**U.S. SECURITIES AND EXCHANGE COMMISSION**

WASHINGTON, D.C. 20549

FORM 10-KSB

(MARK ONE)
 

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

      EXCHANGE ACT OF 1934

      FOR THE FISCAL YEAR ENDED:**JUNE 30, 2002**

OR

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE

      SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD

              FROM _________ TO ________
 

COMMISSION FILE NO.

 

**PROVIDENTIAL HOLDINGS, INC.**

(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

NEVADA                                                                                                                                              13-3121128

(STATE OR OTHER JURISDICTION OF                                                                                   (I.R.S. EMPLOYER

INCORPORATION OR ORGANIZATION)                                                                               IDENTIFICATION NO.)

 

8700 WARNER AVENUE, SUITE 200, FOUNTAIN VALLEY, CA          92708

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

(714) 596-0244

ISSUER'S TELEPHONE NUMBER

   SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

NAME OF EACH EXCHANGE                TITLE OF EACH CLASS:

ON WHICH REGISTERED:

NONE                                                                       NONE

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

Check whether the issuer (1) has filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the Company was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.

                         YES [X]            NO []

Check if disclosure of delinquent filers in response to Item 405 of RegulationS-B is not contained in this form, and no disclosure will be contained, to thebest of registrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or any amendment tothis Form 10-KSB. [ ]

State the issuer's revenues for the fiscal year ended 6/30/2002:

 
None (except consulting income of $602,000).

The aggregate market value of the voting and non-voting equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2002 was $2,691,185 based on a price of $0.0585 per share.

 

The number of shares of  Common Stock, $.04 par value per share,

outstanding as of June 30, 2002 was: 46,003,157 shares (including 11,800,000 treasury shares).

 
Transitional Small Business Disclosure Format (check one):

YES [ ]      NO [X]

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

THIS REPORT CONTAINS  STATEMENTS THAT ARE  FORWARD-LOOKING AND ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  WHEN  USED  IN  THIS REPORT,   THE  WORDS  "BELIEVES,"  "PLANS," "ESTIMATES," "EXPECTS,"  "INTENDS,"  "ANTICIPATES,"  "MAY,"  "WILL," "SHOULD," "COULD," "FORTHCOMING,"  "UPCOMING" AND SIMILAR EXPRESSIONS, TO THE EXTENT USED, ARE INTENDED TO IDENTIFY FORWARD-LOOKING  STATEMENTS.  ALL FORWARD-LOOKING  STATEMENTS ARE BASED LARGELY ON CURRENT  EXPECTATIONS AND BELIEFS  CONCERNING FUTURE EVENTS THAT ARE SUBJECT  TO  SUBSTANTIAL  RISKS AND UNCERTAINTIES.  ACTUAL  RESULTS  MAY DIFFER MATERIALLY  FROM  THE

RESULTS  SUGGESTED  HEREIN.  FACTORS  THAT  MAY  CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES  INCLUDE,  BUT ARE NOT LIMITED TO, THE COMPANY'S ABILITY TO  DEVELOP AND SUCCESSFULLY  MARKET THE PRODUCTS AND SERVICES  DESCRIBED IN THIS REPORT (AND THE COSTS ASSOCIATED  THEREWITH);  THEIR  ACCEPTANCE IN THE MARKETPLACE; TECHNICAL  DIFFICULTIES OR ERRORS IN THE PRODUCTS AND/OR SERVICES; THE COMPANY'S CUSTOMER AND ACTIVE PROSPECT BASE CONTAINING ASUBSTANTIALLY LOWER NUMBER OF INTERESTED  CUSTOMERS THAN THE COMPANYANTICIPATES;  THE FAILURE TO CONSUMMATE THE PENDING JOINT VENTURES ANDACQUISITIONS AT ALL (OR ON A TIMELY BASIS) DUE TO VARIOUS REASONS; DIFFICULTY INTEGRATING OR MANAGING MULTIPLE COMPANIES FROM  TECHNOLOGY, OPERATIONAL  AND MARKETING  ASPECTS; THE SUCCESS (AND COST) OF NEW  MARKETING  STRATEGIES  AS A RESULT  OF MERGERS AND ACQUISITIONS; UNFAVORABLE  CRITICAL  REVIEWS;  INCREASED  COMPETITION (INCLUDING PRODUCT  AND PRICE COMPETITION); ENTRANCE  OF NEW  COMPETITORS  INTO  THE MARKET;  TIMING  AND  SIGNIFICANCE  OF ADDITIONAL  NEW  PRODUCT AND  SERVICE  INTRODUCTIONS  BY THE  COMPANY  AND  ITS COMPETITORS; GENERALECONOMIC  AND  MARKET  FACTORS,   INCLUDING CHANGES  IN SECURITIES AND FINANCIAL  MARKETS;  TECHNOLOGYOBSOLESCENCE, THE ADEQUACY OF WORKING CAPITAL,CASH FLOWS AND AVAILABLE FINANCING TO FUND THE COMPANY'S BUSINESS MODEL AND THE PROPOSED ACQUISITIONS OR INVESTMENTS ;  AND OTHER  RISKS AND UNCERTAINTIES INDICATED THROUGHOUT THIS REPORT AND FROM  TIME TO TIME IN THE  COMPANY'S RELEASES AND FILINGS  INCLUDING WITHOUT LIMITATION FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

