ASSETS
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
      CURRENT ASSETS
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Cash and cash
      equivalents
      
      
      
      
      
      
      
      
      
      
       $ 96,747
      
      
      
      
      
    
    
      
      
      
      Marketable securities
      
      1,102,335
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Other current
      assets
      
      
      
      
      
      
      
      
      
                          
      3,300 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Total Current
      Assets
      
      
      
      
      
      
      
      
      
                          
      1,202,382 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
      PROPERTY & EQUIPMENT,
      net of accumulated depreciation of $164,481
      
      
      
      
      
      
      
      
      
      
      23,627 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
                       
      $1,226,009   
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
      
      LIABILITIES
      AND SHAREHOLDERS' DEFICIT
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
      CURRENT LIABILITIES
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Accounts payable
      and accrued expenses
      
      
      
      
      
      
      
      
      
       $ 4,062,761
      
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Convertible
      promissory notes
      
      
      
      
      
      
      
      
      
                     
      1,100,000 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Short-term notes
      payable
      
      
      
      
      
      
      
      
      
                     
      1,541,498 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Current portion
      of notes payable
      
      
      
      
      
      
      
      
      
                        
      137,089 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Due to officer
      
      
      
      
      
      
      
      
      
                        
      146,916
      
      
      
      
      
    
    
      
      
      
      Due to preferred stockholders
      
      450,000
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Other current
      liabilities
      
      
      
      
      
      
      
      
      
                        
      165,055 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Total Current
      Liabilities
      
      
      
      
      
      
      
      
      
                     
      7,603,319 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
      NOTES PAYABLE
      
      
      
      
      
      
      
      
      
      
      
                         
      198,332 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Total liabilities
      
      
      
      
      
      
      
      
      
                     
      7,801,651
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      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, 61,253,119 shares issued and
      outstanding
      
      
      
      
      
      
      
      
      
                     
      2,570,125
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Treasury stock,
      14,805,200 shares, $.04 par value common stock
      
      
      
      
      
      
      
      
      
                       
      (772,312)
      
      
      
      
      
    
    
      
      
      
      Prepaid consulting fees
      
      (591,190)
    
    
      
      
      
      Stock subscription receivable
      
      (244,660)
    
    
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Additional paid-in
      capital
      
      
      
      
      
      
      
                     
      5,393,054 
      
      
      
      
      
    
    
      
      
      
      Shares to be cancelled
      
      (120,000)
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Accumulated
      other comprehensive loss
      
      
      
      
      
      
      
      
      
                       
      (408,004)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Accumulated
      deficit
      
      
      
      
      
      
      
      
      
                  
      (12,402,655)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Total shareholders'
      deficit
      
      
      
      
      
      
      
      
      
      
                    
      (6,575,642)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       $ 1,226,009

 
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      The Years Ended
      June 30,
      
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      2003
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      2002
      
      
      
      
      
      
    
    
      
      
      
      
      
      
      REVENUES
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Consulting and
      advisory fee income
      
      
      
      
      
      
      
      
      
       $ 1,386,635
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       $ 602,000
      
      
      
      
      
      
    
    
       
      
      Furniture sales
      
      61,800
       
      
      -
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Net Revenues
      
      
      
      
      
      
      
      
      
      1,448,435
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
                
      602,000 
      
      
      
      
      
    
    
      
      Cost of sales - furniture
      
      56,628
       
      
      -
    
    
      
      Gross Profit
      
      1,391,807
       
      
      602,000
    
    
      
      
      
      
      
      
      OPERATING EXPENSES
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Salaries and
      wages
      
      
      
      
      
      
      
      
      
                               
      - 
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
                    
      7,280 
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Professional
      services, including non-cash compensation
      
      
      
      
      
      
      
      
                               
      1,221,054
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
                    
      626,878
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      General and administrative
      
      
      
      
      
      
      
      
      
      663,863
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      432,207
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Total Operating
      Expenses
      
      
      
      
      
      
      
      
      
      
      
               
      1,884,917
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      1,066,365
      
      
      
      
      
      
    
    
      
      
      
      
      
      
      LOSS FROM OPERATIONS
      
      
      
      
      
      
      
      
      
      
      
      (493,110)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (464,365)
      
      
      
      
      
    
    
      
      
      
      
      
      
      OTHER INCOME
      (EXPENSE)
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Interest expense
      
      
      
      
      
      
      
      
      
      
      
       (691,120)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (922,209)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Loss on sale
      of marketable securities
      
      
      
      
      
      
      
      
      
                   
      (432,775)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
                   
      (9,155)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Impairment of
      assets
      
      
      
      
      
      
      
      
      
      
      
         
      (180,500)
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      (381,560)
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Gain on sale
      of fixed assets
      
      
      
      
      
      
      
      
      
                           
      -
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
                      
      3,768
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Gain on legal
      settlement
      
      
      
      
      
      
      
      
      
                       
      81,850 
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
                  
      140,000
      
      
      
      
      
    
    
       
      
      Gain on conversion of notes
      
      467,212
       
      
      383,455
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      Other income
      (expense)
      
      
      
      
      
      
      
      
      
      
      
                      
      (2,256) 
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      11,323
      
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      Net Other Income
      (Expense)
      
      
      
      
      
      
      
      
      
      
      
      (757,589)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (774,378)
      
      
      
      
      
    
    
      
      
      
      
      
      
      LOSS FROM CONTINUING
      OPERATIONS BEFORE INCOME TAX
      
      
      
      
      
      
      
      
      
      
      
      (1,250,699)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (1,238,743)
      
      
      
      
      
    
    
      
      
      
      
      
      
      PROVISION FOR
      INCOME TAX
      
      
      
      
      
      
      
      
      
      
      
                            
      800
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      800 
      
      
      
      
      
      
    
    
      
      
      
      
      
      
      LOSS FROM CONTINUING
      OPERATIONS
      
      
      
      
      
      
      
