend to be ten (10) business days
after a registration statement for said special stock dividend shares is
declared effective by the Securities and Exchange Commission.
PHIVITAE HEALTHCARE, INC.
PHIVITAE HEALTHCARE, INC., a Wyoming corporation, is a wholly-owned subsidiary
of PHI Group established on July 07, 2017 under the name of "PHIVATAE
Corporation, Inc." with the intention to acquire a pharmaceutical and medical
equipment distribution company in Romania and to manage distribution of medical
equipment and pharmaceutical products to emerging markets. This subsidiary
changed its name to PHIVITAE HEALTHCARE, INC. on March 17, 2020. On April 27,
2020, PHI Group, Inc. signed a business cooperation agreement with Natural Well
Technical Ltd. ("NWTL"), Taiwanese company, to jointly cooperate in the research
and development activities of pertinent technologies that have been initiated
and continue to be carried out by NWTL and applying them to produce commercial
products and services in the fields of healthcare, beauty supply, agriculture
and industry, as the case may be, as well as any other business activities
deemed mutually beneficial.
5
In particular, NWTL and PHI Group will initially focus on the following
activities:
1. Developing and implementing a comprehensive plan to increase the production,
marketing and sale of the "Super Green" High Energy Drop Drink and "Mistyrious"
Fine Mist Spray products on a large scale worldwide;
2. Developing and implementing a plan to increase the production, marketing and
sale of "Super Cassava" and "Uni-Wash" Engine Booster products as well as other
products related to the fields of agriculture and energy that have been studied
and developed by NWTL;
3. Continuing to conduct research and accumulate clinical data for NWTL's
biotechnologies in order to obtain U.S. FDA's approval of cancer treatments and
other healthcare products. In addition, both parties also develop, produce and
market beauty supply products.
4. Designing a financial plan and providing the required funding for NWTL to
execute its business plan.
Both companies intend to conduct the activities mentioned in 1. and 3. above
through PHIVITAE HEALTHCARE, INC. or a subsidiary under it.
STOCK OWNERSHIPS:
MYSON GROUP, INC.
As of December 31, 2020, PHI Group, Inc. and PHI Capital Holdings, Inc., a
wholly owned subsidiary of the Company, together owned 33,805,106 shares of
Common Stock of Myson Group, Inc., a Nevada corporation currently traded on the
OTC markets under the symbol "MYSN." The Company wrote off 32,900,106 shares of
MYSN stock held in certificate form as worthless as of June 30, 2019, as Myson
Group was not in good standing with the State of Nevada at that time.
Subsequently, Myson Group filed a Certificate of Reinstatement with the
Secretary of State of Nevada on June 04, 2021.
SPORTS POUCH BEVERAGE COMPANY, INC.
As of December 31, 2020, the Company through PHILUX Capital Advisors, Inc. owned
292,050,000 shares of Sports Pouch Beverage Company, Inc., a Nevada corporation
traded on the OTC Markets under the symbol "SPBV". On March 19, 2021 this
company signed a Business Combination Agreement with Glink Apps International,
Inc. and on May 26, 2021 the corporate name was changed to Glink Arts Global
Group, Inc.
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 December 31, 2020, 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 periods ended December 31, 2020 and 2019, our financial condition at
December 31, 2020 and factors that we believe could affect our future financial
condition and results of operations. Historical results may not be indicative of
future performance.
This discussion and analysis should be read in conjunction with our consolidated
financial statements and the notes thereto included elsewhere in this Form 10-Q.
Our consolidated financial statements are prepared in accordance with Generally
Accepted Accounting Principles in the United States ("GAAP"). All references to
dollar amounts in this section are in United States dollars.
6
Three months ended December 31, 2020 compared to the three months ended December
31, 2019
Total Revenues:
During the three months ended December 31, 2020, the generated $13,000 in
revenues from consulting services as compared to no revenue for the
corresponding quarter ended December 31, 2019.
Total Operating Expenses:
Total operating expenses were $109,892 and $183,348 for the three months ended
December 31, 2020, and 2019, respectively. A decrease of $73,456 in total
operating expenses between the two periods was mainly due to a decrease of
$45,000 in salaries and wages, a decrease in general and administrative expenses
of $8,765 and a decrease in professional services of $19,691.
Loss from Operations:
Loss from operations for the quarter ended December 31, 2020 was $96,892, as
compared to loss from operations of $183,348 for the corresponding period ended
December 31, 2019. A decrease of $86,456 in the loss from operations between the
two periods was mainly due to reasons mentioned in total operating expenses
above and the absence of revenues during the quarter ended December 31, 2019 as
compared to revenues of $13,000 for the corresponding quarter in 2020.
Other Income and Expenses:
The Company had a net other expenses of $115,975 for the three months ended
December 31, 2020, as compared to net other expenses of $43,369 for the three
months ended December 31, 2019. The increase in other expenses of $72,606
between the two periods was mainly due to an increase of $76,057 in net interest
expenses and an increase of $3,451 in other expense. Interest expenses were
$117,532 and $41,464 for the three months ended December 31, 2020 and 2019,
respectively.
