10QSB 1 prvh304q.htm

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, 2004

( ) 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)

Nevada

(State or Other Jurisdiction of Incorporation or Organization)

13-3121128

(I.R.S. employer

Identification No.)

8700 Warner Avenue, Fountain Valley, California 92708

(Address of Principal Executive Offices) (Zip Code)

(714) 596-0244

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: 127,254,081 SHARES OF COMMON STOCK, $.04 PAR VALUE PER SHARE, WERE OUTSTANDING AS OF MARCH 31, 2004.

CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition

and Results of Operations

Item 3. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Securities

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Part 1

ITEM 1: Financial Statements

PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

MARCH 31, 2004

(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents		$ 278,041
Marketable securities		4,305,310
Accounts receivable		3,837,060
Other current assets		97,705
Total Current Assets		8,518,116

Property and equipment, net of accumulated depreciation of $203,728		142,384
Total assets		$ 8,660,500

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses		$ 6,466,433
Convertible promissory notes		85,000
Short-term notes payable		3,144,878
Current portion of notes payable		3,942
Due to officer		729,892
Due to preferred stockholders		285,000
Other current liabilities		510,709
Total Current Liabilities		11,225,854

Notes payable		350,414

Total liabilities		11,576,268

Minority Interest		13,150
Contingencies		-

Stockholders' deficit
Preferred stock (Series I, Class A), $5.00 par value, 10,000,000
shares authorized, 90,000 shares issued and outstanding (Note 3)		-
Common stock, $.04 par value, 300,000,000 shares authorized
122,265,634 shares issued and outstanding		4,890,625
Treasury stock, 14,805,200 shares, $0.04 par value common stock		(772,312)
Additional paid-in capital		10,545,201
Shares to be issued		503,852
Stock subscription receivable		(289,369)
Other comprehensive income		(1,770,079)
Accumulated deficit		(16,036,836)
Total stockholders' deficit		(2,928,918)

Total liabilities and stockholders' deficit		$ 8,660,500

The accompanying notes are an integral part of these consolidated financial statements.

PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,		Nine Months Ended March 31,
	2004	2003	2004	2003
Revenues
Consulting and advisory fee income	$ 67,090	$ 9,784	$ 4,507,090	$ 9,784
Sales	1,981,851	-	4,355,143	61,800
Tuition	70,305	-	86,062	-
Net revenues	2,119,246	9,784	8,948,295	71,584
Cost of Sales	1,779,674	-	3,901,932	56,628
Gross profit	339,572	9,784	5,046,363	14,956

Operating expenses:
Depreciation and amortization	4,233	7,218	18,394	21,809
Bad debt expense	-	-	121,000	-
Salaries and wages	79,629	-	201,763	-
Professional services, including non-cash compensation	1,289,486	294,191	2,924,778	825,438
Impairment of assets	-	175,500	3,150,965	175,500
Directors fees	-	-	22,500	-
General and administrative	419,848	1,773	847,655	273,914
Total Operating Expenses	1,793,196	478,682	7,287,055	1,296,661
Loss from operations	(1,453,624)	(468,898)	(2,240,692)	(1,281,705)

Other income and (expenses)
Interest expense	(91,520)	(134,904)	(363,047)	(540,627)
Loss on sale of marketable securities	-	(61,636)	-	(362,480)
Gain on legal settlement	-	-	-	81,850
Gain (loss) on conversion of notes	(477,891)	304,853	(157,582)	472,420
Beneficial conversion feature expense	(711,331)	-	(711,331)	-
Redemption premium and penalties	(106,111)	-	(153,473)	-
Other income (expense)	791	(9,019)	2,529	2,844
Net other income and expenses	(1,386,062)	99,294	(1,382,904)	(345,993)
Minority interest	28,477	-	29,915	-
Net income (loss)	(2,811,209)	(369,604)	(3,593,681)	(1,627,698)
Dividend requirement of preferred stock	(13,500)	(13,500)	(40,500)	(40,500)
Net income (loss) applicable to common shareholders	(2,824,709)	(383,104)	(3,634,181)	(1,668,198)
Other comprehensive (loss)/gain:
Unrealized gain (loss) on marketable securities	(2,503,000)	77,014	(1,625,070)	363,923
Comprehensive loss	$ (5,327,709)	$ (306,090)	$ (5,259,251)	$ (1,304,275)

Net income (loss) per share - basic and diluted
Net loss per share	$ (0.03)	$ (0.01)	$ (0.04)	$ (0.04)

Weighted average number of shares outstanding - basic and diluted	89,497,280	47,085,758	82,112,849	40,540,526

The accompanying notes are an integral part of these consolidated financial statements.

PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended March 31,
	2004	2003
Cash flows from operating activities:
Net loss from continuing operations	$ (3,634,181)	$ (1,627,698)
Adjustments to reconcile net loss from continued operations
to net cash used in operating activities:
Depreciation	18,394	21,809
(Gain) loss on legal settlement	66,600	(81,850)
Amortization of deferred revenue	-	(11,552)
Amortization of prepaid consulting fees	591,190	627,524
Securities received for consulting services	(4,440,000)	(8,582)
Shares issued for consulting services	2,280,174	38,000
(Gain) loss on settlement of debts	157,582	(472,420)
Loss on marketable securities	-	362,480
Shares issued for distribution agreement	24,388	-
Shares issued for interest on convertible note	382,651	61,340
Shares issued for preferred stock and related dividends	338,110	-
Beneficial conversion and registration penalty	847,183	191,557
Minority interest in subsidiary	(29,915)	-
Impairment of assets	3,150,965	-
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(3,681,987)	-
(Increase) decrease in other assets	(485,029)	(969)
Increase (decrease) in accounts payable	3,489,463	39,647
Increase (decrease) in accrued expenses	(888,369)	317,288
Increase (decrease) in unearned tuition	5,153	-
Increase (decrease) in other liabilities	330,000	153,948
Net cash used in operating activities	(1,477,628)	(389,478)

Cash flows from investing activities:
Purchase of fixed assets	(13,638)	-
Purchase of marketable securities	(125,050)	-
Proceeds from sale of marketable securities	-	20,946
Net cash used by investing activities	(138,688)	20,946

Cash flows from financing activities:
Proceeds from sale of common stock	56,000	131,930
Proceeds from exercise of stock options	1,027,291	-
Borrowings on notes payable	1,322,854	336,287
Payments on notes payable	(738,746)	(42,720)
Borrowings from officer	392,258	10,140
Payments on advances from officer	(297,503)	(57,566)
Net cash provided by financing activities	1,762,154	378,071

Net increase (decrease) in cash	145,838	9,539
Cash and cash equivalents, beginning of period	132,203	4,713
Cash and cash equivalents, end of period	$ 278,041	$ 14,252

SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
Interest	$ 141,392	$ 26,422
Taxes	$ 1,111	$ -

Non-cash Financing Activities:
Shares issued for payment of notes	$ 852,540	$ -
Shares issued for debt conversion	$ 2,342,415	$ -
Shares issued for interest and penalties	$ 469,834	$ -
Shares issued for services	$ 2,280,174	$ -
Shares issued for distribution agreement	$ 24,388	$ -
Shares issued for acquisition of subsidiaries	$ 594,438	$ -
Shares issued for legal settlement	$ 66,600	$ -
Shares issued for payment of preferred stock and interest	$ 338,111	$ -

The accompanying notes are an integral part of these consolidated financial statements.

PROVIDENTIAL HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND REORGANIZATION 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.