As  used in this  report,  the  terms  "we,"  "us,"  "our,"  the "Company"  and "Providential Holdings"  mean Providential Holdings,  Inc. and the term "common stock" means  Providential Holdings, Inc.'s  common  stock,  $.04 par  value  per share (unless context indicates a different meaning).

**PART I**

**ITEM 1. BUSINESS OVERVIEW**

**INTRODUCTION**
 

ProvidentialHoldings, Inc., ("PHI") a diversified holding company committed to increasingshareholder value through growth, focuses on selective technologies, financialservices, international markets, and special situations. Products and servicesinclude liquid crystal displays (LCD's), information technology, identificationtechnologies, mobile entertainment systems, industrial machinery and equipment,telecommunications, and computer hardware and software. PHI also providesexpertise on trade commerce, financial services, and mergers and acquisitions,especially for companies in the U.S. and emerging overseas markets with highpotential for growth.

The company's objective is to develop, operate and participate in selectedbusinesses chosen to strategically utilize its existing and future distinctivecompetencies and generate attractive risk-adjusted rates of return for itsshareholders and investors.

**BACKGROUND**

Providential Holdings, Inc. ("PHI" or “Providential") was organized under thelaws 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 Nevadacorporation, on January 12, 2000, and subsequently changed its name toProvidential Holdings, Inc. on February 9, 2000. From its inception throughSeptember 7, 1995, the Company generated nominal revenues and did not activelyengage in business. Prior to the corporate combination agreement withProvidential Securities, Inc., JR Consulting had an operating subsidiary, DivaEntertainment, Inc ("Diva"), which operated two modeling agencies, one in NewYork and one in California.

Providential Securities, Inc., a California Corporation ("ProvidentialSecurities") was incorporated in the State of California on October 8, 1992.  Itoperated a securities brokerage service in California, New York and Oregon.  The principal markets for Providential Securities' services were individualinvestors who were located throughout the United States. Providential Securitiesbought and sold securities for its customers through a number of differentmarkets, utilizing a brokerage clearinghouse to transact the trades. Due to theresults of an NASD examination, Providential Securities withdrew its membershipand ceased its securities brokerage business in October 2000.

Since November 2000, the Company has reorganized its primary scope of businessto the present form to focus on four main areas: (1)Technologies, (2) Financialservices, (3) International markets, and (4) Special Situations.

**REORGANIZATION**

On October 28, 1999 JR Consulting entered into a corporate combination agreement(the "Agreement") with Providential Securities, whereby JR Consulting acquiredall the outstanding shares of Providential Securities in exchange for 20,000,000

shares of JR Consulting (then renamed Providential) common stock. Thetransaction was consummated on January 14, 2000. In addition, as a covenantunder the Agreement, Providential was required to enter into an agreement tosell to Havilland Limited all of the shares of Diva owned by Providential aswell as to assign all of its rights, title and interest in an Option Agreementto Havilland Limited. JR Consulting's officers and directors resigned from theirpositions and the shareholders of Providential Securities assumed control of thetwo entities (together as "the Company"). The shares issued in the merger are restricted against resale pursuant to the provisions of federal and statesecurities laws. Providential Securities' shareholders of record as of theclosing date owned approximately 75% of Providential's common stock.  Theacquisition has been treated as a capital transaction in substance, rather thana business combination, and was deemed a "reverse acquisition" for accountingpurposes.   Accordingly, Providential Securities was the accounting acquirer andthe historical financial statements prior to January 14, 2000 were those ofProvidential Securities. In the accompanying financial statements, the capitalstructure and losses per share of Providential Securities have beenretroactively restated to reflect the acquisition as if it occurred at thebeginning of the period. The operations of Providential have been included withthose of Providential Securities from the acquisition date.

The sale of Diva was concluded on June 30, 2000, at which time all of the sharesof Diva owned by Providential as well as all of its rights, title and interestin the Option Agreement were exchanged for assignment to and assumption byHavilland 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 ownedby Havilland.  The total gain resulting from the sale of Diva of approximately$1.2 million was considered in the allocation of the purchase price to theassets and liabilities of Providential.  Included in the total gain of $1.2million was Diva's net profit of $245,606 earned during the interim holdingperiod from January 14, 2000 to June 30, 2000.

**BUSINESS RESTRUCTURING**

Since the discontinuance of its securities brokerage operations in October 2000,the Company has restructured its primary scope of business to include thefollowing areas: (1)Technologies, (2) Financial services, (3) Internationalmarkets, and (4) Special Situations. Events and developments relating to theseareas are described in more detail below.

