PHI GROUP INC - Quarter Report: 2008 March (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-QSB

(Mark One)

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March  31, 2008

OR

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

SECURITIES EXCHANGE ACT 1934

For the transition period from __________ to ___________

Commission file number 2-78335-NY

Providential Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:      NONE

Indicate by check (X) whether the issuer (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 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  193,830,961 shares of common stock, $.04 par value per share, were outstanding as of May 13, 2008.  

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TABLE OF CONTENTS

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS

Providential Holdings, Inc., ("PHI") is engaged in a number of business activities, including consulting and financial services, independent energy and resources, real estate development, and investing in special situations with potential for high growth.

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-QSB 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, 2007.  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, 2008 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2008.

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.

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, 2008, the marketable securities have been recorded at $8,085,234 based upon the fair value of the marketable securities.  (Note 4)

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Providential Holdings, Inc., and its subsidiaries, Providential Capital, Inc., Providential Securities, Inc., PHI Digital Inc., (“PHI Digital”), Provimex, Inc., Touchlink Communications, Inc., PhiLand Corporation (“PhiLand”), Providential Energy Corporation, and IndoChina Mining Corporation, collectively referred to as the "Company".  All significant inter-company transactions have been eliminated in consolidation.  Providential Securities, PHI Digital, Provimex, Touchlink Communications, Providential Energy Corporation and IndoChina Mining Corporation are inactive.

RECLASSIFICATIONS

Certain prior year items have been reclassified to conform to the current period’s presentation.

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RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’.  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements.  However, for some entities, the application of this Statement will change current practice.  This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on the consolidated financial statements.

In September 2006, the FASB issued Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (SFAS 158). This Statement improves financial reporting by requiring an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. This Statement is effective as of the end of the fiscal year ending after December 15, 2006. The adoption of this provision does not have a material effect on the consolidated financial position, results of operations or cash flows.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted subject to specific requirements outlined in the new Statement. Therefore, calendar-year companies may be able to adopt FAS 159 for their first quarter 2007 financial statements. The new Statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FAS 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. Management is currently evaluating the effect of this pronouncement on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”. The objective of this statement will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition –date fair value will limited exceptions. Statement 141 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 141R to have a material impact on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51". The objective of this statement is to establish new accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a material impact on the consolidated financial statements.

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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.  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 in October 2000 and ceased its securities brokerage operation.  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 through common director consist of the following at March 31, 2008:

Loans to Bio-Warm and Pho Express are unsecured, interest free and due on demand. The Company agreed to apply the loan balance for Pho Express to the purchase price of Pho Express if a business transaction occurs between the Company and Pho Express. The loan is unsecured, interest free and due on demand.

Loans to Jeantex Group and Provimex HTV is unsecured and bear 8.5% interest per annum  and due on demand  However, during the period ended March 31, 2008,  no interest income has been recorded as the collectability of the interest was not assured by the Company.

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NOTE 4 - MARKETABLE SECURITIES

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, 2008:

As of March 31, 2008, 400,000 shares of Jeantex Group, Inc. stock and 2,000,000 shares of Cavico Corp. stock were pledged as collateral for short-term notes payable. During the nine month period ended March 31, 2008 the Company received 3,763,753 shares from DDC as consulting fee for the services performed by the Company.

NOTE 5 - IMPAIRMENT OF ASSETS

The Company evaluated its investment in Terra Firma Oil and Gas based upon the current situation of the investment project and recognized an impairment loss equal to the book value of these investments amounting $20,000 during the nine months ended March 31, 2007. The evaluation was based upon market value of similar investment.

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NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2008 consists of the following:

Depreciation expense was $869 and $2,065  for the nine  months ended March 31, 2008 and 2007, respectively.

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The accounts payable and accrued expenses at March 31, 2008 consist of the following:

NOTE 8 - LOANS AND PROMISSORY NOTES

SHORT TERM NOTES PAYABLE

As of March 31, 2008, the Company has short term notes payable amounting $1,736,255.  The Company received additional loan of $1,052,600 from various note holders during the nine month period ended March 31, 2008. The accrued interest of $273,486 is included in accrued expenses on these notes.  The notes amounting to $863,000 are past due, $150,000 is due on June 24, 2008, $400,000 is due on May 31, 2008, $20,000 is due on August 28, 2008 and the remaining of the notes are payable on demand.  These notes bear interest rates ranging from 6% to 36% per annum.  During the nine months ended December 31, 2007, the Company repaid $95,000 of principal and $128,248 of related accrued interest.

DUE TO PREFERRED STOCKHOLDERS

As of March 31, 2008, the Company has reclassified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock due to  rescission agreements with the  preferred share subscribers. There were no payments or conversions made during the nine months ended March 31, 2008.

The interest payable to holders of preferred stock amounting to $200,405 at March 31, 2008 has been included in accrued interest.  

OTHER CURRENT LIABILITIES

During the year ended June 30, 2004, the Company received an overpayment of $89,691 for the exercise of stock options receivable.  This amount has not been paid by the Company as of March 31, 2008 and has been classified as other payable on the consolidated financial statement.

Other current liabilities at March 31, 2008also include $53,000 of client deposits to purchase Cavico shares from the Company.

NOTE 9 - DUE TO OFFICERS

Due to officers, represents accrued salaries and advances made by officers of the Company and its subsidiaries, which are non-interest bearing, unsecured and due on demand. During the nine month period ended March 31, 2008, the officers loaned additional $156,400 in cash to the Company and was paid $82,865.  A total of $180,000 of the officer’s notes, including $10,000 changed from account payable to note, was converted to 6,000,000 shares of Company’s common stock at the market price of $0.03 per share.  In addition, $420,000 of officers’ accrued salaries was converted to 14,000,000 shares of the Company’s common stock at the market price of $0.03 per share.  As of March 31, 2008, the balance was $467,440.

NOTE 10 - LITIGATION

LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2007:

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.