      
      
      
      
      (1,251,499)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (1,239,543)
      
      
      
      
      
    
    
      
      
      
      
      
      GAIN ON DISPOSAL
      OF A SUBSIDIARY
      
      
      
      
      
      
      
      
      
      
                     
      248,560
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      -
      
      
      
      
      
    
    
      
      
      
      
      
      
      NET LOSS
      
      
      
      
      
      
      
      
      
      
      
      (1,002,939)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (1,239,543)
      
      
      
      
      
    
    
      
      
      
      
      
      
      DIVIDEND REQUIREMENT
      OF PREFERRED STOCK
      
      
      
      
      
      
      
      
      
      
      
      (54,000)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (54,000)
      
      
      
      
      
    
    
      
      
      
      
      
      
      NET LOSS APPLICABLE
      TO COMMON SHAREHOLDERS
      
      
      
      
      
      
      
      
      
      
      
      (1,056,939)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      (1,293,543)

 
      
      
      
      
      
      
      
      
      
      
      OTHER COMPREHENSIVE
      (LOSS)/GAIN
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
           
      Unrealized loss on investments available for sale
      
      
      
      
      
      
      
      
      
      
      
      (262,995)
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
                    
      (366,820)
      
      
      
      
      
    
    
      
      
      
      
      
      COMPREHENSIVE
      LOSS
      
      
      
      
      
      
      
      
      
      
      
      $(1,319,934)
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
               
      $(1,660,363)
      
      
      
      
      
    
    
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
       
      
      
      
      
    
    
      
      NET LOSS PER SHARE - BASIC AND DILUTED
      
      
      
      
      
      
    
    
      
      
      
      Continued operations
      
      $(0.03)
      
      
      
      $(0.05)
    
    
      
      
      
      Discontinued operations
      
      $0.01
      
      
      
      $-
    
    
      
             Net loss
      
      $(0.02)
      
      
      
      $(0.05)
    
    
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      Weighted average
      number of shares outstanding - basic and diluted
      
      
      
      
      
      
      
      
      
      
      
      42,858,502
      
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
           
      28,648,000

 

 
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      2003
      
      
      
      
      
      
      
      
      
      
      2002
      
      
      
      
      
      
    
    
      
      
      
      
      CASH FLOWS FROM
      OPERATING ACTIVITIES
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Net loss from
      continuing operations 
      
      
      
      
      
      
      
      
      
      $ (1,002,938)
      
      
      
      
      
      
      
      
        
      $ (1,239,543)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Adjustments to
      reconcile net loss from continued operations to
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
        net cash
      used in continued operating activities:
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Gain on disposal
      of property
      
      
      
      
      
      
      
      
      
         
      - 
      
      
      
      
      
      
      
      
              
      ( 3,768)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Legal settlement
      
      
      
      
      
      
      
      
      
                 
      (81,850)
      
      
      
      
      
      
      
      
                   
      (140,000)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Shares issued
      for service
      
      
      
      
      
      
      
      
      
      55,000
      
      
      
      
      
      
      
      
                  
      1,803,600
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Loss on sale
      of marketable securities
      
      
      
      
      
      
      
      
      
      432,775
      
      
      
      
      
      
      
      
      
                   
      9,155 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Depreciation
      
      
      
      
      
      
      
      
      
      
      28,831 
      
      
      
      
      
      
      
      
      
                 
      30,317 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Amortization
      of deferred revenue
      
      
      
      
      
      
      
      
      
      (11,552)
      
      
      
      
      
      
      
      
               
      (125,000)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Allowance for
      bad debt
      
      
      
      
      
      
      
      
      
      217,577
      
      
      
      
      
      
      
      
      
                 
      - 
      
      
      
      
      
    
    
       
       
      
      Loss on Investment
      
      180,500
      
      381,560
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Beneficial conversion
      and registration penalty
      
      
      
      
      
      
      
      
      
      400,073
      
      
      
      
      
      
      
      
                
      -
      
      
      
      
      
    
    
       
       
      
      Amortization of prepaid consulting fees
      
      619,772
      
      -
    
    
       
       
      
      Securities paid for consulting services
      
      -
      
      103,000
    
    
       
       
      
      Securities received for consulting services
      
      (1,436,884)
      
      (486,820)
    
    
       
       
      
      Gain on settlement of debts
      
      (472,420)
      
      (383,455)
    
    
       
       
      
      Gain on disposal of subsidiary
      
      (248,560)
      
      -
    
    
       
       
      
      Shares issued for interest on convertible note
      
      61,340
      
      -
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      CHANGES IN OPERATING
      ASSETS AND LIABILITIES
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
                           
      
      
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      (Increase) decrease
      in prepaid expenses and other assets
      
      
      
      
      
      
      
      
      
                             
      29,371
      
      
      
      
      
      
      
      
      
                
      (1,761,168)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Increase (decrease)
      in accounts payable
      
      
      
      
      
      
      
      
      
      55,442
      
      
      
      
      
      
      
      
                 
      (506,868) 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Increase (decrease)
      in accrued expenses
      
      
      
      
      
      
      
      
      
      292,856
      
      
      
      
      
      
      
      
      
                
      1,548,700 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Minority interest
      
      
      
      
      
      
      
      
      
      -
      
      
      
      
      
      
      
                      
      128,560
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Increase (decrease)
      in other liabilities 
      
      
      
      
      
      
      
      
      
      113,448
      
      
      
      
      
      
      
      
      
                
      (69,864)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      NET CASH USED
      IN OPERATING ACTIVITIES 
      
      
      
      
      
      
      
      
      
      (767,219)
      
      
      
      
      
      
      
      
      (711,594)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
      
      CASH FLOWS FROM
      INVESTING ACTIVITIES
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Sale of fixed
      assets
      
      
      
      
      
      
      
      
      
      - 
      
      
      
      
      
      
      
      
      
                           
      4,268
      
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Proceeds received
      from sale of marketable securities 
      