REORGANIZATION

On October 28, 1999 JR Consulting entered into a corporate combination agreement (the "Agreement") with Providential Securities, whereby JR Consulting acquired all the outstanding shares of Providential Securities in exchange for 20,000,000 shares of JR Consulting (then renamed Providential) common stock. The transaction was consummated on January 14, 2000. In addition, as a covenant under the Agreement, Providential was required to enter into an agreement to sell to Havilland Limited all of the shares of Diva owned by Providential as well as to assign all of its rights, title and interest in an Option Agreement to Havilland Limited. JR Consulting's officers and directors resigned from their positions and the shareholders of Providential Securities assumed control of the two entities (together as "the Company"). The shares issued in the merger are restricted against resale pursuant to the provisions of federal and state securities laws. Providential Securities' shareholders of record as of the closing date owned approximately 75% of Providential's common stock. The acquisition has been treated as a capital transaction in substance, rather than a business combination, and was deemed a "reverse acquisition" for accounting purposes. Accordingly, Providential Securities was the accounting acquirer and the historical financial statements prior to January 14, 2000 were those of Providential Securities. In the accompanying financial statements, the capital structure and losses per share of Providential Securities have been retroactively restated to reflect the acquisition as if it occurred at the beginning of the period. The operations of Providential have been included with those of Providential Securities from the acquisition date.

The sale of Diva was concluded on June 30, 2000, at which time all of the shares of Diva owned by Providential as well as all of its rights, title and interest in the Option Agreement were exchanged for assignment to and assumption by Havilland Limited of the amounts due by Providential to officers of the Company amounting to $617,781, the amounts due to Providential from Diva amounting to $94,843 and the return of 135,000 shares of common stock of Providential owned by Havilland.

On April 30, 2002, the Company consummated an agreement to acquire 56.67% equity interest in SlimTech, Inc., a Nevada corporation, in exchange for 3,000,000 shares of the Company's restricted common stock. SlimTech planned to be a distributor of LCD (liquid crystal display) computer flat screens and other consumer electronics. Since SlimTech is a dormant entity with insignificant assets or liabilities, no pro forma information is presented. This agreement was rescinded on May 6, 2003. The Company has received back the 3,000,000 shares previously issued to SlimTech and the shares were cancelled on October 1, 2003.

A wholly owned division of the Company, Provimex was 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. The Company believes that its trade commerce business will grow substantially as a result of the implementation of the Trade Agreement between Vietnam and the United States. During the quarter ended December 31, 2003, Provimex generated $41,182 in gross sales with $32,634 in cost of goods sold for a net gross profit of $8,548.

On August 23, 2002, the Company entered into a purchase agreement with ATC Technology Corporation ("ATC"), an Arizona corporation, to purchase all the issued and outstanding shares of ATC. For consideration, the Company agreed to deliver $250,000 in promissory notes, non-interest bearing, payable 270 days after closing, and $250,000 in promissory notes, non-interest bearing, payable 180 days after closing, 3,000,000 shares of restricted stock of the Company with an option of additional shares to be issued after 270 days if the stock price does not reach $0.30, 1,000,000 shares of restricted stock of the Company with an option of additional shares to be issued after one year if the stock price does not reach $0.30. The Company consummated the purchase agreement with ATC on October 17, 2003 and delivered $500,000 in promissory notes and 4,000,000 shares of the Company's common stock.

On November 20, 2002 the Company entered into an agreement to acquire 51% of the outstanding common stock of Clear Pass, Inc. ("Clear Pass"), a Nevada corporation, in exchange for $1,500,000 and 3,000,000 shares of restricted stock of the Company. Under an agreement with PASS21 Co., Ltd., ("Pass21") a Korean corporation, Clear Pass had the licensing rights to distribute and market PASS21's biometric products in the United States, Canada, and Europe. Besides a total of $175,500 investment into Clear Pass, the Company issued 3,000,000 shares of restricted common stock of the Company and a promissory note in the amount of $1,324,500 to Clear Pass. This agreement was rescinded on May 9, 2003. The Company has received back the 3,000,000 shares previously issued to Clear Pass and subsequently cancelled the shares and the promissory note. Concurrently, the Company has set up a new wholly-owned subsidiary under the name of ClearPass, a DBA of PHI, to operate as a systems integrator and provider of total biometric security and access management solutions. This company was later incorporated as a Nevada corporation under the name of ClearPass Systems, Inc. This subsidiary has not generated any revenues to date.

On March 26, 2003, the Company entered into a Stock Purchase Agreement with Real ID Technology Co, Ltd., a Korean corporation, ("Real ID") to acquire up to 51% of Real ID's common stock, in exchange for up to $1 million in cash and the balance in two short-term promissory notes totaling $4 million. This Stock Purchase Agreement was amended on April 29, 2003 to allow for the closing of the transaction on May 26, 2003, subject to satisfactory due diligence investigation and review of Real ID's business, legal matters, and accounting by the Company. The proposed Closing was postponed to June 30, 2003 due to additional due diligence requirements. This transaction was mutually rescinded on August 1, 2003.

In May 2003, the Company formed a new wholly-owned subsidiary under the name of Providential Capital, a DBA company, to provide financial products and services for the micro-small cap arenas and manage the Company's proprietary merger and acquisition activities. Providential Capital will focus its attention on the underserved segment of smaller companies in the U.S. and abroad. Providential Capital has recently advised and managed merger plan for Nettel Holdings, Inc. and Lexor Holdings, Inc.

On July 7, 2003 a wholly-owned DBA of Providential Holdings, Inc, Touchlink Communications was formed to provide point-of-sale (POS) terminals and prepaid calling cards to retailers, convenient storesand non-profit organizations across the US. This POS system enables merchants and participating partners to offer prepaid products without purchasing or storing any inventory in advance. This company 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. As of the date of this report, Touchlink Communications has not generated any revenues.

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 (see Note 9). During the nine months ended March 31, 2004, the subsidiary generated $3,590,610 in sales with a cost of goods sold of $3,230,182 for a net gross profit of $360,427.

On December 19, 2003, the entered into a Stock Purchase Agreement with Irvine College of Medical Sciences, Inc., a California corporation, ("the College") to acquire 51% of the College's common stock for an aggregate purchase price of $314,437. This amount is to be paid with $80,000 in cash and 1,116,369 shares of the Company's common stock. As of the date of this report, the common stock has not been issued and is reflected as common stock to be issued in the accompanying financial statements. The Company recorded a loss of $27,285 relating to the income generated by the subsidiary after the purchase by the Company.

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 nationally quoted on the National Association of Securities Dealers OTC Bulletin Board ("OTC:BB"). As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.

Unrealized holding gains and losses for marketable 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, 2004, the investments have been recorded at $64,305,310 based upon the fair value of the marketable securities.

Marketable securities classified as available for sale consisted of the following as of March 31, 2004:

Investee Name (Symbol)	Cost at March 31, 2004	Market Value at March 31, 2004	Accumulated Unrealized Gain (Loss)	Number of Shares Held at March 31, 2004
Jockey Club (JKCL)	$ 3,768	$ 15	$ (3,753)	1,500
Tri Kal Int'l (TRIKF)	141,241	15	(141,226)	15,165
Nettel Holdings (NTTL)	1,365,330	1,208,280	(157,050)	2,250,000
Lexor Holdings (LXRH)	4,565,050	3,097,000	(1,468,050)	1,900,000

	$ 6,075,359	$ 4,305,310	$ (1,770,079)

There were no sales of securities during the quarter ended March 31, 2004.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying Interim Condensed Consolidated Financial Statements are prepared in accordance with rules set forth in Retaliation SB of the Securities and Exchange Commission. As said, these statements do not include all disclosures required under generally accepted principles and should be read in conjunction with the audited financial statements for the year ended June 30, 2003. 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, 2004 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2004.