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. 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.

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PENDING LITIGATION:

NGON VU VS. PROVIDENTIAL SECURITIES, INC.

Claimant was a former employee of Providential Securities, Inc. who was laid off in 2000 due to closure of business. The Claimant complained to the Department of Industrial Relations (DIR) for allegedly unpaid vacation and salaries. On June 13, 2001, the DIR filed a request to enter a judgment against Providential Securities, Inc. for $9,074 including wages and interest, penalty, post hearing and filing fee. The sought amount of $9,074 has been accrued in the accompanying consolidated financial statements.

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.

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.

KEY EQUIPEMNT 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 $14,439plus 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. As of December 31, 2007 the Company has accrued $14,439.

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, 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. (Note 2)

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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.

NOTE 11 - BASIC AND DILUTED NET LOSS PER SHARE

Net loss per share is calculated in accordance with SFAS No. 128, "Earnings per Share".  Under the provision of SFAS No. 128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding for the period.  Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period.  

NOTE 12 - STOCKHOLDER'S EQUITY

COMMON STOCK

During the period ended March 31, 2008, the Company issued 6,000,000 shares for conversion of officer’s notes amounting $180,000 (Note 9).

During the period ended March 31, 2008, the Company issued 14,000,000 shares to officers for converted accrued salaries amounting $420,000.

During the period ended March 31, 2008, the Company issued 1,800,000 shares for consulting service valued at $90,000 of which $56,250 was recorded as prepaid expense.

TREASURY STOCK

During the nine months ended March 31, 2008, the Company purchased 500 Treasury Shares for $42.  The balance as of March 31, 2008 was 2,320,440 shares valued at $92,818.

Subscriptions Receivable:

As of March 31, 2008, the subscription receivable amounting $25,500 from a consultant for shares issued during the year ended 2005 are still not received.

NOTE 13 - STOCK-BASED COMPENSATION PLAN

STOCK OPTIONS

On July 10, 2000 the Company adopted a Stock Option and Incentive Plan (the "Plan") which provides for the issuance of up to a maximum of 16 million shares of the Company's common stock to officers, employees and non-employee directors at the sole discretion of the board of directors.  On August 10, 2000 the Company granted fourteen million options under the Plan to officers, directors and employees at an exercise price of $.50 per share. As of the date of this report there have been no options exercised and seven million of these options have been forfeited. The remaining seven million options were exercisable on July 1, 2001 and expired on December 31, 2005.

The Company did not grant any options during the period ended March 31, 2008 and 2007. 

Common stock purchase options consist of the following as of March 31, 2008:

      Granted      

-

      Expired

-     

      Exercised                                                                         -

These outstanding options were for non-employee and will expire on April 20, 2008.

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Following is a summary of the status of options outstanding at March 31, 2008:

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.  As of March 31, 2008, 12,478,512 shares have been issued for salaries, consulting and professional services in lieu of cash under this plan.

WARRANTS

During the period ended December 31, 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:

Following is a summary of the warrant activity for the period ended March 31, 2008:

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Following is a summary of the status of warrants outstanding at March 31, 2008:

NOTE 14 - CONTRACTS AND COMMITMENTS

BUSINESS CONSUTLING AGREEMENT WITH ZEROMICRON, INC.

On January 17, 2005 the Company entered into a business consulting agreement with ZeroMircon, Inc., a California corporation, to provide services in the identification, location, and facilitating a merger with a fully-reporting publicly-traded company.  If a merger is successful, the Company is to receive common stock in the newly combined company equal up to 30% of the then issued and outstanding common shares of the new company. As of the date of this report, a successful merger has not been completed.

JOINT VENTURE AGREEMENT WITH NEXIS CAPITAL MANAGEMENT CORPORATION, LTD.

On May 10, 2005, the Company entered into a Joint Venture Agreement with Nexis Capital Management Corporation, Ltd., to assist Chinese companies in their pursuit of capital from sources in the United States. Both parties agree to share equally in all gross fee revenues based upon a mutually agreeable compensation schedule. As of the date of this report, the Company has reviewed a number of proposals from China that are introduced by Nexis Capital Management Corp. but have not consummated any transaction. 

BUSINESS PARTNERING AGREEMENT BETWEEN TOUCHLINK COMMUNICATIONS, INC. AND FAREAST CONNECT, INC.

 On August 22, 2005, the Company entered into a Business Partnering Agreement with Fareast Connect, Inc., a California corporation (“Fareast”), whereby the Company will invest 51% of the initial operating budget into Touchlink Communications, Inc., a majority-owned subsidiary of the Company, and Fareast will invest 49% of the operating budget in exchange for 49% equity ownership of Touchlink Communications.  As of the date of this report, no investment has been made into Touchlink Communications by Fareast.

PROVIDENTIAL OIL & GAS, INC. AGREEMENT WITH TERRA-FIRMA GAS & OIL, INC.

On November 24, 2005 the Company’s wholly-owned subsidiary Providential Oil & Gas, Inc. signed an agreement with Terra-Firma Gas & Oil, Inc., a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty-four gas wells on Hudspeth Ranch, Crockett County, West Texas. Providential Oil & Gas, Inc. will be responsible for providing the capital funding for the drilling of these gas wells and Terra-Firma will be responsible for managing the project.  According to the agreement, Providential Oil & Gas will receive a seventy-five percent share in the net working interest from the first two wells until $1,063,800 capital funding is repaid. After the principal is fully repaid to Providential Oil & Gas, it will receive a fifty percent share in the net working interest for the life of the two wells.  For subsequent well packages, Terra-Firma Gas & Oil, Inc. and Providential Oil & Gas, Inc. will determine and agree upon a mutually acceptable arrangement for the sharing of responsibilities and net working interest in these new wells.  A $20,000 investment by the Company on this project was written off as of the date of this report. On June 14, 2006, Providential Oil & Gas, Inc. changed its name to Providential Energy Corporation to expand its scope of business to potentially include alternative energy such as fuel cells and bio-diesel.
 