      
      
      
      
      
      
      
      
      24,243
      
      
      
      
      
      
      
      
                
      19,024
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      NET CASH PROVIDED
      BY INVESTING ACTIVITIES 
      
      
      
      
      
      
      
      
      
      24,243
      
      
      
      
      
      
      
      
               
      23,292 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
      
      CASH FLOWS FROM
      FINANCING ACTIVITIES
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Proceeds from
      sale of common stock
      
      
      
      
      
      
      
      
      
      657,908
      
      
      
      
      
      
      
      
                
      -
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      Proceeds from the
      exercise of stock options
      
      
      
      
      
               
      125,000
      
      
      
      
      
      
      
      
            
      -
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Borrowings on
      notes payable
      
      
      
      
      
      
      
      
      
      147,908
      
      
      
      
      
      
      
      
                 
      594,277
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Payments on notes
      payable
      
      
      
      
      
      
      
      
      
                          
      (70,225)
      
      
      
      
      
      
      
      
               
      (13,337)
      
      
      
      
      
    
    
       
      
      Borrowings from officer
      
      -
      
      97,855
    
    
      
      
      
       
      
      
      
      
      
      
      Payments on advances
      from officer
      
      
      
      
      
      
      
      
      
                          
      (25,581)
      
      
      
      
      
      
      
      
                
      -
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      NET CASH PROVIDED
      BY FINANCING ACTIVITIES 
      
      
      
      
      
      
      
      
      
      835,010
      
      
      
      
      
      
      
      
            
      678,795 
      
      
      
      
      
    
    
      
      
      
      
      NET INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
      
      
      
      
      
      
      
      
      
                 
      92,034
      
      
      
      
      
      
      
      
              
      (9,507)
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
      
      CASH AND CASH
      EQUIVALENTS, beginning of period
      
      
      
      
      
      
      
      
      
      4,713 
      
      
      
      
      
      
      
      
      
                
      14,220 
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
      
      CASH AND CASH
      EQUIVALENTS, end of period
      
      
      
      
      
      
      
      
      
      $ 96,747
      
      
      
      
      
      
      
      
       $ 4,713
      
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
      
      SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATION:
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
      Cash paid during
      the period for:
      
      
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
       
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Interest
      
      
      
      
      
      
      
      
      
          
      $ 35,585
      
      
      
      
      
      
      
      
       $ 15,394
      
      
      
      
      
      
    
    
      
      
      
       
      
      
      
      
      
      
       
      
      
      
      
      
      
      
       
      
      
      
      
      
      
      
      
      
      
      
      Income taxes
      
      
      
      
      
      
      
      
      
          
      $          -
      
      
      
      
      
      
      
      
       $     
      800

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
  
  
  
  
        
  
  
  
  
  NATURE OF BUSINESS AND REORGANIZATION 
  
  
  
   
  
  
  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. The company changed its name to Providential Securities,
  Inc., a Nevada corporation, on January 12, 2000, and 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.  Due to the results of a NASD examination, Providential
  Securities withdrew its membership and ceased its securities brokerage business
  in October 2000.  (See Note
  3)
  
  
  
   
  
  
  
  
  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 to Havilland
  Limited, all of the shares of Diva owned by PHI as well as to assign all of its
  rights, title and interest in an Option Agreement to Havilland Limited. 
  (The Option Agreement gave PHI the option to purchase additional shares of Diva's
  common stock at its $.001 par value in order for PHI to maintain at least a 65%
  interest in Diva's outstanding common shares.)  PHI's officers and directors
  resigned their positions and the shareholders of Providential assumed control
  of the two entities (together as "the Company"). The PHI shares are restricted
  against resale pursuant to the provisions of federal and state securities laws.
  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.  In the accompanying financials statements,
  the capital structure and losses per share of Providential have been retroactively
  restated to reflect the acquisition as if it occurred at the beginning of the
  period. The operations of PHI have been included with those of Providential from
  the acquisition date. 
  
  
  
   
  
  
  The sale of Diva was consummated on June
  30, 2000, whereby all of the shares of Diva owned by PHI 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 PHI to officers of
  Diva amounting to $617,781, the amounts due to PHI from Diva amounting to $94,843
  and the return of 135,000 shares of common stock of PHI owned by 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 the assets and liabilities
  of PHI.  Included in the total gain of $1.2 million was Diva's net profit
  of $245,606 earned during the holding period from January 14, 2000 to June 30,
  2000. 
   
  
  
  During February 2000 the Company formed
  a California corporation, Providential Clearing, Inc. as a vehicle to effectuate
  the purchase of a self‐clearing broker‐dealer and to operate a securities clearing
  firm.  As of June 30, 2003 this subsidiary has had no operations.
  
  
   
  
  
  <p span style="font-family:
"Times New Roman"; margin-top:1; margin-bottom:1">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 has cancelled them subsequently.
  
  
  <p span style="font-family:
"Courier New"; margin-top:1; margin-bottom:1"> 
  
  
  <p span style="font-family:
"Times New Roman"; margin-top:1; margin-bottom:1">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 purchase transaction with ATC
  has not been consummated as of June 30, 2003.  
  
  
  <p span style="font-family:
"Courier New"; margin-top:1; margin-bottom:1"> 
  
  
  
  On November 20, 2002 the Company entered into an agreement to acquire
  51% of the outstanding common stock of Clear Pass, Inc. ("ClearPass"), 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.  
  
  
  <p span style="font-family:
"Courier New"; margin-top:1; margin-bottom:1"> 
  
  
  <p span style="font-family:
"Times New Roman"; margin-top:1; margin-bottom:1">In May
  2003, the Company formed a new subsidiary under the name of Providential Capital
  to provide financial products and services for the micro-small cap arenas and
  to manage the Company's proprietary merger and acquisition activities.  Providential
  Capital will focus its attention on the underserved segment of smaller companies
  in the United States and abroad. Providential Capital began providing merger and
  acquisition advisory services to its clients since the fourth quarter of the fiscal
  year ended June 30, 2003.
  <p span style="font-family:
"Times New Roman"; margin-top:1; margin-bottom:1"> 
  
  
  
  NOTE 2 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
  
  
  
   
  
  
  
  
  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.
  