Net Income (Loss):
Net loss for the three months ended December 31, 2020 was $212,867, as compared
to net loss of $226,717 for the same period in 2019, which is equivalent to
($0.00) per share for the current period and ($0.00) per share for the
corresponding period ended December 31, 2019, based on the weighted average
number of basic and diluted shares outstanding at the end of each corresponding
period.
Six months ended December 31, 2020 compared to the six months ended December 31,
2019
Total Revenues:
The Company generated $18,000 from consulting services for the six months ended
December 31, 2020 as compared to $8,531 in revenues for the same period ended
December 31, 2019.
7
Total Operating Expenses:
Total operating expenses were $426,915 and $334,529 for the six months ended
December 31, 2020, and 2019, respectively. An increase of $92,386 in total
operating expenses between the two periods was mainly due to an increase in
professional services of $165,544 and an increase in general and administrative
expenses of $16,841, offset by a decrease of $90,000 in salaries and wages.
Loss from Operations:
Loss from operations for the six months ended December 31, 2020 was $408,915, as
compared to loss from operations of $325,998 for the corresponding period ended
December 31, 2018. An increase of $82,917 in the loss from operations between
the two periods was mainly due to the changes in the components of the Company's
operating expenses as mentioned above.
Other Income and Expenses:
The Company had a net other expenses of $140,216 for the six months ended
December 31, 2020, as compared to net other expenses of $254,151 for the six
months ended December 31, 2019. The decrease in other expenses of $113,935
between the two six-month periods was mainly due to a decrease of $106,660 in
net interest expenses and an increase of $7,275 in other income. Interest
expenses were $142,933 and $249,593 for the six months ended December 31, 2020
and 2019, respectively.
Net Income (Loss):
Net loss for the six months ended December 31, 2020 was $549,131, as compared to
net loss of $580,149 for the same period in 2019, which is equivalent to ($0.00)
per share for the current period and ($0.00) per share for the corresponding
period ended December 31, 2019, based on the weighted average number of basic
and diluted shares outstanding at the end of each corresponding period.
CASH FLOWS
The Company's cash and cash equivalents balance were $85,853 and $14,141 as of
December 31, 2020 and December 31, 2019, respectively.
Net cash used in the Company's operating activities during the six months ended
December 31, 2020 was $282,375, as compared to net cash used in operating
activities of $275,631 during the corresponding period ended December 31, 2019.
This represents a variance of $6,744 in net cash used in operating activities
between the two periods, which is less than 2.50%.
There was no net cash provided by or used in investing activities during either
the six months ended December 31, 2020 or December 31, 2019.
Cash provided by financing activities was $142,848 for the six months ended
December 31, 2020, as compared to cash provided by financing activities in the
amount of $225,256 for the same period ended December 31, 2019. The primary
underlying reasons for a decrease of $82,408 in cash provided by financing
activities between the two corresponding periods were primarily due to a
decrease in common stock and paid-in capital in the amount $171,980 and a change
in comprehensive loss of $89,632 between the two periods.
HISTORICAL FINANCING ARRANGEMENTS
SHORT TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK
In the course of its business, the Company has obtained short-term loans from
individuals and institutional investors and from time to time raised money by
issuing restricted common stock of the Company under the auspices of Rule 144.
These notes bear interest rates ranging from 0% to 36% per annum.
8
CONVERTIBLE PROMISSORY NOTES
The Company has also from time to time issued convertible promissory notes to
various private investment funds for short-term working capital and special
projects. Typically these notes bear interest rates from 5% to 12% per annum,
mature within one year, are convertible to common stock of the Company at a
discount ranging from 42% to 50%, and may be repaid within 180 days at a
prepayment premium ranging from 130% to 150%.
COMPANY'S PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS
In the next twelve months the Company's goals are to create a number of
sub-funds under PHILUX Global Funds SCA, SICAV-RAIF for investment in real
estate, renewable energy, agriculture, infrastructure, and healthcare, as well
as develop the Asia Diamond Exchange in Vietnam. In addition, the Company will
continue to carry out its merger and acquisition program by acquiring target
companies for roll-up strategy and also invest in special situations. Moreover,
we will provide advisory and consulting services to international clients
through our wholly owned subsidiary PHILUX Capital Advisors, Inc. (formerly
known as PHI Capital Holdings, Inc.)
MATERIAL CASH REQUIREMENTS: We must raise substantial amounts of capital to
fulfill our plans for PHILUX Global Funds and for acquisitions. We intend to use
equity, debt and project financing to meet our capital needs for acquisitions
and investments.
Management has taken action and formulated plans to meet the Company's operating
needs through June 30, 2022 and beyond. The working capital cash requirements
for the next 12 months are expected to be generated from operations, sale of
marketable securities and additional financing. The Company plans to generate
revenues from its consulting services, merger and acquisition advisory services,
and acquisitions of target companies with cash flows.