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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 agreed to pay Hawk Associates $4,500 per month for the investor relations consulting services and 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.

AGREEMENT WITH DAI DUNG METALLIC MANUFACTURE CONSTRUCTION & TRADE CO.

On November  30, 2006 the Company entered into a Business and Financial Consulting Agreement with DAI DUNG Metallic Manufacture Construction – Trade Co., Ltd., a company duly organized and existing under the laws of Socialist Republic of Vietnam, with its principal offices at B23/474C Tran Dai Nghia St., Tan Nhat Village, Binh Chanh District, Ho Chi Minh City, Vietnam, to provide consulting services in the identification, location, and facilitating a merger with a publicly-traded company in the US.  If a merger is successful, the Company is to receive common stock in the newly combined company equal up to 20% of the then issued and outstanding common shares of the new company.  The merger between Dai Dung and Bio-Warm Corp. was consummated on 3/30/2007. During the year ended June 30, 2007, the Company recorded $1,881,877 as part of marketable securities based on the fair market value of shares at the date of the merger. During the period ended March 31, 2008, the Company received 3,763,753 shares of marketable securities valued at $639,838 under this agreement.

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH SAIGON PLASTIC PACKAGING CO., LTD.

On February 11, 2007 the Company entered into a business consulting agreement with Saigon Plastic Packaging Co., Ltd. (“SAPLASTIC”), a Vietnamese company located in Ho Chi Minh City, Vietnam, to provide services in the identification, location, and facilitating a merger with a publicly-traded company in the US and to arrange $5 million to $10 million for the post-merger company to further its growth.  If a merger is successful, the Company is to receive up to 20% of the then issued and outstanding common shares in the new combined company as payment for its services.  As of the date of this report, a successful merger has not been completed.

AGREEMENT WITH PACIFIC ASSOCIATES INVESTMENT GROUP

On April 25, 2007, Providential Capital, a subsidiary of the Company, entered into an agreement with Pacific Associates Investment Group (“PAIG”) for consulting services for duration of 12 months. The Company will pay PAIG 30% of all commission fees collected upon contract agreement signed by Providential Capital and Seller. There was no activity as of the date of this report.

BUSINESS AND FINANCIAL CONSUTLING AGREEMENT WITH CATTHAI PLASTIC COMPANY 

On June 25, 2007, the Company entered into a business consulting agreement with Catthai Plastic Company (“CATHACO, LTD”), a Vietnamese company located in Ho Chi Minh City, Vietnam. The services include (1) taking CATHACO  public in the US via reverse merger, a business combination or IPO  (2) arranging intermediate funding after it become a fully-reporting publicly traded company on the OTCBB or a higher exchange in the US (3) subsequent listings of the new company’s  shares on the Berlin and Frankfurt Stock Exchanges if necessary (4) further long-term funding and capital requirements as needed.   

CONSULTING AGREEMENT WITH AFFILIATED BUSINESS SERVICES, INC.

On July 10, 2007, the Company entered into a consulting agreement with Affiliated Business Services, Inc. for services concerning management, marketing, consulting, strategic planning, corporate organization and structure financial matters for one year term and continues on a month to month basis until terminated by either party with 30 days of notice. The Company

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will pay (1)10% in cash of any funds raised by consultant on behalf of Company (2)a fee in the form of cashless exercise warrants in the same amount and at the same term as those negotiated and agreed to by the Company and the Investor for any funds raised by the consultant (3) a fee of $50,000 or 10% whichever is greater of the purchase price of any acquisition or merger made by or involving Company introduced by consultant (4) a fee of 10% of the total value of any contracts brought to the Company.

AGREEMENT WITH THE PEOPLE’S COMMITTEE OF QUANG NAM PROVINCE

On July 13, 2007, the Company entered into an agreement with The People’s Committee of Quang Nam Province to develop the real property project in Vietnam to serve as investor of the project. In order to obtain the rights of usage of the land and to satisfy the purposes of the usage of land, the Company is responsible for a lease payment of $.11/sq meter per annum in accordance with methods described in the agreement. A deposit of $5,000,000 is to be made within 10 business days from the agreement date. No deposit was made as of the date of this report.

On December 14, 2007, PhiLand Corporation, a wholly-owned subsidiary of the Company, was granted an investment license by the Authority of Chu Lai Open Economic Zone, People's Committee of Quang Nam Province, to form PhiLand Vietnam, Ltd., a Vietnam-based company 100% owned by PhiLand Corporation, to invest $35,000,000 and develop approximately 57 acres of land in Bien Rang, Tam Quang Village, Nui Thanh District, Quang Nam Province, as the first phase of the overall development plan. PhiLand Corporation is in the process of amending the investment license to develop approximately 103 acres at this location, with an option to increase to 300 acres.

AGREEMENT WITH ORRICK, HERRINGTON & SUTCLIFFE, LLP

On July 27, 2007, Providential Capital, a subsidiary of the Company entered into an agreement to engage Orrick, Herrington & Sutcliffe LLP for establishment of a Vietnam-focused private equity fund in Cayman Islands.

JOINT VENTURE AGREEMENT WITH WRC PARTNERS

On September 5, 2007, Providential Energy Corp., a subsidiary of the Company entered an agreement with WRC Partners, to be formed joint venture between Intersource Consulting Group, Inc.  WRCP and PEC will cooperate in funding, building, owning and operating certain business in the US and other regions of the world and share in the benefits of these business operations.

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH VIP NETWORK HOLDINGS

On September 17, 2007, Providential Capital, a subsidiary of the Company entered into business and financial consulting agreement with VIP Network Holdings (“VIP”). to provide consulting services in taking VIP in the US via reverse merger and financing five to ten million in form of a PIPE, Equity Line, SEDA or a comparable instrument through a major institutional fund. Upon successful merger, the Company is to receive common stock in the newly combined company equal to 22.5% of the then issued and outstanding restricted common shares of the new company.  