  
  
   
  
  
  
  
  CASH AND CASH EQUIVALENTS
  
  
  
   
  
  
  
  
  The Company considers all liquid investments
  with a maturity of three months or less from the date of purchase that are readily
  convertible into cash to be cash equivalents.
  
  
  
   
  
  
  
  
  MARKETABLE SECURITIES
  
  
  
   
  
  
  
  
  The Company's securities are classified
  as available‐for‐sale and, as such, are carried at fair value. Securities classified
  as available‐for‐sale may be sold in response to changes in interest rates, liquidity
  needs, and for other purposes. The Company does not currently have any held‐to‐maturity
  or trading securities.
  
  
  
   
  
  
  
  
  Unrealized holding gains and losses for
  available‐for‐sale securities are excluded from earnings and reported as a separate
  component of stockholder's equity. Realized gains and losses for securities classified
  as available‐for‐sale are reported in earnings based upon the adjusted cost of
  the specific security sold.
  
  
  
   
  
  
  
  
  IMPAIRMENT OF LONG‐LIVED ASSETS
  
  
  
   
  
  
  
  
  Long‐lived assets are reviewed for impairment
  whenever events or changes in circumstances indicate that the carrying amount
  may not be recoverable. If the sum of the expected undiscounted cash flows is
  less than the carrying value of the related asset or group of assets, a loss is
  recognized for the difference between the fair value and carrying value of the
  asset or group of assets.
  
  
  
  
          
  
  
  
  
  
  PROPERTY AND EQUIPMENT
  
  
  
   
  
  
  
  
  Property and equipment are stated at cost.
  Maintenance and repair costs are charged to expense as incurred; costs of major
  additions and betterments are capitalized. When property and equipment are sold
  or otherwise disposed of, the cost and related accumulated depreciation are eliminated
  from the accounts and any resulting gain or loss is reflected in income.
  
  
  
   
  
  
  
  
  DEPRECIATION AND AMORTIZATION
  
  
  
   
  
  
  
  
  The cost of property and equipment is depreciated
  over the estimated useful lives of the related assets.  Depreciation and
  amortization of fixed assets are computed on a straight‐line basis.
  
  
  
   
  
  
  
  
  
  
  
  NET EARNINGS (LOSS) PER SHARE
  
  
  
   
  
  
  
  
  The Company adopted the provisions of Statement
  of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 128").
  SFAS No. 128 eliminates the presentation of primary and fully diluted earnings
  per share ("EPS") and requires presentation of basic and diluted EPS. Basic EPS
  is computed by dividing income (loss) available to common stockholders 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.
  Common stock equivalents have been excluded from the calculation of weighted‐average
  shares for purposes of calculating diluted earnings per share for 2002 and 2001;
  as such inclusion is anti‐dilutive.  
  
  
  
   





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

#### CHU LAI INDUSTRIAL ZONE, QUANG NAM PROVINCE,
VIETNAM

#### PROVIMEX

##### JOINT VENTURE
WITH MINH HIEU COMPANY

#### OFFICE SPACE LEASE

#### EQUIPMENT LEASES

# NOTE 18 - SUBSEQUENT EVENT

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, 2003





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 by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the Company was required to file such reports), and (2)
has been 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 Regulation S-B is not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ ]







State the issuer's revenues for the fiscal year ended 6/30/2003:
$1,448,435.00
 





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
October 13, 2003 was $9,721,357 based on a price of $0.119 per share.

 

The number of shares of Common Stock, $.04
par value per share, outstanding as of June 30, 2003 was: 71,253,119 shares (including
14,805,200 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 A SUBSTANTIALLY
LOWER NUMBER OF INTERESTED CUSTOMERS THAN THE COMPANY ANTICIPATES; THE FAILURE TO
CONSUMMATE THE PENDING JOINT VENTURES AND ACQUISITIONS 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; GENERAL ECONOMIC AND MARKET
FACTORS, INCLUDING CHANGES IN SECURITIES AND FINANCIAL MARKETS; TECHNOLOGY OBSOLESCENCE,
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
 































































































Providential Holdings,
Inc., ("PHI") a diversified holding company committed to increasing shareholder
value through growth, focuses on selective technologies, financial services, international
markets, and special situations. 
 
Products and services
include  mobile entertainment systems, information technology, identification
technology, infrastructure development, telecommunications, trade commerce, and
mergers and acquisitions, especially for companies in the U.S. and emerging overseas
markets with high potential for growth.



The company's objective
is to develop, operate and participate in selected businesses chosen to strategically
utilize its existing and future distinctive competencies and generate attractive
risk-adjusted rates of return for its shareholders and investors.







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.







Since November 2000,
the Company has reorganized its primary scope of business to the present form to
focus on four main areas: (1)Technologies, (2) Financial services, (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 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. The total gain resulting from
the sale of Diva of approximately $1.2 million was considered in the allocation
of the purchase price to the assets and liabilities of Providential. Included in
the total gain of $1.2 million was Diva's net profit of $245,606 earned during the
interim holding period 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 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 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 Design Award from IDSA (Industrial Designers Society
of America), is one of the finest and affordable car theater systems available to
consumers. With its wireless viewing monitor, which attaches easily to the back
of any automobile headrest, the patent-pending VidegoTM system provides consumers
with the highest quality DVD and Video players and hours of entertainment while
traveling.