ACCOUNTING 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.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Providential Holdings, Inc., and its subsidiary Providential Securities, Inc., collectively referred to as the "Company". All significant inter-company transactions have been eliminated in consolidation.

RECLASSIFICATIONS

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

RECENT ACCOUNTING PRONOUNCEMENTS

On May 15, 2003, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 150 (FAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. FAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement of financial position. Further, FAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. FAS 150 affects an entity's classification of the following freestanding instruments: a) Mandatorily redeemable instruments b) Financial instruments to repurchase an entity's own equity instruments c) Financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own equity instruments d) FAS 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. The guidance in FAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. For private companies, mandatorily redeemable financial instruments are subject to the provisions of FAS 150 for the fiscal period beginning after December 15, 2003. The adoption of SFAS 150 does not have a material effect on the earnings or financial position of the Company.

In December 2003, the Financial Accounting Standards Board (FASB) issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46R). FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. The Company does not hold any variable interest entities.

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, as follows:

Providential and Henry Fahman accepted and consented, without admitting or denying the alleged violations, to the entry of the following findings by NASD Regulation, Inc.:

From in or about December 15, 1998 through June 15, 1999, Providential Securities, through its Private Placement Memorandum, offered and sold one hundred three thousand (103,000) shares of Series I Class A Convertible Cumulative Preferred Stock in Providential Securities, Inc. for five hundred fifteen thousand dollars ($515,000) to twenty-two (22) customers. In connection with the Private Placement Memorandum, Providential Securities made certain misrepresentations or omissions in soliciting investments from public customers, such as: failure to disclose that an officer of Providential Securities could make contributions to help meet the minimum requirement; failure to disclose Providential Securities, Inc.'s disciplinary history whereby Providential Securities, Inc. and Henry Fahman, jointly and severally, were fined $28,500 for net capital deficiencies and for failing to send the requisite written notification or confirmation in fifty eight (58) securities transactions to public customers; and failure to disclose that Henry Fahman was ordered to requalify by examination as a financial and operational principal.

That Providential's use of the private placement funds mainly for Providential's own operational purposes (more than for those represented in the private placement memorandum) amounted to conversion or improper use of those funds thus violating the Conduct Rules 2110 and 2330.

That Providential, acting through Henry Fahman, violated SEC Rule 15c2-4, SEC Rule 10b-9, and Conduct Rule 2110 (a) by not utilizing a proper escrow account for the investment funds received, (b) by not retaining the private placement funds until the minimum requirement was met, and (c) by not refunding these funds to the customers when the minimum was not met, or not met in a timely manner.

That by receiving and controlling funds from public customers in connection with the private placement, Providential became obligated to comply with the full provisions of SEC Rule 15c3-3 (during the period of January through at least March, 1999, Providential Securities, through Henry Fahman, and Providential's financial and operations principal, Theodore Fahman, failed to compute the reserve requirements, and set aside appropriate reserves for customer protection.

That Providential, acting through Henry Fahman, in violation of Conduct Rule 3010(a) and Membership and Registration Rule 1018, was operating three non-registered supervisory jurisdiction branch offices, and that while Providential's membership agreement limited the firm's branch activities to two branches, there were at least seven full-service satellite locations, thereby violating Conduct Rule 2110 and Membership and Registration Rule 1014.

That both Providential and Henry Fahman also violated Membership and Registration Rule 1030 for failing to enforce Membership and Registration Rule 1031(a) by allowing four individuals with deficiencies in license registration to conduct a securities business during much of 1998 and 1999.

That Providential and Henry Fahman failed to comply with Membership and Registration Rule 1030 by failing to enforce Rule 1032(f) by allowing five individuals to act in the capacity of equity trader with deficiency in registration as Limited Representative-Equity Traders.

That Providential and Henry Fahman also violated Membership and Registration Rule 1120 and Conduct Rule 2110 by permitting a broker to conduct business and earn commissions, while his status was "inactive" as a result of his failing to complete his continuing education requirements.

That from on or about May 2, 2000 through May 30, 2000, Providential Securities, Inc. distributed biased communications to the public regarding its ProTimer service through the World Wide Web.

Providential Securities, Inc. and Henry Fahman also consented to the imposition, at a maximum, of the following sanctions:

Providential shall be censured, fined $115,000.00 and shall offer rescission to those public customers who participated in the Providential Private Placement. Providential shall provide proof in form satisfactory to NASDR's District 2 staff of its offer of rescission to the customers who participated in the Providential Private Placement. In addition, to the extent the offer of rescission is accepted by any investors, Providential is ordered to provide proof of payment of the restitution in a form satisfactory to the District 2 NASDR staff, no later than 120 days after acceptance of the Letter of Acceptance, Waiver and Consent. Henry Fahman shall be 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. As of the date of this report the Company has redeemed $65,000 of the preferred stock plus accrued interest. The balance of unredeemed preferred shares has been reclassified as a current liability from the stockholder's deficit section on the accompanying consolidated financial statements.

NOTE 3 - LOANS AND PROMISSORY NOTES

CONVERTIBLE PROMISSORY NOTES

The Company issued convertible promissory notes in March and April 2000 amounting $1,350,000 plus interest due on September 28, 2000 and $400,000 plus interest due on October 21, 2000. These notes are essentially demand notes that have a six-month term and bear interest at 8% annually, unless the notes are in default, in which instance the interest rate will increase to 12% annually. Further, the notes bear a redemption premium, based upon the date of redemption equal to: 5% if within the first 60 days; 10% if within the second 60 days; 15% if within the third 60 day-period, and 20% if redeemed after 181 days. On the 180th day, the Company can require the holders to convert (if a registration statement is in effect) the notes into common stock. After the 180th day, only the holders can elect to convert - no right of the Company to force conversion after that time. On the second anniversary, any remaining notes will automatically covert into common stock (if a registration statement is in effect). If the conversion is at the direction of the Company, then, in addition to the redemption amount, the Company would also owe a 20% per annum rate of return on the redemption amount.

The notes may be paid by tender of common stock of the Company, with the conversion rate for the issuance of the common stock equal to the "closing price" on the date of the initial purchase of the notes, which is the average of the closing bid price for the five previous trading days. Re-pricing warrants have also been issued in contemporaneous amounts, such that any decrease in the trading price of the stock will entitle the note holders to reset the exercise price to a lower price than that which existed on the closing date. The number of shares issued under the re-pricing warrants is directly linked to the Company's stock price on the conversion date of the notes. As the stock price decreases, the number of shares to be issued pursuant to the re-pricing warrants increase. The note purchasers are also entitled to a separate set of warrants, equal to 20% of the total purchase amounts of the notes acquired, allowing for an exercise price of 110% of the closing price and having a 5-year term.

In accepting these subscriptions for these convertible notes, the Company had agreed to file a registration statement with respect to the Company's common stock to be issued upon conversion of the notes and any exercise of the warrants, with the initial filing to occur within 60 days of the "first closing", which occurred on March 28, 2000. A 2% per month penalty will accrue if the registration statement is not declared effective on or prior to the 181st day following the first closing. The holders have the right to require repayment in cash if no registration statement is in effect on the 181st day. Since this registration statement was not filed within the first 60 days of the first closing, nor has it been declared effective within 181 days after the first closing, the note holders have the right to the 2% penalty and repayment in cash. The Company has not paid these notes as of the date of this report and will also owe the note holders the 12% default rate and the 20% redemption premium noted above.