BUSINESS COOPERATION AGREEMENT WITH PHO EXPRESS

On September 19, 2007, Provimex, Inc., a subsidiary of the Company entered into business cooperation agreement with a owner of Pho Express to establish a new Vietnamese style noodle soup restaurant, Pho Express International, LLC. Pho Express agreed to contribute all assets and liabilities in exchange for 40% of equity ownership and Provimex agreed to pay $165,000 in exchange for 60% of equity ownership of Pho Express International, LLC. Provimex paid $20,000 cash advance per this agreement.

CONSULTING AGREEMNT WITH JDS INVESTMENT, INC.

On December 31, 2007, the Company entered into a consulting agreement with JDS Investment, Inc.  for long range strategic investor relations planning and advisory service in business and financial matters for one year.  The Company issued 1,500,000 restricted shares of common stock of the Company under this agreement.

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH NAM KIM JOINT STOCK COMPANY

On February 15, 2008, Providential Capital, Inc, a subsidiary of the Company entered into a business and financial consulting agreement with Nam Kim Joint Stock Company,  a Vietnamese company located in Binh Duong, Vietnam. The services include (1) taking Nam Kim  public in the US via reverse merger (2) arranging funding of five to ten million dollars after it become a fully-reporting publicly traded company in the US (3) subsequent listings of the new company’s  shares on the NASDAQ,  if necessary (4)further funding and capital requirements as needed. Upon signing the agreement, Nam Kim agreed to pay $10,000 and if a merger is successful, the Company is to receive 20% of the then issued and outstanding common shares in the new combined company as payment for its services.  As of the date of this report, a successful merger has not been completed.

BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH AMERICAN TECHNOLOGIES, INC.

On March 6, 2008, the Company entered into a business and financial consulting agreement with American Technologies, Inc (ATI). to provide services in taking ATI  public in the US and/or European stock markets by initial public offering, merger or reverse merger and arranging equity funding  and other capital requirements, and providing or arranging public relateions, investor relations, management consulting, and strategic alliance. The amount and terms of compensation for each assignment or project will be determined by the Company and ATI prior to rendering the service.

OFFICE SPACE LEASE

The Company started its office lease in August 2004 at $3,907 per month  for three years which was terminated in July 2007 and paid the rent on a monthly basis during the period ended March 31, 2008.The Company renewed this lease effective May 1, 2008. (Note 17)

The rent expense was $40,480  and $37,309  for the nine months ended March 31, 2008 and 2007, respectively.

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NOTE 15- GOING CONCERN UNCERTAINTY

As shown in the accompanying consolidated financial statements, the Company recorded accumulated deficit of $17,736,133 and negative cash flow from operations amounting $1,196,251. These factors, as well as the uncertain conditions that the Company faces in its day-to-day operations, create an uncertainty as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Management is in process of taking action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs for next twelve months and beyond. The Company also anticipates generating more revenue through its proposed mergers and acquisitions. No assurances can be made that management will be successful in achieving its plan.  The president and chairman of the Company has committed to funding the Company’s operations for the next 12 months.

NOTE 16 - RELATED PARTY TRANSACTIONS

The Company recorded $157,500 for salaries for Henry Fahman and Tina Phan for the nine months ended March 31, 2008 and 2007. During the period ended March 31, 2008, $420,000 of their accrued salaries was converted to 14,000,000 shares of Company’s common stock.

The Company has loans receivable of $329,862 from related parties through common director as of March 31, 2008. The loans are unsecured and bear interest rate of 8.5%. However, the Company did not record the interest income as the collection of this interest was not assured.

During the nine month periods ended March 31, 2008, the Company has recorded $40,500 as consulting income for services rendered to Cavico Corp., a member of whose Board of Directors is a brother of the Chief Executive Officer of the Company. The amount is being reflected as Account receivable – related party in the accompanying financial statements.

NOTE 17 – SUBSEQUENT EVENTS

Effective April 1, 2008, the Company entered into a business and financial consulting agreement with Mast Ventures, LLC  to raise capital for a wholly owned subsidiary, PhiLand Corporation for 5 years. The service includes assistance identifying potential investors, developing an approach in seeking such current financing and investor relations.

The Company agreed to pay 5% of  the total funds raised by the consultant.

On April 7, 2008, Providential Energy Corporation, a wholly owned subsidiary of the Company entered in to an agreement with Iberville Exploration, LLC(Iberville) to purchase the interest in the Bayou Choctaw Project Assets. The Company agreed to provide 100% of the funds required for Iberville to purchase an Acquired Interests within 5 days of the notification of the scheduling of a closing date of transaction.

On April 10, 2008, the Company appointed two non-executive directors of IndoChina Mining Corporation (IMC), a wholly owned subsidiary of the Company. Each of these individuals will be paid one time grant of 300,000 restricted shares of common stock of IMC and $1,000 for attendance at each board meeting and $750 for attendance for each committee meeting.

On April 14, 2008, IndoChina Mining Corporation (IMC), a wholly owned subsidiary of the Company, entered into a Cooperation agreement with Phu Yen Minerals Joint Stock Company (PYMICO). Under this agreement, PYMICO and IMC will cooperate to contribute capital for establishment of a joint venture specializing in exploitation and processing of diatomite in Phu Yen province and IMC will participate in PYMICO through purchasing a maximum of 30% shares of PYMICO when the latter issues additional shares in 2008.

The Company signed on a 5 year lease agreement for the office lease effective May 1, 2008. The monthly rental will be $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.

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

The following is a discussion and analysis of our results of operations for the nine-month periods ended March 31, 2008 and 2007, our financial condition at March 31, 2008 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.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this document that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation statements regarding our expectations, beliefs, intentions or strategies regarding our business, and the level of our expenditures and our liquidity in future periods. We may identify these statements by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and other similar expressions. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements, except as may otherwise be required by law. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Such forward looking statements involve risks and uncertainties and actual results could differ from those described herein and future results may be subject to numerous factors, many of which are beyond the control of the Company.