 
Launched in 2002,
the GamegoTM allows people of all ages the opportunity to play video games in the
car, RV, SUV, van or boat by connecting our product to an existing Microsoft X-BoxTM,
Sony Playstation2TM, or Nintendo GamecubeTM. Like the VidegoTM, the GamegoTM also
has a viewing monitor which attaches easily to the back of any automobile headrest.
Its portability enables video-gamers to take their favorite videogames out of the
home and to the places they want to be.  ATC Technology Corporation currently
sells both of these U.S. manufactured exciting products in the United States, Mexico,
Canada, Denmark, Panama, and Great Britain. It is also selling direct to well-known
car dealers such as: Land Rover, Mercedes Benz, Lexus, Ford, Honda and Toyota. The
company soon expects to see its products on the shelves of major superstores throughout
North America.





 
On August 23, 2002,
the Company entered into a purchase agreement with ATC Technology Corp. 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 above-mentioned
notes were later amended to bear an interest rate of 12% per annum and mature on
December 31, 2003, and March 31, 2004, respectively.
 
The
purchase agreement  was initially scheduled for closing on September 12, 2002,
but 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 requirement for
additional review of ATC's recent developments.









PROVIMEX DIVISION





Provimex is a wholly-owned
division of the Company originally formed on April 10, 2001 under the name "Providential
Imex", to focus on trade commerce with Vietnam. This division changed its name to
Provimex on July 5, 2001. Provimex is engaged in exporting and importing of industrial
and consumer goods. The Company believes that its trade commerce business will grow
substantially as a result of the ratification of the Trade Agreement between Vietnam
and the United States. Provimex only began to generate revenues from its import
and export activities since August 2002.  For the fiscal year ended June 30,
2003, this division recorded $61,800 in sales.  Provimex recently signed an
agreement with Vietnam-based CDI CO, Ltd., to export titanium from Vietnam and expects
to increase its revenue though this operation and other new business developments.







PROVIDENTIAL CAPITAL







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. and is actively involved with new clients on an ongoing basis.







CLEARPASS
On November 20, 2002
the Company entered into an agreement to acquire 51% of the outstanding common stock
of Clear Pass, Inc., a Nevada corporation, in exchange for $1,500,000 and 3,000,000
shares of restricted common stock of the Company.  Under an agreement with
PASS21 Co, Ltd., a Korean corporation, Clear Pass had the licensing rights to distribute
and market PASS21 Co.'s biometric products in the US, Canada and Europe. Besides
a total of $175,500.00 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, Inc. This agreement between Clear Pass and the Company
was rescinded on May 9, 2003. The Company has received 3,000,000 shares of the Company's
restricted common stock back from Clear Pass, Inc. and has cancelled the $1,324,500.00
promissory note. Concurrently, the Company has set up a new wholly-owned subsidiary
under the name of ClearPass, a DBA of Providential Holdings, Inc., to operate as
a systems integrator and provider of total biometric security and access management
solutions. On March 26, 2003 the Company signed a stock purchase agreement to acquire
up to 51% of Real ID Technology Co, Ltd., a Korean corporation, and planned to market
Real ID Technology's biometric products through the ClearPass subsidiary. The stock
purchase agreement with Real ID Technology was later rescinded on August 26, 2003.
ClearPass is in the process of developing its own biometric systems and forming
alliance with existing biometric product manufacturers.



 

TOUCHLINK COMMUNICATIONS

A wholly-owned DBA of Providential Holdings,
Inc, Touchlink Communications was formed on July 7, 2003 to provide point-of-sale
(POS) terminals and prepaid calling cards to retailers, convenient stores 
and non-profit organizations across the US. This POS system enables merchants and
participating partners to offer prepaid products without purchasing or storing any
inventory in advance.

Touchlink Communications has signed an
agreement with KAGRO (Korean American Grocer Association) to provide pre-paid services
to its network of 25,000 member stores in the US and Canada.  As of the date
of this report, Touchlink Communications has not generated any revenues.

AGREEMENTS WITH NETTEL
HOLDINGS, INC.

 

n March 13, 2002 the Company entered into
a Letter of Intent to acquire a 51% common stock of Nettel Global Communication
Corp. ("Nettel"), a Delaware corporation,  for a combination of $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 period commencing the closing
of this transaction were equal or greater than the threshold amount of $2,500,000
then Nettel would be entitled to a dividend payment of fifty percent (50%) of any
and all profits in excess of said threshold amount for the above-mentioned period.

 

On December 3, 2002 the Company entered into
a Stock Purchase Agreement with Nettel whereby the Company would acquire 46.5% of
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 90 days after closing. On January 17, 2003 an Amendment
to Stock Purchase Agreement was entered into by and between the Company and Nettel
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 2% penalty
per month on any unpaid balances of the notes for a maximum period of 60 days after
the respective maturity dates. If the notes were not liquidated in their entirety
after the penalty periods, the Company would surrender any unpaid portions of Nettel's
stock back to Nettel. 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 later rescinded on May 19, 2003. The Company cancelled
the afore-mentioned promissory notes and treated the total of $49,000 investment
as of the end of June 30, 2003 as a receivable from Nettel.

 

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 plan with a fully reporting publicly-traded
company. On May 23, 2003 Nettle consummated a merger plan with Bio Standard Corp,
a Florida corporation, and changed the name of the combined company to Nettel Holdings,
Inc., a Florida corporation. The Company received 2,250,000 shares of common stock
of Nettel Holdings, Inc. as compensation for its advisory and consulting services
to Nettel.



 

Nettel provides long-distance telephony and
VoIP (Voice-Over-Internet-Protocol) services to over 40 countries, owns a software
development company (Entec Software) and operates an export and import division
(Nettel Trading). Based on existing and pending contracts, Nettel expects combined
revenues of the long-distance business, Nettel Trading and other divisions to exceed
$100 million over the next twelve months.

 

AGREEMENTS WITH LEXOR INCORPORATED AND LEXOR
HOLDINGS, INC.

 

On October 9, 2001, the Company entered into
an 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 Pan American Automotive Corporation, 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. The Company
has received 2,476,191 restricted shares of Lexor International Inc.'s common stock
(after a seven-to-one reverse split and a subsequent ten-to-one reverse split) as
a fee for its service.