AVAILABLE FUTURE FINANCING ARRANGEMENTS: The Company may use various sources of
funds, including short-term loans, long-term debt, equity capital, and project
financing as may be necessary. The Company believes it will be able to secure
the required capital to implement its business plan.
EQUITY LINE FACILITY
On March 6, 2017, PHI Group, Inc., a Nevada corporation (the "Company") and
Azure Capital, a Massachusetts Corporation (the "Investor") entered into an
Investment Agreement (the "Investment Agreement") and a Registration Rights
Agreement (the "Registration Rights Agreement"), each dated March 6, 2017
between the Company and the Investor.
Pursuant to the Investment Agreement, the Investor committed to purchase,
subject to certain restrictions and conditions, up to $10,000,000 worth of the
Company's common stock, over a period of 36 months from the effectiveness of the
registration statement registering the resale of shares purchased by the
Investor pursuant to the Investment Agreement. The Company agreed to initially
reserve 20,000,000 shares of its Common Stock for issuance to the Investor
pursuant to the Investment Agreement. In the event the Company cannot register a
sufficient number of shares of its Common Stock for issuance pursuant to the
Investment Agreement, the Company will use its best efforts to authorize and
reserve for issuance the number of shares required for the Company to perform
its obligations in connection with the Investment Agreement as soon as
reasonable practical.
The Company may in its discretion draw on the facility from time to time, as and
when the Company determines appropriate in accordance with the terms and
conditions of the Investment Agreement. The maximum number of shares that the
Company is entitled to put to the Investor in any one draw down notice shall not
exceed shares with a purchase price of $250,000 or 200% of the average daily
volume (U.S. market only) of the Company's Common Stock for the three (3)
Trading Days prior to the applicable put notice date multiplied by the average
of the three (3) daily closing prices immediately preceding the put date,
calculated in accordance with the Investment Agreement. The Company may deliver
a notice for a subsequent put from time to time, after the pricing period for
the prior put has been completed.
9
The purchase price shall be set at ninety-four percent (94%) of the lowest daily
volume weighted average price (VWAP) of the Company's common stock during the
five (5) consecutive trading days immediately following the put notice date. On
each put notice submitted to the Investor by the Company, the Company shall
specify a suspension price for that put. In the event the price of Company's
Common Stock falls below the suspension price, the put shall be temporarily
suspended. The put shall resume at such time the price of the Company's Common
Stock is above the suspension price, provided the dates for the pricing period
for that particular put are still valid. In the event the pricing period has
been complete, any shares above the suspension price due to the Investor shall
be sold to the Investor by the Company at the suspension price under the terms
of the Investment Agreement. The suspension price for a put may not be changed
by the Company once submitted to the Investor.
There are put restrictions applied on days between the draw down notice date and
the closing date with respect to that particular put. During such time, the
Company shall not be entitled to deliver another draw down notice. In addition,
the Investor will not be obligated to purchase shares if the Investor's total
number of shares beneficially held at that time would exceed 4.99% of the number
of shares of the Company's common stock as determined in accordance with Rule
13d-1(j) of the Securities Exchange Act of 1934, as amended. In addition, the
Company is not permitted to draw on the facility unless there is an effective
registration statement to cover the resale of the shares.
The Investment Agreement also contains customary representations and warranties
of each of the parties. The assertions embodied in those representations and
warranties were made for purposes of the Investment Agreement and are subject to
qualifications and limitations agreed to by the parties in connection with
negotiating the terms of the Investment Agreement. The Investment Agreement
further provides that the Company and the Investor are each entitled to
customary indemnification from the other for, among other things, any losses or
liabilities they may suffer as a result of any breach by the other party of any
provisions of the Investment Agreement or Registration Rights Agreement (as
defined below). Investor should read the Investment Agreement together with the
other information concerning the Company that the Company publicly files in
reports and statements with the Securities and Exchange Commission (the "SEC").
Pursuant to the terms of the Registration Rights Agreement, the Company is
obligated to file one or more registrations statements with the SEC within
twenty-one (21) days after the date of the Registration Rights Agreement to
register the resale by the Investor of the shares of common stock issued or
issuable under the Investment Agreement. In addition, the Company is obligated
to use all commercially reasonable efforts to have the registration statement
declared effective by the SEC within 90 days after the registration statement is
filed.
This Investment Agreement was amended on August 3, 2017 to allow for the
reservation of 65,445,000 shares of the Company's Common Stock for issuance to
the Investor pursuant to the corrected Investment Agreement.
The Company has filed a S-1 Registration Statement with the Securities and
Exchange Commission to include 7,936,600 shares of its Common Stock for issuance
in connection with the first tranche of the Equity Line Facility. The S-1
Registration Statement, as amended, was declared effective by the Securities and
Exchange Commission on January 11, 2018. As of the day of this report, the
Company has not accessed the Equity Line Facility for funding.
© Edgar Online, source Glimpses
PHILUX GLOBAL GROUP INC. 