INTRODUCTION

Providential Holdings, Inc., ("PHI") through its wholly-owned and majority-owned subsidiaries engages in a number of diverse business activities including merger and acquisition advisory services, independent energy, import and export, real estate development, fund management, and telecommunications and maintains minority interests in various companies operating in the areas of infrastructure, construction, natural resources, finance, manufacturing, services and retail.  The Company provides financial consultancy and M&A advisory services to U.S. and foreign companies and invests in selective businesses that may create long-term shareholder value.  No assurances can be made that management will be successful in achieving its plan.

BACKGROUND

Providential Holdings, Inc. ("PHI" or "Providential") was organized under the laws of the State of Nevada on June 8, 1982 under the name of JR Consulting, Inc. The Company changed its name to Providential Securities, Inc., a Nevada corporation, on January 12, 2000, and subsequently changed its name to Providential Holdings, Inc. on February 9, 2000. 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 ("Diva"), which operated two modeling agencies, one in New York and one in California.

Providential Securities, Inc., a California Corporation ("Providential Securities") was incorporated in the State of California on October 8, 1992. It operated a securities brokerage service in California, New York and Oregon. The principal markets for Providential Securities' services were individual investors who were located throughout the United States. Providential Securities bought and sold securities for its customers through a number of different markets, utilizing a brokerage clearinghouse to transact the trades. Due to the results of an NASD examination, Providential Securities withdrew its membership and ceased its securities brokerage business in October 2000.

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BUSINESS RESTRUCTURING

Following the discontinuance of its securities brokerage operations in October 2000, the Company restructured its primary scope of business to engage in merger and acquisition advisory services. At the present, the Company focuses in: (1) Consulting and financial services, (2) Energy and resources, (3) Real estate, and (4)  Special Situations.  During the Fiscal Year ended June 30, 2007, the Company increased its focus on assisting Vietnamese companies to go pubic in the U.S. stock markets and investing in Vietnam. Events and developments relating to these areas are described in more detail below.

SUBSIDIARIES:

PROVIMEX, INC.   

Provimex is a wholly-owned division of the Company 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.  For the fiscal years ended June 30, 2007 and 2006, this division did not generate any sales. This subsidiary was later 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.

In September 2007, Provimex entered into a Business Cooperation Agreement with Timmy Nguyen, sole owner of Pho Express, a Vietnamese-style noodle soup (“pho”) restaurant in Pomona, California to set up Pho Express International, LLC, a California Limited Liability Company, in order to launch a pho restaurant chain. According to the agreement, Provimex will contribute $165,000 towards and own sixty percent (60%) of Pho Express International, LLC.

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.  Providential Capital has successfully managed merger plans for several publicly-traded companies and is currently focusing on a number of target companies in the US, China, Korea, and Vietnam.

On February 15, 2008, Providential Capital, Inc, entered into a business and financial consulting agreement with Nam Kim Joint Stock Company, a Vietnamese company located in Binh Duong, Vietnam. Per agreement, Nam Kim paid $10,000 for consulting fee and if a merger is successful, the Company is to receive 20% of the then issued and outstanding common shares in the new combined company as payment for its services.  

TOUCHLINK COMMUNICATIONS, INC.

A wholly-owned DBA of Providential Holdings, Inc, Touchlink Communications was formed on July 7, 2003 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. 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.

PHI DIGITAL CORP

On November 1, 2003, the Company formed PHI Video Corp., which was later renamed PHI Digital Corp. ("PHI Digital"), a Nevada corporation, to provide the sale of consumer electronics, including flat-screen television sets and monitors, as part of its distributorship agreement with XOCECO. The distributorship agreement with XOXECO was terminated in June 2004 and PHI Digital has been renamed "TULON INDUSTRIES, INC." to change its scope of business.  This subsidiary is inactive and did not generate any revenue during the periods ended March 31, 2008 and 2007.

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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 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. Providential Energy Corporation did not generate any revenue during the periods ended March 31, 2008 and 2007.

PHILAND CORPORATION

PhiLand Corporation is a Nevada corporation and wholly-owned subsidiary of Providential Holdings, Inc., set up in July 2007 to manage the real estate development project in South Hoi An, Quang Nam Province, Vietnam.  In July 2007, Providential Holdings 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 is $250,250,000. 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 from the Authority of Chu Lai Open Economic Zone, People Committee of Quang Nam Province, to form PhiLand Vietnam Limited, a Vietnam-based company 100% owned by PhiLand Corporation, to invest $35,000,000 and develop approximately 57 acres of land in Bien Rang, Tam Quang Village, Nui Thanh District, Quang Nam Province. PhiLand Vietnam Limited is in the process of amending the investment license to increase the acreage to 103 acres for the first phase and up to 300 acres at this location.

INDOCHINA MINING CORPORATION

IndoChina Mining Corporation, a Nevada corporation and wholly-owned subsidiary of Providential Holdings, Inc., was incorporated on March 20, 2008 for exploitation and processing of diatomite mines. On April 14, 2008, IndoChina Mining Corporation (IMC), entered into a Cooperation agreement with Phu Yen Minerals Joint Stock Company (PYMICO). Under this agreement, PYMICO and IMC will cooperate to contribute capital for establishment of a joint venture specializing in exploitation and processing of diatomite in Phu Yen providence and IMC will participate in PYMICO through purchasing a maximum of 30% shares of PYMICO when the latter issues additional shares in 2008.

MINORITY INTERESTS:

EASTBRIDGE INVESTMENT GROUP CORP. (FORMERLY ATC TECHNOLOGY CORP.)