 



The transaction between Pan American and Lexor
was rescinded on October 23, 2002, after which Pan American changed its name to
Grayling Wireless USA Inc. and effected a one-for-hundred reverse split. The Company
currently holds 24,762 shares of common stock of Grayling Wireless but has not recognized
the value of these shares on its books.



 



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 received 1,500,000 shares
of common stock of Lexor Holdings, Inc. (approximately 10% of the issued and outstanding
shares) as compensation for its advisory and consulting services. 



 

Lexor International, Inc. is a leading manufacturer
and supplier of premium pedicure spa products. The Company is positioned to provide
other product lines to 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.

 

AGREEMENT WITH DATALOGIC INTERNATIONAL, INC.

 

Datalogic Consulting, Inc., a Texas corporation,
is an IT consulting firm and a SAS Institute Quality Partner. The Company has assisted
Datalogic in connection with its merger plan with Topclick International, Inc. and
other development strategies. On April 25, 2001, but effective April 18, 2001, Datalogic
Consulting, Inc. and the Company entered into an agreement whereby the Company would
receive 10 percent equity in the new company that would result from the consummation
of the proposed merger between Datalogic Consulting, Inc. and Topclick International,
Inc. The merger plan between Datalogic and Toplick was consummated on July 20, 2001.
The fee for the merger and acquisition consulting services the Company performed
resulted in 2,666,922 shares of Datalogic International, Inc. (the new name for
Topclick International, Inc.). The Company has received and subsequently disposed
of 1.2 million shares of Datalogic International.







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 under the Ministry of Trade
of Vietnam that promotes economics, trade, investment and training activities between
Vietnam and foreign entities. PHI and ICTC signed an agreement in March 2001 to
cooperate in the areas of trade, economics, and technology. ICTC is responsible
for representing PHI 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 PHI. 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.

 









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

 







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

 







Chu Lai is centrally located near three Southeast
Asian nations and is convenient to Vietnam's Highway One, the Trans-Viet Railroad,
an international port suitable for ocean-going ships and a major airport. Part of
the overall plan that includes 27,000 acres, the North Chu Lai Industrial Zone has
set aside 740 acres for facilities engaged in paper products, agricultural, maritime
and forest products, consumer electronics, leather and footwear manufacturing, food
and beverage operations and glassware and crystal fabrication.

 







Foreign investment entities approved for development
projects in the Chu Lai Industrial Zone enjoy opportunities to lease land at $0.001
per square foot/year, to secure 50-year leases renewable for 20 years, plus exemptions
from national and provincial land use taxes, a 10-year income-tax holiday, and exemptions
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 necessary infrastructure and the Company will be the manager organizing
the different companies that will operate their businesses at this location.


 







MEMORANDUM OF AGREEMENT AND PRINCIPLE CONTRACT
WITH VIETNAM'S CENTER OF TELECOM TECHNOLOGY

 







Center of Telecom Technology (CTT) is an organization
under the National Center for Natural Science and Technology of Vietnam. Established
in 1990, CTT's mission is to recruit and develop professionals in the areas of electronics,
telecommunications, and information technology and to provide related products based
on advanced technologies. One of CCT's largest customers is the Vietnamese Postal
and Telecommunications Services. CTT also focuses on rural telecommunications in
Vietnam.

 







On March 23, 2002, the Company entered into
a Memorandum of Agreement and Principle Contract with the Center of Telecom Technology
(CTT), Vietnam to cooperate in the areas of wireless access networks, consultancy
services and other business ventures in Vietnam. The two parties will collaborate
to form a joint venture enterprise or strategic alliances with appropriate Vietnamese
entities to provide wireless access services to consumers, businesses and government
organizations throughout Vietnam.





PENDING AGREEMENTS

 

LETTER OF INTENT AND AGREEMENT WITH VINET COMMUNICATIONS, INC.

 



In January
2001, the Company entered into a Letter of Intent to acquire a majority interest
and ultimately 100% of Vinet Communications, Inc. ("Vinet") for a combination of
cash and stock. In January 2003, the Company signed a Stock Purchase Agreement to
acquire 51% of the total issued and outstanding common stock of Vinet for $400,000,
of which $200,000 would be paid to a shareholder of Vinet and the balance would
be applied to Vinet's working capital. As of the date of this report, this proposed
transaction has not been consummated.



 



Established
in 1996, Vinet Communications is a leading full-service IT solutions provider that
furnishes web hosting, web design, software programming, project management and
other IT services to both the ethnic and mainstream markets.



 

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
will include industrial garments, packaging products and accessories. No capital
contribution has been made to 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.

 

DISCONTINUED OPERATIONS AND ACQUISITIONS

 

PROVIDENTIAL CLEARING, INC.

 

During
February 2000 the Company formed a California corporation, Providential Clearing,
Inc. as a vehicle to effectuate the purchase of a self-clearing broker-dealer and
to operate a securities clearing firm. This subsidiary had no operations and was
dissolved in September 2002 by unanimous consent of the Board of Directors of the
Company.

 

PROVIDENTIAL ADVISORY SERVICES, INC.

 

Providential
Advisory Services, Inc. was formed in February 2000 as a California corporation.
The Company purchased 60 percent of the outstanding shares of this entity in July
2001 for $1,000. The Company discontinued its interest in Providential Advisory
Services in May 2003. As of the date of this report, there has been no revenues
generated through this entity.

 

SLIMTECH

 

SlimTech
was  a Nevada startup company that focused on the distribution of liquid crystal
display (LCD) and consumer electronics products. Pursuant to a Stock Acquisition
purchase agreement (the "Acquisition Agreement") on April 30, 2002, the Company
exchanged 3,000,000 shares of newly issued common stock for

10,200,000
shares of the common stock of SlimTech, Inc., which constituted approximately 57%
interest in SlimTech, Inc. The acquisition was approved by the

unanimous
written consent of the Board of Directors on June 14, 2002.