**SUBSIDIARIES:**

**ATC TECHNOLOGY CORP.**

 

ATC Technology Corporation, established in 2001 as an Arizona corporation,manufactures mobile entertainment products, including VidegoTM and GamegoTM.  The VidegoTM, winner of the prestigious 2001 Innovation Engineering and DesignAward from IDSA (Industrial Designers Society of America), is one of the finestand affordable car theater systems available to consumers.  With its wirelessviewing monitor, which attaches easily to the back of any automobile headrest,the patent-pending VidegoTM system provides consumers with the highest qualityDVD and Video players and hours of entertainment while traveling.  

 
Launched in 2002, the GamegoTM allows people of all ages the opportunity to playvideo games in the car, RV, SUV, van or boat by connecting our product to anexisting Microsoft X-BoxTM, Sony Playstation2TM, or Nintendo GamecubeTM.  Like theVidegoTM, the GamegoTM also has a viewing monitor which attaches easily to theback of any automobile headrest.  Its portability enables video-gamers to taketheir favorite videogames out of the home and to the places they want to be.  

ATC Technology Corporation currently sells both of these U.S. manufacturedexciting products in the United States, Mexico, Canada, Denmark, Panama, andGreat Britain. It is also selling direct to well-known car dealers such as: LandRover, Mercedes Benz, Lexus, Ford, Honda and Toyota. The company soon expects tosee its products on the shelves of major superstores throughout North America.  

 
On August 23, 2002, the Company entered into a purchase agreement with ATCTechnology Corp. to purchase all issued and outstanding shares of ATC TechnologyCorp. For consideration, the Company agreed to deliver $250,000 in promissorynote, non-interest bearing, payable 270 days after closing, and $250,000 inpromissory note, non-interest bearing, payable 18 months after closing,3,000,000 shares of restricted stock of the Company with an option of additionalshares 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 additionalshares to be issued after one year if the stock price does not reach $.30. 

 

As a result of the closing of this transaction on September 12, 2002, ATCTechnology Corp has become a wholly-owned subsidiary of PHI.

**SLIMTECH**

SlimTech is a Nevada startup company that focuses on the distribution of liquidcrystal display (LCD) and consumer electronics products. Pursuant to a StockAcquisition purchase agreement (the "Acquisition Agreement") on April 30, 2002,the Company exchanged 3,000,000 shares of newly issued common stock for10,200,000 shares of the common stock of SlimTech, Inc., which constitutesapproximately 57% interest in SlimTech, Inc. The acquisition was approved by theunanimous written consent of the Board of Directors on June 14, 2002.

This company has received orders for 15" flat-panel computer monitors valued atmore than $300,000,000 from a Chinese government unit and a California-basedcomputer reseller. PHI has retained the London Manhattan Company as theexclusive investment banker to secure up to $21,750,000 purchase order financingto fulfill these orders.  As of the date of this report, SlimTech has notgenerated any revenues from these purchase orders.

**PROVIMEX DIVISION**

Provimex is a wholly-owned division of the Company originally formed on April10, 2001 under the name "Providential Imex", to focus on trade commerce withVietnam. This division changed its name to Provimex on July 5, 2001. Provimex isengaged in exporting and importing of industrial and consumer goods. The Companybelieves that its trade commerce business will grow substantially as a result ofthe ratification of the Trade Agreement between Vietnam and the United States.Provimex had no assets or operations as of June 30, 2002 and only began to generate revenues from its import and export activities sinceAugust 2002. The Company expects to register substantial revenue growth throughthis division in the fiscal year 2003.

**PROVIDENTIAL CLEARING, INC.**

During February 2000 the Company formed a California corporation, ProvidentialClearing, Inc. as a vehicle to effectuate the purchase of a self-clearingbroker-dealer and to operate a securities clearing firm. This subsidiary had nooperations and was dissolved in September 2002 by unanimous consent of the Boardof Directors of the Company.

**PROVIDENTIAL ADVISORY SERVICES, INC.**

Providential Advisory Services, Inc. (Providential Advisory Services) was formedin February 2000 as a California corporation. Its mission is to createdistinctive value and enrich client's lives by providing high quality investment

advisory services that help improve their asset value over time. ProvidentialAdvisory Service will seek to provide investment advisory services to individualand institutional clients for both short-term and long-term results.

The Company purchased 60 percent of the outstanding shares of this entity inJuly 2001 for $1,000. As of the date of this report this corporation has had nosales, cost of sales or gross profit.

**INVESTMENTS:**

**INVESTMENT IN PROVIDENTIAL TECHNOLOGY, INC.**

The Company purchased less than 10 percent of the outstanding shares ofProvidential Technology, Inc.  This corporation was engaged in softwaredevelopment for financial service providers. The Company provided the initialfunding of $165,000 for Providential Technology to develop a market-timingprogram and an online trading platform for equities. These projects were

discontinued in October 2000 due to lack of additional funding. This investmenthas been recorded at no value and any funds invested into this corporation havebeen written off in the previously reported financials.