 On October 6, 2003, the Company completed the acquisition of 100% of ATC Technology Corp. in exchange for $500,000 non-interest bearing notes and 4,000,000 shares of restricted common stock of the Company. ATC Technology Corporation, established in 2001 as an Arizona corporation, manufactured mobile entertainment products, including VidegoTM, GamegoTM and MoviegoTM. During the year ended June 30, 2005, the Company distributed 20% of it's investment in ATC to the Company's shareholders and distributed 70% of its investment to ATC's creditors.  As of June 30, 2005, the Company has written off its investment in ATC.  ATC has subsequently changed its name to EastBridge Investment Group Corp. to provide financial services including public offering guidance, joint venture and merchant banking services to the small-to-medium-size businesses in China and India. The Company currently holds less than 10% equity stake in EastBridge Investment Group Corp. which currently trades on the OTCBB under the symbol “EBIG”.                                                                                                                     

JEANTEX GROUP, INC.  (FORMERLY LEXOR HOLDINGS, INC.)

On September 26, 2003, Providential Capital, a wholly-owned DBA of the Company, entered into a new agreement to provide merger and acquisition consulting services to Lexor International, Inc., a Maryland corporation, and to assist Lexor in its

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business combination plan with Western Silver-Lead Corp, a Florida corporation. On September 29, 2003, Western Silver-Lead Corp. signed a definitive agreement to acquire 100% of Lexor in exchange for stock in Western Silver-Plead Corp. This transaction was closed on September 29, 2003 and Western Silver-Lead Corp's corporate name was changed to Lexor Holdings, Inc., a Florida corporation. According to the consulting agreement, Providential Capital received 1,500,000 shares of common stock of Lexor Holdings, Inc. (approximately 10% of the issued and outstanding shares) as compensation for its advisory and consulting services. 

On March 31, 2005, Lexor Holdings, Inc. entered into a Rescission Agreement with Lexor International Inc., and Christopher Long. The Rescission Agreement calls for the total rescission of the Merger Agreement and a return of 100% of the issued and outstanding equity interests of International to Long.   Additionally, Long and International have agreed to surrender the 10,867,000 shares of Lexor Common Stock they received under the Merger Agreement.  Each party to the Rescission Agreement will be entitled to a return of any assets which it held prior to the closing of the Merger Agreement and will be responsible for any liabilities accrued on its behalf.

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. Providential Holdings, 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.  Jeantex Group’s common stock is trading on the OTCBB under the symbol “JNTX”.

DDC INDUSTRIES, INC.

Effective October 1, 2004, the Company entered into a business consulting agreement with Red5 Holdings, Inc., a Nevada corporation, and Mirae Tech Co., Ltd., a Republic of Korea corporation, to provide consulting services in the identification, location, and facilitating a merger between Mirae Tech Co., Ltd. and a fully-reporting publicly-traded company. According to the agreement, the Company would receive common stock in the newly combined company equal to 10% of the then issued and outstanding common shares of the new company.  The Company has received 4,718,421 restricted shares of common stock in Rapid Bio Tests Corp, which was renamed to Bio Warm Corporation, under the terms of the business consulting agreement. 

 In March 2007, the Company received 45,000,000 shares (900,000 post-reverse split shares), valued at $675,000, of Bio-Warm, which subsequently acquired 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company 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, which is equivalent to 10% of all issued and outstanding shares of DDC Industries, Inc. for services performed in the merger of Bio-Warm Corp. and Dai Dung Metallic Manufacture Construction and Trade Co. as of closing date of March 30, 2007 valued at $1,881,877. In December 2007, the Company received 3,763,753 shares, which is remaining 10% of all issued and outstanding shares of  DDC Industries per the business and consulting agreement, valued at $639,838. DDC Industries common stock is currently trading on the Pink Sheets under the symbol “DDCI”.

CAVICO CORP.

On April 18, 2006, Providential Holdings, Inc. entered into a business and consulting agreement with Cavico Vietnam Joint Stock Company, a corporation organized and existing under the laws of Socialist Republic of Vietnam (“Cavico”).  Pursuant to the agreement, the Company helped Cavico in entering into an Asset Purchase Agreement with Agent155 Media Group, Inc., a Delaware Corporation.  The Asset Purchase Agreement was closed on May 12, 2006 and Agent155 Media Group, Inc.

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subsequently changed  its name to Cavico Corp.  Providential Holdings, Inc. received 2,000,000 shares of restricted common stock of Cavico Corp. on June 30, 2006 and 2,000,000 shares of restricted common stock of Cavico Corp. on September 18, 2006 for services rendered in connection with this transaction. Cavico Corp. became a fully-reporting company on the OTCBB as of March 27, 2008.

ALL LINE, INC.

During the quarter ended June 30, 2007, the Company entered into a consulting agreement with Blueocean Investments, LLC, a California Limited Liability Company, to provide merger and acquisition advisory services in connection with Blueocean’s recapitalization plan. The Company received 8,550,000 shares of common stock of Cinnabar Enterprises, Inc. for services rendered through the consulting agreement. Cinnabar Enterprises, Inc. later changed its name to All Line, Inc., which currently trades on the Pink Sheets under the symbol “ALIN”.

JOINT VENTURES:

PROVIMEX-HTV JOINT VENTURE COMPANY, LTD.

On October 18, 2004, the People's Committee of Ho Chi Minh City, Vietnam approved the joint venture application by the Company and HTV, Ltd., a Vietnam-based company, to form a Joint Venture company under the name of "Provimex-HTV Joint Venture Company, Ltd."  This joint venture company primarily focused on providing equipment and liquid gas to high rise buildings and premium residential housings in Vietnam. The Company was to own 80% equity in the joint venture company.  The investment in Provimex-HTV Joint Venture Company, Ltd. has been written off as an impairment of assets as of June 30, 2005. On May 13, 2007, the Company loaned $67,000 to Provimex-HTV Joint Venture Company with interest rate of 8.5% per year. This Note was due November 12, 2007 or upon demand.