 

In
April 2002, this company received orders for 15" flat-panel computer monitors valued
at more than $300,000,000 from a Chinese government unit and a California-based
computer reseller. PHI retained the London Manhattan Company as the exclusive investment
banker to secure the purchase order financing to fulfill these orders. However,
no funding was available and as of the date of this report, SlimTech has not generated
any revenues from these purchase orders.

 



This agreement
was rescinded on May 6, 2003. The Company received 3,000,000 shares of Providential
Holdings, Inc.'s stock back from SlimTech and cancelled  the same on October
1, 2003.



 

PROVIDENTIAL TECHNOLOGY, INC.

 

The
Company purchased less than 10 percent of the outstanding shares of Providential
Technology, Inc. This corporation was engaged in software development for financial
service providers. The Company provided the initial funding of $165,000 for Providential
Technology to develop a market-timing program and an online trading platform for
equities. These projects were discontinued in October 2000 due to lack of additional
funding. This investment has been recorded at no value and any funds invested into
this corporation have been written off in the previously reported financials.

 

JOINT VENTURE AGREEMENTS WITH HTV CO, LTD AND MIMI BAN

 

On
January 15, 2001, the Company signed a Joint Venture Contract with LTV CO, Ltd,
a Vietnamese corporation, to form a joint venture enterprise, namely Manna

Technologies
Joint Venture Company Limited ("Manna"). On March 21, 2001, Manna was granted the
Investment License (No. 76/GP-KCN-DN) from the Board of

Management
of the Industrial Zones Of Dong Nai Province, Vietnam, to set up a liquid crystal
display (LCD) manufacturing plant.

 

On
November 27, 2001 by effective November 23, 2001, the Company signed a joint venture
agreement with Mimi Ban, an individual, whereby Mimi Ban would transfer the liquid
crystal display (LCD) technologies to Providential for the purpose of setting up
and operating one or more LCD manufacturing plants in Vietnam. According to the
joint venture agreement, Mimi Ban will share 30%, Providential Holdings, Inc. will
share 60% and other business partners and investors, including HTV Co., Ltd., will
share 10% of the net profits that will be generated 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 superseded all prior agreements, arrangements and covenants,
including but not limited to the 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 December 20, 2000 and any amendment thereof.

 

As
of the date of this report there have been no manufacturing plants operating or
has been set-up. Due to adverse economic conditions, the Joint Venture Agreement
between HTV CO, Ltd. and the Company was rescinded on May 19, 2003.

 

AGREEMENT WITH REAL ID TECHNOLOGY CO, LTD

 

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.



 







SPECIAL NOTE ON ACQUISITIONS

 







The Company is in the process of evaluating
various opportunities and negotiating to acquire other companies and technologies.
Acquisitions entail numerous risks, including difficulties in the assimilation of
acquired operations and products, diversion of management's attention from other
business concerns, amortization of acquired intangible assets and potential loss
of key employees of acquired companies. We have limited experience in assimilating
acquired organizations into our operations. Although potential synergy may be achieved
by acquisitions of related technologies and businesses, no assurance can be given
as to the Company's ability to integrate successfully any operations, personnel,
services or products that have been acquired or might be acquired in the future.
Failure to successfully assimilate acquired organizations could have a material
adverse effect on the Company's business, financial condition and operating results.

 







STRATEGY

 







Providential Holdings' strategy is to:

 







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

 







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

 







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

 







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









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         
(164,480)







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







    Net:                                                           
$ 23,628







                                                              
==========
 







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
$28,830 and $30,317 for the twelve ended June 30, 2003 and June 30, 2002, respectively.

 







 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 material pending legal proceedings and, to the best of its
knowledge, no such action by or against the company has been threatened. The majority
of the legal proceedings and arbitration cases are related to the discontinued operations
of Providential Securities, Inc.

 

LEGAL PROCEEDING SETTLED
AND CLEARED AS OF YEAR END:

 

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 and pledged 1,049,600 shares of common stock of Providential
Holdings, Inc. for a personal loan in the amount of $150,000 from Claimant. This
note was amended on February 22, 2001 to mature on March 19, 2001. Henry D. Fahman
repaid $25,000 to Claimant 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 mutual friend of both Claimant's and Henry D. Fahman's. On May 31, 2001, Claimant
filed a complaint with the Superior Court of California, County of Orange, Central
Justice Center (Case No. 01CC07055) seeking $125,000 plus interest at the highest
rate allowed by law from and after December 19, 2000, attorney fees and costs, exemplary
and punitive damages, and ownership of the pledged shares of common stock of Providential
Holdings, Inc. Henry D. Fahman has repaid a total of $45,000 toward the note. 
This case was fully settled on June 30, 2003.  The Company has not accrued
any amount relating to this case in the accompanying consolidated financial statements.
 







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 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 $2,500 and is subject to an entry
of judgment for $79,000. The settlement amount has been accrued in the accompanying
consolidated financial statements.

 







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

 

In
September 1997 Providential Securities, Inc. entered into a written Lease Agreement
to lease certain items of equipment from Green Tree Vendor Services, in return for
which Providential Securities, Inc. agreed to pay thirty-six monthly installments,
each in the amount of $1,552. On or about September 12, 2000, and subsequently,
Providential Securities, Inc. was unable to make the monthly payments to Claimant
due to the lack of revenues following the interruption and subsequent closure of
its securities brokerage operations. (See Note 3) Claimant filed a complaint for
money with the Superior Court of the State of California, County of Orange (Case
No. 01CC02613) on February 23, 2001 seeking $39,102 plus interest thereon at the
legal rate from September 12, 2000. The claimant entered a judgment against Providential
Securities, Inc., Henry Fahman and Tina Phan for $48,933. The judgment amount has
been accrued in the accompanying consolidated financial statements.