During the nine months ended March 31, 2004, $1,015,000 of the notes and accrued interest and other fees of $1,541,027, totaling $2,556,027 were converted to 19,412,804 shares of common stock. The market value of the stock issued for the conversion was calculated and a loss of $256,222 resulted from this note conversion was recorded as other income/(expense). During the nine months ended March 31, 2004, an additional 584,255 shares of Company's common stock were issued to exercise the re-pricing warrants relating to the notes converted above.

As of March 31, 2004, total amount due on these notes amounted to $85,000. These notes have been classified as current liabilities in the accompanying financial statements.

PROMISSORY NOTES:

As of March 31, 2004, the Company has notes payable to International Mercantile Holding amounting $196,111. The notes are due in the year ended June 30, 2006. The Notes carries an interest rate equal to Libor plus 1%.

As of December 31, 2003, the Company has notes payable amounting $3,942 against acquisition of an automobile. The note is secured by the auto, carry interest rate of 8.5%. The entire note is due by December 31, 2004.

The Company had a note payable to a financial institution amounting $125,000. The note bore an interest rate of 8%. During the quarter ended March 31, 2004, the Company issued 1,000,000 shares of its common stock as payment on this note and the related accrued interest of $35,000. The market value of the stock issued for the conversion was calculated and a gain of $19,200 resulted from this note conversion was recorded as other income/(expense).

Following is the maturity schedule of notes payable:

Year Ended June 30,

2004	-
2005	-
2006	196,111

SHORT TERM NOTES PAYABLE:

As of March 31, 2004, the Company has short term notes payable amounting $1,950,450 plus accrued interest of $507,671 on these notes. The notes are due to various parties, payable in the year ended June 30, 2004 and bear interest rate ranging from 6% to 20% per annum. In addition, the subsidiaries have $1,194,428 in short term notes payable for a consolidated total of $3,144,878. During the nine months ended March 31, 2004, the Company converted certain of these notes and related accrued interest amounting to $309,275 into 2,560,000 shares of the Company's common stock. The conversion rate was less than the market rate of the shares at the time of issuance and a beneficial conversion expense was recorded of $364,639.

DUE TO PREFERRED STOCKHOLDERS AND OTHER CURRENT LIABILITIES:

The Company has classified $450,000 of preferred stock subscribed as a current liability payable to holders of preferred stock due to non compliance of preferred shares subscription agreement. During the quarter ended March 31, 2004, $165,000 plus $72,000 in related dividends payable totaling $237,000 was paid with either cash or through the issuance of common stock. The conversion rate was less than the market rate of the shares at the time of issuance and a redemption premium expense was recorded of $101,111.

The dividend amount payable to holders of preferred stock amounting $133,555 at March 31, 2004 has been classified as other current liabilities.

During the quarter ended March 31, 2004, the Company received as a deposit on a business consulting agreement in the amount of $330,000. As the conditions of the agreement have not been met at March 31, 2004, the amount has been classified as unearned revenues and is shown in the consolidated financial statement in "other liabilities" (see Note 9).

In addition, the subsidiaries have other liabilities consisting of unearned tuition fees in the amount of $47,154.

NOTE 4 - DUE TO OFFICERS

Due to officer, represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, unsecured and due on demand. As of March 31, 2004, the total amount due to officers was $729,892. During the current quarter, an officer converted $133,488 of these notes into 2,480,268 shares of the Company's common stock. The conversion rate was less than the market rate of the shares at the time of issuance and a beneficial conversion expense was recorded of $346,692.

NOTE 5 - LITIGATION

LEGAL PROCEEDINGS SETTLED AND UNPAID AS OF MARCH 31, 2004:

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 $75,000.00 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 $62,500.00 plus $4,500.00 in administrative costs. As the date of this report, the Company has paid $8,000 and has accrued $84,000 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 $1,552.01. 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 $39,102.50 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.

IMPERIAL BUSINESS CREDIT, INC. VS. PROVIDENTIAL SECURITIES, INC., TINA T. PHAN, TIMOTHY DACK FAHMAN, THEODORE DACK FAHMAN, AND HENRY DACK FAHMAN.

On or about November 20, 1997, Nara Bank, N.A. and Providential Securities, Inc. entered into a Written Lease Agreement ("Agreement") wherein Nara Bank, N.A. agreed to lease certain computer equipment to Providential Securities, Inc. Thereafter, the Agreement was assigned from Nara Bank, N.A. to Claimant's Assignor Oak Financial Services. Thereafter, the Agreement was assigned from Claimant's Assignor to Claimant. Pursuant to the terms of the Agreement, Providential Securities, Inc. agreed to pay Nara Bank, N.A. the sum of $1,187.40 per month for sixty months. On or about September 15, 2000, and subsequently, Providential Securities, Inc. was unable to make the monthly payments to Claimant due to the lack of revenues following the interruption and subsequent closure of its securities brokerage operations. (See Note 15) Claimant filed a complaint for money with the Superior Court of the State of California, County of Orange (Case No. 01CC07697) on June 14, 2001 seeking $30,873.40 plus interest thereon at the rate of ten percent (10%) per annum from September 15, 2000. This case was settled on December 17, 2001. However, since Providential Securities, Inc. was unable to pay the settlement amount, Claimant entered a judgment for $79,681 on January 23, 2002. Subsequently, $12,000 was paid by Mr. Fahman. The unpaid judgment amount of $71,417 has been accrued in the accompanying consolidated financial statements.

JAMES C. HU VS. MINGMAN HU AND PROVIDENTIAL SECURITIES, INC.

Mingman Hu was a registered representative with Providential Securities, Inc. who served Claimant's investment account. Claimant filed a complaint with the Los Angeles County Superior Court, Northeast District on April 27, 2001 (Case No. G0027156) seeking compensatory damages in the amount of $11,609.11 plus 12% interest and emotional distress damages in excess of $50,000.00 for Mingman Hu's failure to honor her written agreement with Claimant. Mingman Hu was an independent contractor with Providential Securities, Inc. and was responsible for any alleged claims by Claimant. This case was settled for $13,908, which has been accrued in the accompanying consolidated financial statements.

PENDING LITIGATION:

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 $9,973.10 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 $9,973.10 (excluding interest) has been accrued in Accrued Expenses in the accompanying consolidated financial statements.

FRANCIS VAUSE, MARK VAUSE, FRANCIS VAUSE, JR., IAN VAUSE AND MARGARET HODSON VS. JERSEY TRANSFER & TRUST COMPANY AND PROVIDENTIAL HOLDINGS, INC.

Claimants filed a complaint with the United States District Court, District of New Jersey (Case No. 00-4353(JAGF) on September 6, 2000 seeking damages of $500,000.00 against Jersey Transfer & Trust Company and Providential Holdings, Inc. for refusing to remove the restrictive legends and register a total of 568,332 shares of Rule 144 stock held by Claimants. Providential Holdings, Inc. and Jersey Transfer & Trust Company ("Defendants") relied on representation by the former management of JR Consulting, Inc., later changed to Providential Holdings, Inc., that the captioned shares were not free of all encumbrances and were issued for invalid consideration. Defendants are seeking a dismissal of the case and may cross-claim against the appropriate former management of JR Consulting, Inc. The sought amount of $490,898 has been accrued in the accompanying consolidated financial statements.