**INVESTMENT IN CLEARPASS**

The Company entered into a letter of intent to provide funding of $10,000,000for minimum of 33% equity in ClearPass. ClearPass is a manufacturing company forsecurity systems and related equipment using an innovative biometricidentification technology. The Company invested $15,000 during the fiscal yearended June 30, 2002. This amount has been reflected as investment in thefinancial statements on June 30, 2002. 

**MINORITY INTEREST IN DATALOGIC INTERNATIONAL, INC.**

Datalogic Consulting, Inc., a Texas corporation, is an IT consulting firm and aSAS Institute Quality Partner. The Company has assisted Datalogic in connectionwith its merger plan with Topclick International, Inc. and other developmentstrategies. On April 25, 2001, but effective April 18, 2001, Datalogic Consulting, Inc. and the Company entered into an agreement whereby the Companywould receive 10 percent equity in the new company that would result from theconsummation of the proposed merger between Datalogic Consulting, Inc. andTopclick International, Inc. The merger plan between Datalogic and Toplick

was consummated on July 20, 2001.  The fee for the merger and acquisitionconsulting services the Company performed resulted in 2,666,922 shares ofDatalogic International, Inc. (the new name for Topclick International, Inc.).The Company has received 1.2 million shares as of the date of this report.

**MINORITY INTEREST IN LEXOR INTERNATIONAL, INC.**

On October 9, 2001, the Company entered into an agreement to provide merger andacquisition consulting services to Lexor International, Inc., a Marylandcorporation, and to assist Lexor in its business combination plan withPan American Automotive Corporation, a Delaware corporation. According to theagreement, the Company will be receiving 10% equity interest in the resultingcompany as compensation for its advisory and consulting services. On October 22,2001, Pan American signed a definitive agreement to acquire 100% of Lexor inexchange for stock in Pan American. This transaction was closed on November 5,2001. The Company has received 2,476,191 restricted shares of LexorInternational Inc.'s common stock (after a seven-to-one reverse split and asubsequent ten-to-one reverse split) as a fee for its service. 

Lexor International, Inc. is a leading manufacturer and supplier of premiumpedicure spa products. The Company is positioned to provide other product linesto the US and international beauty care industry. Headquartered in Baltimore,Maryland, Lexor International, Inc. also operates its own manufacturing facilities in Vietnam, an emerging market with high potential for growth.

As of the date of this Lexor has not begun the process of filing the requiredregistration statement to become a fully-reporting company.

**STRATEGIC ALLIANCES:**

**AGREEMENT WITH INTERNATIONAL CENTER FOR TRAINING AND CONSULTING,**

**VIETNAM'S MINISTRY OF TRADE AGREEMENT**

International Center for Training and Consulting (ICTC) is an organization underthe Ministry of Trade of Vietnam that promotes economics, trade, investment andtraining activities between Vietnam and foreign entities. PHI and ICTC signed anagreement in March 2001 to cooperate in the areas of trade, economics, andtechnology. ICTC is responsible for representing PHI in connection withappropriate Vietnamese organizations, businesses, and individual businessmen andinvestors in Vietnam. ICTC will also perform consulting services and provideinformation on various economic, trade and investment projects as may berequired by PHI. Fees between the parties will be negotiated on an as projectbasis
.  
As of the date of this report ICTC has introduced Vietnam-based DeltaElectromechanis Co., Ltd., a manufacturer of electric bicycles, and Nam HiepCo., Ltd., a manufacturer of organic fertilizer and construction company to PHIas potential joint venture partners; however, there have been no projectscompleted.
 

**AGREEMENT WITH CHU LAI INDUSTRIAL ZONE, QUANG NAM PROVINCE, VIETNAM**

 

The Company has entered into an agreement with Chu Lai Industrial Zone (the "ChuLai Zone") Authority, Quang Nam Province, Central Vietnam, to develop thisindustrial and export processing zone. On May 4, 2001, the government of Vietnamapproved a $50 million infrastructure development program targeting the Chu LaiZone. Construction began on May 18, 2001.

 

Chu Lai is centrally located near three Southeast Asian nations and isconvenient to Vietnam's Highway One, the Trans-Viet Railroad, an internationalport suitable for ocean-going ships and a major airport. Part of the overallplan that includes 27,000 acres, the North Chu Lai Industrial Zone has set aside740 acres for facilities engaged in paper products, agricultural, maritime andforest products, consumer electronics, leather and footwear manufacturing, foodand beverage operations and glassware and crystal fabrication.

 

Foreign investment entities approved for development projects in the Chu LaiIndustrial Zone enjoy opportunities to lease land at $0.001 per squarefoot/year, to secure 50-year leases renewable for 20 years, plus exemptions fromnational and provincial land use taxes, a 10-year income-tax holiday, andexemptions from export taxes from two to four years, based on the size of the

investment made.