CAVICO-PHI CEMENT JOINT STOCK COMPANY

On August 29, 2006, the Company entered into a Principle Business Cooperation Agreement with Cavico Vietnam Joint Stock Company, a Socialist Republic of Vietnam corporation, which is a business conglomerate engaged in various business activities including, but not limited to, infrastructure, construction, energy, mining, information technology, and real estate development.  Pursuant to the terms of the Agreement, Providential and Cavico have agreed to cooperate in funding, building, owning and operating certain businesses in Vietnam and other regions of the world and share in the benefits of these business operations. 

In September 2006 Cavico and the Company formed a joint-venture company, namely Cavico PHI Cement Joint Stock Company (“CPCC”), to jointly fund, build, own, and operate a cement plant in Phu Ly, Ha Nam province. It is anticipated that the Company  will contribute 10% of the equity investment towards CPCC. To date, the Company has contributed $30,000 towards the joint venture project.

VIETNAM FINANCIAL INVESTMENT  MEDIA CORPORATION

Vietnam Financial Investment Media Corporation (VFMC) is a Vietnam-based joint venture of Hawk Associates, Providential Holdings, Cavico Vietnam, Cavico Hitech and Bao Viet Securities.  The Company has invested $7,500 towards this joint venture and intends to own approximately 10% of  VFMC.

SPECIAL NOTE ON ACQUISITIONS

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

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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.

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, and the realization of deferred tax assets.  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, 2008, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

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RESULTS OF OPERATIONS

Three months ended March 31, 2008 compared to the three months ended March 31, 2007

Total Revenues:

Total revenues were $31,000 and $2,556,877 for the three months ended March 31, 2008, and 2007 respectively.  The revenues reflect the value of thinly traded shares. In particular, during the three month ended March 31, 2007, we earned 3,763,753 shares from DDC Industries, Inc. that we valued at $0.50 per share resulting in revenue of $1,881,877.  We also generated $675,000 revenues earned from BioWarm by receiving 45,000,000 shares at $0.015for services in this period.  During the three month ended March 31, 2008, we earned $25,000 from consulting service and $6,000 from management service.

Operating Costs and Expenses:

Total operating expenses were $318,065 and $216,189 for the three months ended March 31, 2008, and 2007, respectively.  

The slight increase is primarily due to the increase in professional services and salaries and wages expenses.  Professional services were $123,190  and $86,218 for the quarter ended March 31, 2008, and 2007, respectively. The main cause for this increase is due to issuance of 1,800,000 shares for services valued at $90,000, of which $33,750 was recorded as current period expense. General and administrative expenses were $105,014 and $99,236 for the comparable periods.  During the current three months the Company recorded salaries of $89,496 as compared to $70,204 of salaries in the three months last fiscal year.

Other Income and Expenses:

Total other income was $10,294 for the three months ended March 31, 2008compared to $33,025 for the three months ended March 31, 2007.

The decrease in other expenses was due primarily to an increase in gain on sale of marketable securities of $114,817 in current quarter compared to $504 in the same quarter in the prior year.  During the quarter ended March 31, 2007, the Company recorded $25,400 from recovery of bad debts and $79,046 from gain on legal settlement. The interest expense was increased to $104,655 in the three months ended March 31, 2008 compared to $79,538 in the  three months last fiscal year due to additional notes added in the current year.

Net Income and Loss:

Net loss for the three months ended March 31, 2008 was $276,772 as compared to a net income of $2,373,712 for the same period in 2007, which is equivalent to ($0.00) and $0.01 per share, respectively, based on the weighted average number of basic and diluted shares outstanding.   

The decrease  in net income is primarily due a $2,525,877  decrease in consulting income for the three months ended March 31, 2008.  Total operating and other expenses were comparable for the both periods.

Nine months ended March 31, 2008 compared to the nine months ended March 31, 2007

Total Revenues:

Total revenues were $705,338 and $2,677,377 for the nine months ended March 31, 2008, and 2007, respectively.  During the nine month ended March 31, 2008, we earned 3,763,753 shares from DDC Industries, Inc. valued at $639,838 for consulting fees and $65,500 for management fee.  We earned $2,677,377 revenues from consulting services for the nine months ended March 31, 2007,which was generated from 3,763,753 shares from DDC Industries, Inc. that we valued at $0.50 per share resulting in revenue of $1,881,877 and $675,000 revenues earned from BioWarm by receiving 45,000,000 shares at $0.015for services in this period.  

Operating Costs and Expenses:

Total operating expenses were $984,640 and $864,679 for the nine months ended March 31, 2008, and 2007, respectively.  The increase is primarily due to the increases in professional services, salaries and wages and general and administrative expenses in the period

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ended March 31, 2008; offset by the decreases in bad debt expense, impairment of assets and legal settlement. Professional services were $399,636 and $378,738 for the comparable periods. During the nine months the Company recorded salaries of $265,810 as compared to $216,755 of salaries in the nine months last year. The Company recorded $10,000 for bad debts expenses, and $20,000 for impairment of assets in the nine months ended March 31, 2007 compared to none recorded in the nine months ended March 31, 2008. General and administrative expense was increased by $81,202 during the nine months ended March 31, 2008mainly due to an increase in travel expenses.

Other Income and Expenses:

Total net other expense was $106,927 for the nine months ended March 31, 2008 compared to other income of $169,662 for the nine months ended March 31, 2007

Interest expense was $221,876 and $276,933 for the nine months ended March 31, 2008, and 2007, respectively.  During the nine  months ended March 31, 2007, the Company recorded a gain on the sale of marketable securities of $381,348 compared to $114,817 in 2008, the forfeiture of an investment deposit of $42,500 recovery of bad debts of $25,400, gain on legal settlement of $79,046, gain on sale of fixed assets of $5,000 and the expense of $4,902 for the fair market value of 250,000 warrants issued to an outside consultant, which were not present in the same period in 2008. Other income for the nine months ended March 31, 2008 was $132 as compared to $2,699 for the same period in 2007.