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 $9,073.64 including wages and interest, penalty, post hearing and filing fee. Providential Securities, Inc. is appealing the request for judgment. The sought amount of $9,074 has been accrued in the accompanying consolidated financial statements.

MARK TOW, ESQ. VS. PROVIDENTIAL HOLDINGS, INC.

This case is pre-arbitration. The Company hired Mark Tow, Esq. to prepare an SB-2 Registration Statement and prepaid him $25,000 in retainer. Because Mark Tow was unable to complete the work according to schedule, the Company hired another law firm to replace Mark Tow. The other law firm completed the SB-2 Registration Statement and filed with the SEC on 9/28/2000. Mark Tow sent the Company a letter in June 2001 seeking a total of $75,000.00 for his allegedly rendered service. The Company has accrued $50,000 relating to this case in Accrued Expenses in the accompanying consolidated financial statements since the original agreement with Mark Tow was for a total service fee of $75,000 and the Company has already paid $25,000 as a retainer to be offset against the total fees. There has been no further communication between Mark Tow and the Company since June 2001.

NOTE 6 - 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 7 - STOCKHOLDER'S EQUITY

COMMON STOCK

During the nine months ended March 31, 2004, the Company issued 300,000 shares of common stock for cash valued at $56,000.

During the nine months ended March 31, 2004, the Company issued 25,376,821 shares of common stock for services amounting $2,280,174.

During the nine months ended March 31, 2004, the Company received $583,491 for 6,100,000 shares of stock options ranging between $0.07 and $0.32 per share which were exercised.

During the nine months ended March 31, 2004, 584,255 shares of Company's common stock were issued to exercise the re-pricing warrants for the notes converted during the period.

During the nine months ended March 31, 2004, $1,015,000 of the notes and accrued interest and other fees of $1,541,027, totaling $2,556,027 were converted to 19,412,804 shares of common stock. A loss of $256,222 resulted from these note conversions, which is included in other expenses in the accompanying consolidated financial statements.

During the nine months ended March 31, 2004, 2,560,000 shares of the Company's common stock were issued as payment on short-term notes payable valued at $265,500 and related accrued interest of $43,775. A beneficial conversion expense of $364,639 resulted from these note conversions, which is included in other expenses in the accompanying consolidated financial statements.

During the nine months ended March 31, 2004, 2,480,268 shares of the Company's common stock were issued as payment on short-term notes payable - officers valued at $133,488. A beneficial conversion expense of $346,692 resulted from these note conversions, which is included in other expenses in the accompanying consolidated financial statements.

During the nine months ended March 31, 2004, the Company issued 409,595 shares of common stock valued at $338,110 for the conversion of preferred stock payable of $165,000 and related dividend payable of $72,000. A redemption expense of $101,111 resulted from these conversions, which is included in other expenses in the accompanying consolidated financial statements. At March 31, 2004, 1,613,262 shares valued at $269,415 related to the conversion of these preferred stock payable have not been issued and are included in "Shares to Be Issued" on the accompanying consolidated financial statements.

In September 2003, the Company signed a letter of intent with Xiamen Overseas Chinese Electronic Co., Ltd to enter into a distribution agreement. As part of this agreement, 461,391 shares of the Company's common stock valued at $24,388 were issued.

The Company received $443,800 as payment against the subscription receivable for the exercise of stock options.

In September 2003, the Company cancelled 3,000,000 shares previously issued to Clear Pass Inc. as the agreements were terminated during the year ended June 30, 2003.

In November 2003, the Company issued 375,000 shares of the Company's common stock valued at $66,600 for litigation settlement.

During the nine months ended March 31, 2004, the Company acquired two subsidiaries. 4,000,000 shares of the Company's common stock valued at $360,000 were issued to ATC. 1,116,369 shares of the Company's common stock valued at $234,437 are to be issued to Irvine College of Medical Sciences. As of the date of this report, these shares have not been issued and are included in "Shares to Be Issued" on the accompanying consolidated financial statements.

PREPAID CONSULTING

On April 15, 2002, the Company signed an agreement an un-related third party for consulting service. The consultant will consult the Company in identifying, locating and acquiring various business opportunities for the Company for a period of two years through April 15, 2004. The Company issued 3,000,000 shares of common stock to the consultant valued at $1,620,000 based upon market value of the stock at the time of consummation of the agreement. The Company has recorded the shares issued to the consultant as prepaid fees.

The Company is amortizing these prepaid consulting fees over the life of the contract. During the nine months ended March 31, 2004 amortization expense was $591,189. The balance of the prepaid consulting fees at March 31, 2004 is $0.

NOTE 8 - STOCK-BASED COMPENSATION PLAN

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. All the remaining options were exercisable on July 1, 2001 and expire on December 31, 2005

As of March 31, 2004, the Company has 1,000,000 in stock options outstanding which were granted during the three month period ended September 30, 2003.

In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based Compensation-Transition and Disclosure". SFAS No. 148 amends SFAS No. 123, "Accounting for Stock Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used, on reported results. The Statement is effective for the Companies' interim reporting period ending January 31, 2003. In compliance with FAS No. 148, the Company has elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation plan as defined by APB No. 25 and has made the applicable disclosures below.

Had the Company determined employee stock-based compensation cost based upon the fair value at the grant date consistent with Statement of Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation," the Company's net loss and loss per share as of March 31, 2004 would have been as follows ($ in thousands, except per share amounts):

	3/31/04	3/31/03
Net loss as reported	$ (3,634)	$ (1,628)

Stock-based employee compensation expense included in reported net income, net of tax	-	-

Total stock-based employee/consultant compensation expense determined under fair-value-based method for all rewards, net of tax	(166)	(2,625)

Net loss - pro forma	$ (3,800)	$ (4,253)

Loss per share:
Basic, as reported	0.04	0.03
Diluted, as reported	0.04	0.03
Basic, pro forma	0.04	0.08
Diluted, pro forma	0.04	0.08

NOTE 9 - CONTRACTS AND COMMITMENTS

INTERNATIONAL CENTER FOR TRAINING AND CONSULTING, VIETNAM'S MINISTRY OF TRADE

International Center for Training and Consulting (ICTC) is an organization under the Ministry of Trade of Vietnam that promotes economics, trade, investment and training activities between Vietnam and foreign organizations. Providential Holdings, Inc. and ICTC signed an agreement in March 2001 to cooperate in the areas of trade, economics, and technology. ICTC is responsible for representing Providential Holdings in connection with appropriate Vietnamese organizations, businesses, and individual businessmen and investors in Vietnam. ICTC will also perform consulting services and provide information on various economic, trade and investment projects as may be required by Providential. Fees between the parties will be negotiated on an as project basis. As of the date of this report there have been no projects completed and none are in process.

CHU LAI INDUSTRIAL ZONE, QUANG NAM PROVINCE, VIETNAM

Providential Holdings has entered into an agreement with Chu Lai Industrial Zone (CLIZ) Authority, Quang Nam Province, Central Vietnam, to develop this industrial and export processing zone, to upgrade a paper mill, and to implement two to five investment projects in Chu Lai by the end of 2002. As of the date of this report the Company has not assisted in funding this project. The Company expects its main role in this project to be the manager organizing the different companies that will operate their business at this location. As the date of this report, the Company has not assisted in funding this project.

PROVIMEX

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. The Company believes that its trade commerce business will grow substantially as a result of the implementation of the Trade Agreement between Vietnam and the United States. During the period ended March 31, 2004 revenues from this division was $101,856.