 

According to this agreement, the Chu Lai Zone will provide the necessaryinfrastructure and the Company will be the manager organizing the differentcompanies that will operate their businesses at this location.

 

**MEMORANDUM OF AGREEMENT AND PRINCIPLE CONTRACT WITH VIETNAM'S CENTER OF TELECOMTECHNOLOGY**

 

Center of Telecom Technology (CTT) is an organization under the National Centerfor Natural Science and Technology of Vietnam.  Established in 1990, CTT'smission is to recruit and develop professionals in the areas of electronics,telecommunications, and information technology and to provide related productsbased on advanced technologies. One of CCT's largest customers is the VietnamesePostal and Telecommunications Services. CTT also focuses on ruraltelecommunications in Vietnam. 

 

On March 23, 2002, the Company entered into a Memorandum of Agreement andPrinciple Contract with the Center of Telecom Technology (CTT), Vietnam tocooperate in the areas of wireless access networks, consultancy services andother business ventures in Vietnam. The two parties will collaborate to form ajoint venture enterprise or strategic alliances with appropriate Vietnameseentities to provide wireless access services to consumers, businesses andgovernment organizations throughout Vietnam.

**JOINT VENTURES:**

 

**JOINT VENTURE AGREEMENT WITH HTV CO., LTD - MANNA TECHNOLOGIES**

 

The Company entered into a Joint Venture Agreement with HTV Co., Ltd. of Ho ChiMinh City, Vietnam in January 2001 to form Manna Technologies for the purpose ofmanufacturing LCD products. Manna Technologies received its permit from theVietnamese government in March 2001. The manufacturing plant is to be located inDong Nai Province, Vietnam. The Company is committed to assist in funding the cost of the plant, which is expected to be approximately $35 million.Management estimates that, once established, the plant may generate up to $500million in revenues by its third year of operation. The construction has notstarted and is expected to take at least nine months to complete after fundingis available.

 

**JOINT VENTURE AGREEMENT WITH MIMI BAN**

 

On November 27, 2001 by effective November 23, 2001, the Company signed a jointventure agreement with Mimi Ban, an individual, whereby Mimi Ban would transferthe liquid crystal display (LCD) technologies to Providential for the purpose ofsetting up and operating one or more LCD manufacturing plants in Vietnam.  According to the joint venture agreement, Mimi Ban will share 30%, ProvidentialHoldings, Inc. will share 60% and other business partners and investors,including HTV Co., Ltd., will share 10% of the net profits that will begenerated from any and all LCD plant(s) that will be established in Vietnam and

elsewhere as a result of this agreement. This joint venture agreement supersedesall prior agreements, arrangements and covenants, including but not limited tothe Joint Venture Agreement between Boxo, Inc. and the Company dated January 4,

2001 and the Letter of Intent between Boxo, Inc. and the Company dated December20, 2000 and any amendment thereof. As of the date of this report there havebeen no manufacturing plants set up or operating.

 

**JOINT VENTURE WITH MINH HIEU COMPANY**

 

On January 1, 2002 the Company entered into an agreement with Minh Hieu JointStock Company of Ho Chi Minh City, Vietnam to form "Providential JVC," a jointventure company under the laws of the Socialist Republic of Vietnam. Accordingto the terms of the agreement, the Company will contribute $140,000 to theinitial 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 will include industrial garments,packaging products and accessories. No capital contribution has been made todate.

 

**LETTERS OF INTENT:**

 

**LETTER OF INTENT WITH VINET COMMUNICATIONS, INC.**

 

Established in 1996, Vinet Communications is a leading full-service IT solutionsprovider that furnishes web hosting, web design, software programming, projectmanagement and other IT services to both the ethnic and mainstream markets.  TheCompany entered into a Letter of Intent in January 2001 to acquire a majorityinterest and ultimately 100% of Vinet Communications for a combination of cashand stock.  No agreement has been consummated as of the date of this report.
 

**LETTER OF INTENT WITH XMS EQUIPMENT, LLC**

 

XMS Equipment, an Arizona Limited Liability Corporation, specializes inproviding repair and manufacturing services for the mining industry locatedthroughout the United States and in other foreign countries including, but notlimited to, Canada, Chile, and Australia.

 

On November 27, 2001 the Company signed a Letter of Intent to acquire 75% of theoutstanding capital stock of XMS Equipment, LLC, an Arizona limited liabilitycompany, for $1,200,000 in cash. 

 

The Company is in the process of proposing a revised offer to acquire 100% ofXMS, subject to availability of funds and other conditions.