Net Loss:

Net loss for the nine months ended March 31, 2008 was $386,230, compared to a net income of $1,982,360 for the same period in 2007, which is equivalent to ($0.00) per share and $0.01for the respective periods, based on the weighted average number of basic and diluted shares outstanding.  The difference is primarily due to $1,972,039 decrease  in revenue, an increase in administrative and general expenses of $81,202, a decrease of $267,035 gain on the sale of marketable securities, and offset by $42,500 forfeiture of the investment deposit, $4,902 due to adjustment for fair market value of the warrants issued, and $20,000 impairment of assets which was not present during the corresponding period in 2008.

LIQUIDITY AND CAPITAL RESOURCES

The Company had consolidated cash and cash equivalents of $0 and $34,784  as of March 31, 2008 and 2007, respectively.

The Company's operating activities used $1,196,251 and $573,361  in the nine months ended March 31, 2008 and 2007, respectively.  The difference is mainly attributable to the increase in activities of the Company.

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Cash provided by investing activities was $41,433 as compared to $519,223  for the nine months ended March 31, 2008and 2007, respectively.  The difference is mainly attributable to the sale of marketable securities of $138,123 in the period ended March 31, 2008, compared to $659,973 in the prior period. Cash provided by financing activities was $1,147,066 for the nine months ended March 31, 2008, as compared to $86,519 in financing activities for the same period in the prior year. This increase in cash provided in financing activities is primarily due to cash received on the proceeds from notes and borrowings from officers.

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.

ITEM 3.  EFFECTIVENESS OF THE REGISTRANT’S DISCLOSURE CONTROLS AND PROCEDURES

(a) As of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer made an evaluation of the company's disclosure controls and procedures (as defined in ss.240.13a-15(e) or 240.15d-15(e) of the Securities Exchange Act). Based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or 15d-15 under the Exchange Act, in their opinion, the disclosure controls and procedures are effective.

(b) During the most recent fiscal year, there have not been any significant changes in our internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II.   OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

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

ITEM 2.   CHANGES IN SECURITIES

Not applicable, 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 SECURITIES HOLDERS

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

ITEM 5.   OTHER INFORMATION

AUDIT COMMITTEE:

The Company does not have an independent Audit Committee of its Board of Directors.  The entire Board of Directors functions as the Company’s Audit Committee.  The Sarbanes-Oxley Act of 2002  (“Sarbanes-Oxley Act”) and proposed U.S. Securities and Exchange Commission Rules currently under review to implement the Sarbanes-Oxley Act impose certain standards on listed companies relative to the maintenance and operations of Board of Directors Audit Committees, including but not limited to the requirement that Audit Committees be appointed, that membership of such committees comprise only independent directors, that a financial professional be among the membership of such committee and that such committee be afforded an adequate operating budget and be able to employ independent professional advisors.  The Sarbanes-Oxley Act also requires that the Audit Committee oversee the work of a company’s outside auditors and that the outside auditors be responsible to the Audit Committee.  At this time, the Company is not in compliance with the requirements of the Sarbanes-Oxley Act as they relate to independent Board of Directors Audit Committees.  The Company believes that under the Rules of the U.S. Securities and Exchange Commission which implement these provisions of the Sarbanes-Oxley Act, it is not required to comply with its requirements relating to the appointment of an independent Audit Committee of its Board of Directors and conforming with the enumerated standards and guidelines because the Company is not a “Listed Company” as defined therein.  Notwithstanding, the Company may ultimately be determined to not be in compliance therewith and may therefore face penalties and restrictions on its operations until it comes into full compliance.  Additionally, the Company’s failure to comply with the provisions of the Sarbanes-Oxley Act could preclude it from being listed on NASDAQ or any other stock exchanges until it can show that it is in compliance.  The Company intends to form an independent Audit Committee in the near future.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)

The following exhibits are filed as part of this report:

Exhibit No.

Description

Location

21.1

Subsidiaries of Registrant

Incorporated by reference to Exhibit 21.1 to the Registrant’s

                                                                                                                                Annual Report on Form 10-KSB, filed on November 14, 2006

31.1

Certification by Henry D. Fahman,

Chief Executive Officer, pursuant to

Section 302 of the Sarbanes-Oxley Act                        Provided herewith

of 2002.                                                                               

31.2

Certification by Henry D. Fahman,

Acting Principal Financial Officer, pursuant

To Section 302 of the Sarbanes-Oxley Act                    Provided herewith

of 2002.                                                                               

32.1

Certification by Henry D. Fahman,

Chief Executive Officer and Chief Financial

Officer of the Registrant, pursuant to Section             Provided herewith

906 of the Sarbanes-Oxley Act of 2002.

(b)                                           Reports on Form 8-K                                                            None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:  May 13, 2008       

PROVIDENTIAL HOLDINGS, INC.

By: /s/ Henry Fahman

Henry Fahman

President and Chairman &Acting Chief Financial Officer

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Exhibit 31.1

Certification of Chief Executive Officer

       I, Henry Fahman, certify that:

1.

      I have reviewed this Form 10-QSB of Providential Holdings, Inc. and subsidiaries;            

2.

1.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

2.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

3.    The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

4.    The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated:  May 13, 2008       

/s/ Henry Fahman

Henry Fahman

President and Chairman &

Acting Chief Financial Officer

Exhibit 31.2

Certification of Principal Financial and Accounting Officer

I, Henry Fahman, certify that:

1.

I have reviewed this Form 10-QSB of Providential Holdings, Inc. and subsidiaries;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated:  May 13, 2008      

/s/ Henry Fahman

Acting Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-QSB of Providential Holdings, Inc. and subsidiaries (the “Company”) for the  nine months ended March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Henry Fahman, Chief Executive Officer and Acting Chief Financial Officer of Providential Holdings, Inc. and subsidiaries, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)      the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  May 13, 2008       

/s/Henry Fahman

Henry Fahman