In December 2001, Provimex signed an agreement with Ky Ha Chu Lai Development and Investment Company, ("CDI") to supply certain consumer and industrial goods to CDI. In March 2003, Provimex signed an amendment to this contract to supply an estimated annual amount of $70 million of consumer and industrial goods to CDI. As of the date of this report there have been no shipments under this contract.

AGREEMENT WITH LEXOR INTERNATIONAL, INC.AND RECORDING OF REVENUE OF $4,440,000:

On October 9, 2001, the Company entered into an agreement to provide merger and acquisition consulting services to Lexor International, Inc. ("Lexor"), a Maryland corporation, and to assist Lexor in its business combination plan with in its business combination plan with Pan-American Automotive Corporation ("Pan-American"), a Delaware corporation. According to the agreement, the Company will be receiving 10% equity interest in the resulting company as compensation for its advisory and consulting services. On October 22, 2001, Pan-American signed a definitive agreement to acquire 100% of Lexor in exchange for stock in Pan-American. This transaction was closed on November 5, 2001 and on November 15, 2001 the Company received 24,761,900 restricted shares of Pan-American's common stock, (after the 7 to 1 reverse split). Pan-American changed its name to Lexor International, Inc. and again effectuated a 10:1 reverse split of its common stock on December 19, 2001. This business combination plan between Lexor and Pan-American was later rescinded. Pan-American changed its name to Grayling Wireless USA, Inc. ("Grayling".) On January 16, 2003, Grayling effected a 200:1 reverse split of its common stock. As a result the Company currently owns 12,380 shares of Grayling but will not record any value for the shares until a trading market value has been established for this stock.

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 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

was entitled to 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. The stock was valued at $4,440,000 or $2.90 per share. This amount has been included as consulting and advisory income in the accompanying financial statements. The stock was received by the Company on October 31, 2003.

AGREEMENTS WITH NETTEL GLOBAL COMMUNICATION CORP.

On December 3, 2002, the Company entered into a Stock Purchase Agreement with Nettel Global Communication Corp. ("Nettel"), a Delaware corporation, whereby the Company would acquire 46.5% of the common stock of Nettel in exchange for a total of $2,500,000 in non-interest bearing notes, $500,000 of which would be due 60 days after the closing of the transaction and $2,000,000 would be due in 90 days after closing. On January 17, 2003, an Amendment to Stock Purchase Agreement was entered into between Nettel and the Company which called for the $500,000 note to be due on April 15, 2003 and the $2,000,000 note to be due on June 15, 2003. The Company also agreed to pay Nettel a 2% penalty per month on any unpaid balances of the notes for a maximum period of 60 days after the respective maturity dates. The closing of the transaction occurred and became effective on January 17, 2003, at which time the Company issued and delivered these notes to Nettel. This agreement was rescinded on May 19, 2003. As of June 30, 2003, the Company had paid $57,348 to Nettel and has written this amount off as bad debt expense.

On May 19, 2003, the Company entered into an agreement to provide merger and acquisition consulting services to Nettel and to assist Nettel in its business combination plans with a fully reporting publicly-traded company. As of June 30, 2003, the Company received 2,250,000 restricted common shares of Nettel, and recorded consulting income of $1,365,300 on this transaction. During the period ended December 31, 2003, the Company did not recognize any income in this regard.

JOINT VENTURE WITH MINH HIEU COMPANY

On January 1, 2002 the Company entered into an agreement with Minh Hieu Joint Stock Company of Ho Chi Minh City, Vietnam to form "Providential JVC," a joint venture company under the laws of the Socialist Republic of Vietnam. According to the terms of the agreement, the Company will contribute $140,000 to the initial required capital and own 70% of Providential JVC while Minh Hieu Company will contribute $60,000 for 30% of the joint venture enterprise. Providential JVC's main line of business includes industrial garments, packaging products and accessories. To date, no funds have been contributed towards the joint venture.

DISTRIBUTORSHIP AGREEMENT WITH XIAMEN OVERSEAS CHINESE

On October 28, 2003, the Company entered into an agreement with Xiamen Overseas Chinese Electronics Company ("Xoceco") to establish a new majority-owned subsidiary to distribute consumer electronics products for Xoceco. The Company will own 95% of the new subsidiary.

According to the agreement, Xoceco will be granted options to acquire up to 4,300,000 shares of common of the Company with exercise prices ranging from $0.10 to $.35 per share until December 31, 2005, subject to a minimum level of annual revenues not less than $5,000,000 and profit of sales not less than 10%. In December 2003, the Company established PHI Digital Corp. under this agreement.

STOCK PURCHASE AGREEMENT WITH ATC TECHNOLOGY CORPORATION

On August 23, 2002, the Company entered into a purchase agreement with ATC Technology Corp., an Arizona corporation, to purchase all issued and outstanding shares of ATC Technology Corp.

For consideration, the Company agreed to deliver $250,000 in promissory note, non-interest bearing, payable 270 days after closing, and $250,000 in promissory note, non-interest bearing, payable 18 months after closing, 3,000,000 shares of restricted stock of the Company with an option of additional shares to be issued after 270 days if the stock price does not reach $.30, 1,000,000 shares of restricted stock of the Company with an option of additional shares to be issued after one year if the stock price does not reach $.30.

The initial scheduled closing date of September 12, 2002 was later re-scheduled to close on October 6, 2003. However, both parties have agreed to reset the final closing date to October 17, 2003 due to the requirement for additional review of ATC's recent developments and the agreement was consummated on this date.

AGREEMENT WITH MEDICAL CAREER COLLEGE AND ATLANTIS CAREER COLLEGE

In May 2003, Providential Capital ("ProCap") entered into a business consulting agreement with Medical Career College and Atlantis Career College ("MCC") to provide Merger and Acquisition advisory services to MCC. According to this agreement, ProCap will be entitled to 15% equity interest in the combined company when and only if a merger between MCC and a fully reporting publicly-traded company is consummated. As of the date of this report, no merger has been completed for MCC.

STOCK PURCHASE AGREEMENT WITH IRVINE COLLEGE OF MEDICAL SCIENCES, INC.

On December 19, 2003, the Company entered into a stock purchase agreement with Irvine College of Medical Sciences, inc., DBA Atlantis Career College ("the College"), a California corporation to purchase 51% of the issued and outstanding shares of the college.

For consideration, the Company agreed to pay $80,000 in cash and issue 1,116,369 shares of the Company's common stock valued at $234,437 for a total purchase price of $314,437. As of the date of this report, the shares have not been issued.

STOCK PURCHASE AGREEMENT

On February 5, 2004 an unrelated private investment company signed an agreement with the Company to purchase $3,000,000 worth of the Company's restricted common stock based upon a price equal to 20% discount from the average 10 day "Bid" price when the Company's stock is traded for at least One Dollar ($1.00) per share and there is average daily trade volume of at least thirty thousand (30,000) shares of volume per day. In addition, the purchaser will be given the option to purchase up to one million shares of the Company's restricted common stock at a price equal to 30% discount from the market price or thirty (30) cents per share, whichever is lower. This option shall be for a period of one year from the close of the proposed transaction. As of the date of this report, the conditions of the agreement have not been met and therefore the agreement has not been consummated.

BUSINESS CONSULTING AGREEMENT WITH ENTEC SOFTWARE, INC.