 

**LETTER OF INTENT WITH NETTEL GLOBAL COMMUNICATIONS CORP.**

 

Nettel Global Communication Corporation, a Delaware corporation with principalbusiness address in Portland, Oregon, provides long-distance telephony and VoIP(Voice-Over-Internet-Protocol) services to over 40 countries and operates anexport and import division under the name of Nettel Trading. Besides, Nettel isalso engaged in information technology services. Based on existing and pendingcontracts, Nettel expects combined revenues of the long-distance business,Nettel Trading and other divisions to exceed $150 million over the next twelvemonths.

 

On March 13, 2002 the Company entered into a Letter of Intent to acquire a 51%common stock of Nettel Global Communication Corp. (“Nettel") for a combinationof $2,250,000 in cash and $250,000 in common stock of Providential Holdings,Inc. In addition, if Nettel's aggregate net profits for the twelve-month periodcommencing the closing of this transaction are equal or greater than thethreshold  amount of $2,500,000 then Nettel shall be entitled to a dividendpayment of fifty percent (50%) of any and all profits in excess of saidthreshold amount for the above-mentioned period.

 

The consummation of this transaction is subject to the signing of a definitiveagreement between Nettel and the Company after a satisfactory due diligencereview by the Company and the availability of funds.

 

**SPECIAL NOTE ON ACQUISITIONS**

 

The Company is in the process of evaluating various opportunities andnegotiating to acquire other companies and technologies. Acquisitions entailnumerous risks, including difficulties in the assimilation of acquiredoperations and products, diversion of management's attention from other businessconcerns, amortization of acquired intangible assets and potential loss of keyemployees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although potential synergy may beachieved by acquisitions of related technologies and businesses, no assurancecan be given as to the Company's ability to integrate successfully anyoperations, personnel, services or products that have been acquired or might beacquired in the future. Failure to successfully assimilate acquiredorganizations could have a material adverse effect on the Company's business,financial condition and operating results.

 

**STRATEGY**

 

Providential Holdings' strategy is to:

 

      1. Identify, build, acquire and deploy valuable resources with distinctivecompetitive advantages;

 

      2. Identify, evaluate, participate and compete in attractive businessesthat have large, growing market potential;

 

      3. Design and implement best-of-breed management systems; and

 

      4. Build an attractive investment that includes points of exit forinvestors through capital appreciation or spin-offs of business units.

**ITEM 2. DESCRIPTION OF PROPERTIES**

 

Property and equipment at June 30, 2002 consist of the following:

 

    Furniture and equipment:                     $107,005

    Automobiles:                                              81,103

                                                                     -----------

                                                                      $188,108

    Less: Accumulated depreciation          (135,650)

                                                                    ------------

    Net:                                                            $ 52,458

                                                               ==========
 

The Company depreciates its furniture, equipment and automobiles on a straight-line basis over an estimated useful life of 5 years.

 

Depreciation and amortization expense was $30,317 and $132,950 for the twelveended June 30, 2002 and June 30, 2001, respectively.

 

On June 22, 2001 the Company completed sale of its corporate office building.The Company recognized a gain, net of broker and escrow fees, of $551,179 on thesale.  The Company currently leases its office space from the new owners at$4,263 per month. 

**ITEM 3. LEGAL PROCEEDINGS AND ARBITRATIONS**

 

Other than as set forth below, the company is not a party to any materialpending legal proceedings and, to the best of its knowledge, no such action byor against the company has been threatened. The majority of the legalproceedings and arbitration cases are related to the discontinued operations ofProvidential Securities, Inc.

 

**LEGAL PROCEEDING SETTLED AND UNPAID AS OF YEAR-END:**

 

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 June25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution forarbitration. On or about August 24, 2000, the Company's legal counsel negotiatedwith the Claimant's counsel and unilaterally reached a settlement that had notbeen approved by the Company. While the Company was in the process of re-negotiating the terms of said settlement, the Claimants filed a request forarbitration hearing before the National Association of Securities Dealers onOctober 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 $75,000.00plus pre-judgment interest, costs incurred in connection with the complaint, andother relief. Without admitting or denying any allegations, the Company reacheda settlement agreement with the Claimants whereby the Company would pay theClaimants a total of $62,500.00 plus $4,500.00 in administrative costs. As thedate of this report, the Company has paid $2,500 and is subject to an entry ofjudgment for $79,000.  The settlement amount has been accrued in theaccompanying 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

 