On February 28, 2004, the Company entered into a business consulting agreement with Entec Software, Inc. ("Entec") 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 to 20% 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. In connection with this agreement, the Company has received $330,000 as a deposit for expenses and has recorded this as "other liabilities" in the accompanying consolidated financial statements (see Note 3).

OFFICE SPACE LEASE

The Company currently leases its office space from PAUB ENTERPRISES, LLC at $4,263 per month. This lease commenced on April 1, 2001 and expires on March 31, 2004.

EQUIPMENT LEASES

Providential Securities, Inc., a discontinued subsidiary of the Company, has been unable to make all their monthly payments on other equipment leases due to the lack of revenues following the interruption and subsequent closure of its securities brokerage operations. The Company is in litigation with some of the equipment lessors and is negotiating additional payoffs with other equipment lessors.

NOTE 10 - INVESTMENTS

INVESTMENT IN CLEARPASS

INVESTMENT IN SLIMTECH

On April 30, 2002, the Company consummated an agreement to acquire 51% equity interest in SlimTech, Inc., a Nevada corporation, in exchange for 3,000,000 shares of the Company's restricted common stock. On May 6, 2003, the agreement was rescinded and the shares were returned and cancelled, (see Note 1). As a result, the Company wrote off its minority interest in the Company of $128,560 and cancelled the shares of common stock, a gain from disposal of subsidiary in the amount of $248,560 was recorded in the year ended June 30, 2003.

BUSINESS ACQUISITION

The Company has accounted for above transactions under the purchase method of accounting for business combinations. The assets and liabilities of ATC and the College are included in the consolidated balance sheet as of March 31, 2004 and included in these statements of operations and cash flows from the date of acquisition through March 31, 2004.

The purchase price was allocated to the acquired assets and assumed liabilities based on the fair values as of the date of the acquisition. The excess of the fair value of the net identifiable assets acquired over the purchase price paid represented goodwill for both transactions amounted to $3,150,965. The Company determined the value of goodwill at zero on December 31, 2003 and therefore, has recorded $2,308,290 as an impairment of goodwill.

The preliminary purchase price was allocated as follows (in thousands):

ATC:

Goodwill ......................................................... $ 2,881

Current assets ................................................... 19

Non-current assets................................................ 3

-----

Total assets...................................................... 2,903

Less liabilities assumed..................................(2,043)

-----

Consideration paid...........................................$ 860

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College:

Goodwill ......................................................... $ 270

Current assets ................................................... 206

Non-current assets.............................................131

-----

Total assets...................................................... 607

Less liabilities assumed...................................(293)

-----

Consideration paid.........................................$ 314

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NOTE 11- GOING CONCERN UNCERTAINTY

As of March 31, 2004, the Company had a negative working capital of $2,707,738 and a shareholder deficit of $2,928,918. Since the main operating subsidiary Providential Securities, Inc. ceased its securities brokerage operations in October 2000, there has been no significant revenue stream for the Company until the current fiscal year. The Company is in default of the terms of convertible notes at March 31, 2004. 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 has taken action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2004 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 12 - GAIN ON SETTLEMENT OF DEBT

On March 18, 2004, the Company entered into a settlement agreement with Datalogic International, Inc. ("Datalogic") whereby Datalogic agreed to cancel $75,000 owed to it by the Company. The Company had recorded this liability in accrued expenses and as a result of this agreement, during the quarter ended March 31, 2004, recorded a gain on settlement of debt of $75,000 and is shown in other expenses in the accompanying consolidated financial statements.

NOTE 13 - SEGMENT INFORMATION

The following table presents a summary of operating information and certain year-end balance sheet information for the nine months ended March 31:

	2004	2003

Revenues from unaffiliated customers:
Consulting and advisory services	$ 4,507,090	$ 9,784
Sales	4,355,143	61,800
Tuition	86,062	-
Consolidated	$ 8,948,295	$ 71,584

Operating income (loss):
Consulting and advisory services	$ 769,076	$ (1,111,377)
Sales	(2,686,899)	5,172
Tuition	(322,869)	-
Consolidated	$ (2,240,692)	$ (1,106,205)

Identifiable assets:
Consulting and advisory services	$ 4,716,530	$ 189,536
Sales	3,615,610	-
Tuition	328,360	-
Consolidated	$ 8,660,500	$ 189,536

Depreciation and amortization:
Consulting and advisory services	$ 18,394	$ 21,809
Sales	-	-
Tuition	-	-
Consolidated	$ 18,394	$ 21,809

Capital expenditures:
Consulting and advisory services	$ 7,743	$ -
Sales	-	-
Tuition	5,895	-
Consolidated	$ 13,638	$ -

NOTE 14 - SUBSEQUENT EVENTS

On March 18, 2004, a settlement agreement was reached with Datalogic International, Inc. ("Datalogic") whereby Datalogic agreed to cancel $75,000 due to it by the Company for technical services and agreed to deliver 500,000 shares of Datalogic's common stock to the Company as payment of merger services provided by the Company. On May 14, 2004, the Company received 137,009 of these shares.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion includes the operations of the Company for each of the periods discussed. This discussion and analysis should be read in conjunction with the Company's consolidated financial statements and the related notes thereto, which are included elsewhere in this document.

This discussion contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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.

OVERVIEW

Providential Holdings, Inc. ("PHI") was organized under the laws of the State of Nevada on June 8, 1982 under the name of JR Consulting, Inc.; subsequently on February 9, 2000 it changed its name to Providential Holdings, Inc. 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. PHI had an operating subsidiary, Diva Entertainment, Inc ("Diva"). Diva operated two modeling agencies, one in New York and one in California.

Providential Securities, Inc. ("Providential") was incorporated in the State of California on October 8, 1992. It operated a securities brokerage service in Fountain Valley, CA and New York City, NY. The principal markets for Providential's services were individual investors who were located throughout the United States. Providential bought and sold securities for its customers through a number of different markets, utilizing a brokerage clearinghouse to transact the trades. In October 2000, due to the results of a NASD examination, Providential has ceased its operations in the securities brokerage business.

REORGANIZATION

On October 28, 1999 PHI entered into a corporate combination agreement (the "Agreement") with Providential, whereby PHI acquired all the outstanding shares of Providential in exchange for 20,000,000 shares of PHI common stock. The transaction was consummated on January 14, 2000. In addition, as a covenant under the Agreement, PHI was required to enter into an agreement to sell all of the shares of Diva owned by PHI. PHI's officers and directors resigned their positions and the shareholders of Providential assumed control of the two entities (together as "the Company"). Providential's shareholders of record as of the closing date owned approximately 75% of PHI's common stock. The acquisition has been treated as a capital transaction in substance, rather than a business combination, and was deemed a "reverse acquisition" for accounting purposes. Accordingly, Providential was the accounting acquirer and the historical financial statements prior to January 14, 2000 were those of Providential. The operations of PHI have been included with those of Providential from the acquisition date.

BUSINESS RESTRUCTURING

Since the discontinuance of its securities brokerage operations in October 2000, the Company has restructured its primary scope of business to include the following areas: (1) Technologies, (2) Financial services, (3) International markets, and (4) Special Situations. Events and developments relating to these areas are described in more detail elsewhere in this report.

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 realizability 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, 2004, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

RESULTS OF OPERATIONS

Nine Months ended March 31, 2004 compared to Nine Months ended March 31, 2003

Revenues

Total revenues were $8,948,295 and $71,584 for the nine months ended March 31, 2004, and 2003, respectively. Revenues for the current period consist of $4,507,000 in consulting fees and $4,441,205 in sales and tuition compared to $9,784 consulting fees and $61,800 in sales and tuition for the comparable period in the prior fiscal year. The increase is due primarily in the completion of a merger agreement the Company facilitated and the acquisition of several new subsidiaries. Of this amount, $4,339,348 in sales and tuition was generated by the subsidiaries.