InSeptember 1997 Providential Securities, Inc. entered into a written LeaseAgreement to lease certain items of equipment from Green Tree Vendor Services,in return for which Providential Securities, Inc. agreed to pay thirty-sixmonthly installments, each in the amount of $1,552. On or about September 12,2000, and subsequently, Providential Securities, Inc. was unable to make themonthly payments to Claimant due to the lack of revenues following theinterruption and subsequent closure of its securities brokerage operations. (SeeNote 3) Claimant filed a complaint for money with the Superior Court of theState of California, County of Orange (Case No. 01CC02613) on February 23, 2001seeking $39,102 plus interest thereon at the legal rate from September 12, 2000.The claimant entered a judgment against Providential Securities, Inc., Henry Fahman and Tina Phan for $48,933. The judgment amount has been accrued in theaccompanying 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 ofNew Jersey (Case No. 00-4353(JAGF) on September 6, 2000 seeking damages of$500,000 against Jersey Transfer & Trust Company and Providential Holdings, Inc.for refusing to remove the restrictive legends and register a total of 568,332shares of Rule 144 stock held by Claimants. Providential Holdings, Inc. andJersey Transfer & Trust Company ("Defendants") relied on representation by theformer management of JR Consulting, Inc., later changed to ProvidentialHoldings, Inc., that the captioned shares were not free of all encumbrances andwere issued for invalid consideration. Defendants are vigorously defending thecase and have cross-claimed against the appropriate former management of JRConsulting, Inc. The sought amount of $500,000 has been accrued in theaccompanying 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 theLos Angeles County Superior Court, Northeast District on April 27, 2001 (CaseNo. 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'sfailure to honor her written agreement with Claimant. Mingman Hu was anindependent contractor with Providential Securities, Inc. and was responsiblefor any alleged claims by Claimant. Providential Securities, Inc. willvigorously defend this case.  The sought amount of $61,609 has been accrued in the accompanying consolidated financial statements.

 

LAWRENCE NGUYEN VS. HENRY D. FAHMAN, PROVIDENTIAL HOLDINGS, INC. AND HUNG NGUYEN aka TONY NGUYEN

 

On December 19, 2000 Henry D. Fahman executed a Demand Promissory Note andpledged 1,049,600 shares of common stock of Providential Holdings, Inc. for apersonal loan in the amount of $150,000 from Claimant. This note was amended onFebruary 22, 2001 to mature on March 19, 2001. Henry D. Fahman repaid $25,000 toClaimant and requested an extension for repayment of said note to July 15, 2001, which was agreed by Claimant and guaranteed by Mr. Derek Nguyen, a mutualfriend of both Claimant's and Henry D. Fahman's. On May 31, 2001, Claimant fileda complaint with the Superior Court of California, County of Orange, CentralJustice Center (Case No. 01CC07055) seeking $125,000 plus interest at the highest rate allowed by law from and after December 19, 2000, attorney fees andcosts, exemplary and punitive damages, and ownership of the pledged shares ofcommon stock of Providential Holdings, Inc. To date, Henry D. Fahman has repaida total of $45,000 toward the note and has expressed commitment to repay thebalance to the Claimant. The Company has not accrued any amount relating to thiscase 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 fromClaimant's Assignor to Claimant. Pursuant to the terms of the Agreement,Providential Securities, Inc. agreed to pay Nara Bank, N.A. the sum of $1,187.40per month for sixty months. On or about September 15, 2000, and subsequently,

Providential Securities, Inc. was unable to make the monthly payments toClaimant due to the lack of revenues following the interruption and subsequentclosure of its securities brokerage operations.  (See Note 3) Claimant filed acomplaint for money with the Superior Court of the State of California, Countyof Orange (Case No. 01CC07697) on June 14, 2001 seeking $30,873.40 plus interestthereon at the rate of ten percent (10%) per annum from September 15, 2000. Thiscase 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. Theunpaid judgment amount has been accrued in the accompanying consolidatedfinancial statements.

 

NGON VU VS. PROVIDENTIAL SECURITIES, INC.

 

Claimant was a former employee of Providential Securities, Inc. who was laid offin 2000 due to closure of business. The Claimant complained to the Department ofIndustrial Relations (DIR) for allegedly unpaid vacation and salaries. On June13, 2001, the DIR filed a request to enter a judgment against Providential Securities, Inc. for $9,074 including wages and interest, penalty, post hearingand filing fee. The sought amount of $9,074 has been accrued in the accompanyingconsolidated 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 Towwas unable to complete the work according to schedule, the Company hiredStradling Yocca Carson & Rauth to replace Mark Tow. Stradling Yocca Carson &Rauth completed the SB-2 Registration Statement and filed with the SEC on9/28/2000. 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 accompanyingconsolidated financial statements since the original agreement with Mark Tow wasfor a total service fee of $75,000 and the Company has already paid $25,000 as aretainer to be offset against the total fees. As of the date of this reportthere has been no filing for arbitration by Mark Tow. 

 

**ARBITRATION CASES**

 
The Company has several arbitration cases that are either pending or inpreliminary stages against Providential Securities, Inc. relating to the dailytrading operations of the Company.  The Company intends to defend each of thematters vigorously but may enter into a settlement where appropriate based onthe specific allegations involved and the potential cost to defend the matter.The total amount of damages sought by all the claimants of these cases is$131,850.  This amount has been accrued in the accompanying consolidatedfinancial statements.

 

 

**ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

          None.

**PART II**

**ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

 

On June 29, 1995 Company's Common Stock began trading on the Over the CounterBulletin Board (OTCBB) under the symbol "JRCI." Until December 12, 1999.  SinceDecember 12, 1999, the Common Stock was trading under the symbol "JRCIE." Following the corporate combination with Providential Securities, Inc. that was consummated on January 14, 2000, the Common Stock traded under the symbol"PRVH," until October 20, 2000 when it traded under the symbol "PRVHE" due tothe delay in its filing of Form 10-KSB for the period ended June 30, 2000. TheCompany's stock was trading under the symbol "PRVH" on the OTC Pink Sheets fromNovember 21, 2000 until April 3, 2002 when it was re-listed on the OTCBB.  Thefollowing sets forth the high and low prices of the Company's Common Stock forthe most recent month, most recent quarter and each quarter during the precedingtwo fiscal years.

 

The market for the Company's common stock is extremely limited and the pricesfor the Company's common stock quoted by brokers are not necessarily a reliableindication of the value of the Company's common stock.

Per Share Common Stock Prices by Quarter

For the Most Recent Month and Quarter

                                                                                                      High                        Low

 

     Month Ended September 30, 2002                                       0.090                        0.040

     Quarter Ended September 30, 2002                                                  0.100                            0.035

Per Share Common Stock Prices by Quarter

     For the Fiscal Year Ended on June 30, 2002

                                                 
                                                                                                      High                         Low

 

    Quarter Ended June 30, 2002                                                 0.850                          0.055

    Quarter Ended March 31, 2002                                              1.300                          0.050

    Quarter Ended December 31, 2001                                        1.000                          0.010

    Quarter Ended September 30, 2001                                       0.500                              0.010

 Per Share Common Stock Prices by Quarter

     For the Fiscal Year Ended on June 30, 2001

 

                                                                                                      High                           Low

 

     Quarter Ended June 30, 2001                                                0.500                                0.001

     Quarter Ended March 31, 2001                                             0.500                                0.001

     Quarter Ended December 31, 2000                                       0.312                            0.010

     Quarter Ended September 30, 2000                                      0.687                            0.312

**Holders of Common Equity:**

 

There are approximately 1,200 shareholders of record of the Company's commonstock.

 

**Dividends:**

 

The Company has not declared or paid a cash dividend to common stockshareholders since the Company's inception.  The Board of Directors presentlyintends to retain any earnings to finance company operations and does not expectto authorize cash dividends to common shareholders in the foreseeable future.Any payment of cash dividends in the future will depend upon the company'searnings, capital requirements and other factors.

 

The Company intends to issue share dividends from ATC Technology Corp. toshareholders of record in the quarter ending June 30, 2003, subject to certainconditions.

 

**ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.**

 

Except for the audited historical information contained herein, this reportspecifies forward-looking statements of management of the Company within themeaning of Section 27a of the Securities Act of 1933 and Section 21e of theSecurities Exchange Act of 1934 ("forward-looking statements") including,without limitation, forward-looking statements regarding the company's

expectations, beliefs, intentions and future strategies. Forward-lookingstatements are statements that estimate the happening of future events and arenot based on historical facts. Forward- looking statements may be identified bythe use of forward-looking terminology, such as "could", "may", "will","expect", "shall", "estimate", "anticipate", "probable", "possible", "should","continue", "intend" or similar terms, variations of those terms or the negativeof those terms.  The forward-looking statements specified in this report havebeen compiled by management of the Company on the basis of assumptions made bymanagement and considered by management to be reasonable. Future operatingresults of the Company, however, are impossible to predict and norepresentation, guaranty, or warranty is to be inferred from those forward-looking statements.  The assumptions used for purposes of the forward-lookingstatements specified in this report represent estimates of future events and aresubject to uncertainty as to possible changes in economic, legislative,industry, and other circumstances.  As a result, the identification andinterpretation of data and other information and their use in developing andselecting assumptions from and among reasonable alternatives require theexercise of judgment. To the extent that the assumed events do not occur, theoutcome may vary substantially from anticipated or projected results, and,accordingly, no opinion is expressed on the achievability of those forward-looking statements.  In addition, those forward-looking statements have beencompiled as of the date of this report and should be evaluated withconsideration of any changes occurring after the date of this report.  Noassurance can be given that any of the assumptions relating to the forward-looking statements specified in this report are accurate and the companyassumes no obligation to update any such forward-looking statements.

 

**RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001**

 

**Revenues:**

 

Except for $602,000 of consulting fee income, we had no revenues for the twelvemonths ended June 30, 2002, as compared to $659,547 for the year ended June 30,2001.  The decrease in revenues is due to the discontinuance of the securitiesbrokerage operations of Providential Securities Inc. in 2001. 

 

**Operating Expenses:**

 

We incurred total operating expenses of $1,066,365 for the year ended June 30,2002 as compared to $2,291,245 for the year ended June 30, 2001. The decrease inoperating expenses is primarily the result of the discontinuance of thesecurities brokerage operations, the reduction of employees and the decrease inlitigation costs.