General and Administrative

Total general and administrative expenses were $847,655 and $273,914 for the nine months ended March 31, 2004, and 2003, respectively. The increase is primarily due to the increased activity of the Company and the acquisition of the subsidiaries. Professional services were $2,924,778 and $825,438 for the comparable periods. Included in this amount for the current period is $646,320 for past services paid with common stock. During the current nine months the Company paid salaries of $201,763 of which $146,006 was paid with the issuance of common stock and $22,500 in director's fees, also paid with common stock.

Other Expenses

Interest expense was $363,047 and $540,627 for the nine months ended March 31, 2004, and 2003, respectively. This is primarily due to the conversion of $1,015,000 of notes during the quarter.

During the nine months ended March 31, 2004 the Company recorded a loss of conversion of notes of $157,582 compared to a gain of $472,420 for the nine months ended March 31, 2003. In addition, the Company recognized an expense of $153,473 in redemption premiums and registration penalties related to the debt conversion during the current fiscal year and beneficial conversion feature expense for notes converted of $711,331.

Related to the acquisition of the subsidiaries, the Company recognized an impairment of assets of $3,150,965 during the nine months ended March 31, 2004. The value represents the difference of the consideration paid by the Company and the net equity of the subsidiaries acquired.

Net Income (Loss)

Net loss for the nine months ended March 31, 2004 was $3,593,681, compared to $1,627,698 for the same period in 2003, which is equivalent to ($0.04) per share versus ($0.04) per share, respectively, based on the weighted average number of basic and diluted shares outstanding for the pertinent quarters. The difference is primarily attributed to the acquisition of several subsidiaries in the current quarter and the impairment of assets.

Quarter ended March 31, 2004 compared to quarter ended March 31, 2003:

Revenues

Total revenues were $2,119,246 and $9,784 for the quarter ended March 31, 2004, and 2003, respectively. The increase is due primarily in the completion of a merger agreement the Company facilitated and the acquisition of several new subsidiaries. Of this amount, $1,991,482 in sales and tuition was generated by the subsidiaries.

General and Administrative

Total general and administrative expenses were $419,848 and $1,773 for the quarter ended March 31, 2004 and 2003, respectively. The increase is primarily due to the increased activity of the Company and the acquisition of the subsidiaries. Professional services were $1,289,486 and $294,191 for the comparable periods. During the current quarter the Company paid salaries of $35,000 with the issuance of common stock.

Other Expenses

Interest expense was $91,520 and $134,904 for the quarter ended March 31, 2004, and 2003, respectively. This is primarily due to the conversion and payment of $716,583 of convertible notes and short-term notes payable during the quarter.

During the quarter ended March 31, 2004 the Company recorded a loss of conversion of notes of $477,891 compared to a gain of $304,853 for the quarter ended March 31, 2003. In addition, the Company recognized an expense of $106,111 in redemption premiums and registration penalties related to the debt conversion during the current fiscal quarter and $711,331 in beneficial conversion feature expense related to the conversion of short-term notes payable and officers notes.

Net Income (Loss)

Net loss for the quarter ended March 31, 2004 was $2,824,709, compared to $383,104 for the same period in 2003, which is equivalent to ($0.03) per share versus ($0.01) per share, respectively, based on the weighted average number of basic and diluted shares outstanding for the pertinent quarters. The difference is primarily attributed to the activity in several subsidiaries acquired in the previous quarter, conversion expenses of notes payable into common stock and increased professional services.

LIQUIDITY AND CAPITAL RESOURCES

The Company had consolidated cash and cash equivalents of $278,041 and $14,252 as of March 31, 2004 and 2003, respectively.

The Company's operating activities used $1,477,628 and $389,478 in the nine months ended March 31, 2004 and 2003, respectively. The difference is mainly attributable to the increase in activities and acquisition of several subsidiaries.

Cash used by investing activities was $138,688 for the nine months ended March 31, 2004 compared to cash provided of $20,946 in the comparable period of the prior year. This was primarily due to the purchase of marketable securities during the period and the purchase of fixed assets.

Cash provided by financing activities was $1,762,154 and $378,071 for the nine months ended March 31, 2004 and 2003, respectively. The increase is primarily due proceeds from the exercise of stock options, borrowings on notes payable and advances from an officer.

The Company's operations are currently financed through various loans. 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 the 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.

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

Acquisition of ATC Technology Corp (incorporated by reference to the Company's Current Reports on Form 8-K/A, filed November 6, 2002, March 31, 2003 and February 18, 2003).

(a) Exhibits

31.1 Rule 13a-14a/15d-14(a) Certification of Chief Executive Officer

31.2 Rule 13a-14a/15d-14(a) Certification of Chief Financial Officer

32.1 Section 1350 Certification of Chief Executive Officer

32.2 Section 1350 Certification of Chief Financial Officer

(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.

Date May 20, 2003 PROVIDENTIAL HOLDINGS, INC.

By: /s/ Henry Fahman

Henry Fahman

President and Chairman

By: /s/ Gene Bennett

Gene Bennett

Chief Financial Officer

Exhibit 31.1

Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification. I, Henry Fahman, President and Chairman of Providential Holdings, Inc. ("Company"), certify that:
1.	I have reviewed this quarterly report on Form 10-QSB of Providential Holdings, Inc.;
2.	Based on my knowledge, this quarterly 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 quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
4.	The other certifying director 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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 my supervision, to ensure that material information relating to Providential Holdings, Inc., including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles. c. 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 on such evaluation;; and d. Disclosed in this report any change in Providential Holdings, Inc.'s internal control over financial reporting that occurred during Providential's second fiscal quarter that has materially affected, or is reasonably likely to materially affect, Providential's internal control over financial reporting; and
5.	We have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of our 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 Company's ability to record, process, summarize and report financial data; and

b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and

Date: May 20. 2004	/s/ Henry Fahman
	Henry Fahman, President and Chairman

Exhibit 31.2

Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification. I, Gene Bennett, Chief Financial Officer of Providential Holdings, Inc. ("Company"), certify that:
1.	I have reviewed this quarterly report on Form 10-QSB of Providential Holdings, Inc.;
2.	Based on my knowledge, this quarterly 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 quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
4.	The other certifying director 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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 my supervision, to ensure that material information relating to Providential Holdings, Inc., including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles. c. 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 on such evaluation;; and d. Disclosed in this report any change in Providential Holdings, Inc.'s internal control over financial reporting that occurred during Providential's second fiscal quarter that has materially affected, or is reasonably likely to materially affect, Providential's internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of our 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 Company's ability to record, process, summarize and report financial data; and

b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and

Date: May 20. 2004	/s/ Gene Bennett
	Gene Bennett, Chief Financial Officer

Exhibit 32.1

CERTIFICATION 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 of Providential Holdings, Inc. on Form 10-QSB for the quarter ending March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Henry Fahman, President and Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (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 result of operations of the Company.

/s/ Henry Fahman

Henry Fahman

President and Chairman

May 20, 2004

Exhibit 32.2

CERTIFICATION 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 of Providential Holdings, Inc. on Form 10-QSB for the quarter ending March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gene Bennett, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (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 result of operations of the Company.

/s/ Gene Bennett

Gene Bennett

Chief Financial Officer

May 20, 2004