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.
 





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 3) 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 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 $9,074 including wages and interest, penalty,
post hearing and filing fee. The sought amount of $9,074 has been accrued in the
accompanying consolidated financial statements.
 

VERIO VS. PROVIDENTIAL SECURITIES, INC.
 

On or about April 1, 2003, Verio, Inc. filed
a judgment against Providential Securities, Inc., a wholly-owned subsidiary of the
Company which was discontinued in October 2000, for a total of $9,140.94. 
This sum consists of $6,800.00 for services allegedly rendered by Verio, Inc. to
Providential Securities, Inc. in 2000 and $2,340.94 for legal costs.  Both
amounts have been accrued in the accompanying consolidated financial statements.
 

PENDING LEGAL PROCEEDINGS:
 

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 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 vigorously defending the case and have
cross-claimed against the appropriate former management of JR Consulting, Inc. The
sought amount of $500,000 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 Stradling Yocca Carson & Rauth to replace Mark Tow. Stradling
Yocca Carson & Rauth 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. As of the date of this report there has been no
filing for arbitration by Mark Tow.

 







ARBITRATION CASES



















 
During the fiscal year
ended June 30, 2002, the arbitration case brought by Richard Shaffer against Providential
Securities, Inc. was closed.  The total claim requested by the claimant of
$100,000 plus interest was denied.  This amount was recorded as a gain on legal
settlement in the financial statements since this mount had been accrued in the
prior period.

 

During the fiscal year
ended June 30, 2002, the arbitration case for Tam was never filed.  The prior
year's accrued expense of $40,000 was reversed and the amount was recorded as a
gain on legal settlement.

 

During the fiscal year
ended June 30, 2003, the arbitration case brought by Mohammad Bagherbadi against
Providential Securities, Inc. was closed.  The total claim requested of $81,849
was reversed and the amount was recorded as a gain on legal settlement.

 







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 Counter Bulletin Board (OTCBB) under the symbol "JRCI."
Until December 12, 1999. Since December 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
to the delay in its filing of Form 10-KSB for the period ended June 30, 2000. The
Company's stock was trading under the symbol "PRVH" on the OTC Pink Sheets from
November 21, 2000 until April 3, 2002 when it was re-listed on the OTCBB. The following
sets forth the high and low prices of the Company's Common Stock for the most recent
month, most recent quarter and each quarter during the preceding two fiscal years.

 







The market for the Company's common stock
is extremely limited and the prices for the Company's common stock quoted by brokers
are not necessarily a reliable indication 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, 2003                                      
0.110                       
0.040







     Quarter Ended September
30, 2003                                     
0.110                       
0.040









Per Share Common Stock Prices by Quarter







     For the Fiscal Year
Ended on June 30, 2003













                                                


                                                                                                      
High                         
Low

 







    Quarter Ended June 30,
2003                                                
0.115                         
0.035







    Quarter Ended March 31,
2003                                             
0.110                         
0.030







    Quarter Ended December
31, 2002                                       
0.155                         
0.030







    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









Holders of Common Equity:

 







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

 







Dividends:

 







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

 







The
Company intends to issue share dividends from one or more of its subsidiaries to
shareholders in the near future, subject to certain conditions.

 







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

 







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

 







RESULTS OF OPERATIONS FOR THE YEARS ENDED
JUNE 30, 2003 AND JUNE 30, 2002
 



Revenues:

 

The Company generated $1,448,435 from sales
and consulting services for the twelve months ended June 30, 2003, as compared to
$602,000 for the year ended June 30, 2002, which represented 140.60% increase. The
increase in revenues was due to the increase in advisory and consulting fees from
merger and acquisition activities.

 

Operating Expenses:

 

The Company incurred total operating expenses
of $1,884,917 for the year ended June 30, 2003 as compared to $1,066,365  for
the year ended June 30, 2002. The increase in operating expenses was primarily due
to the increase professional services, including non-cash compensation.

 

Loss from operations:

 

The Company incurred a loss from operations
of $493,110 for the year ended June 30, 2003 as compared to a loss from operations
of $464,365 as re-classified for the year ended June 30, 2002. This was mainly due
to the increases in professional services, including non-cash compensation and in
general and administrative expenses.

 

Net loss before income taxes:

 

The Company had a loss before taxes of $1,250,699
for the year ended June 30, 2003 as compared to a loss of $1,238,743 for the year
ended June 30, 2002. The increase in net loss before income taxes was due to the
increase in the loss on sale of marketable securities, offset by the decrease in
impairment of assets and the gains on conversion of convertible notes.

 

Net loss:

 

The Company had a net loss of $1,056,939 for
the year ended June 30, 2003 as compared to a net loss of $1,293,543 for the year
ended June 30, 2002. The net loss based on the basic and diluted weighted average
number of common shares outstanding for the year ended June 30, 2003 was ($0.02)
as compared to that of ($.05) for the year ended June 30, 2002.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our business plan was restructured in November
2000 and has been updated to its now-current form. We must continue to raise capital
to fulfill our plan of acquiring other companies and assisting in the development
of those internally.  The Company expects that the working capital cash requirements
over the next 12 months will be generated from operations and additional financing.

 

We had cash and cash equivalents of $96,474
and $4,700 as of June 30, 2003 and June 30, 2002, respectively. Our operating activities
used $767,220 in the year ended June 30, 2003 and $711,600 in the year ended June
30, 2002. The largest use of cash in the 2003 period was from net loss from continued
operations, offset by the net effect of normal fluctuations in operating asset and
liability accounts. The largest use of cash in the 2002 period was from the net
loss from continued operations, the increase in prepaid expenses and other assets,
offset by the net effect of normal fluctuations in operating asset and liability
accounts.

 

Cash provided in the 2003 period by financing
activities of $835,000 was primarily from proceeds from sale of common stock, proceeds
from exercise of stock options, and borrowings on notes payable offset by payments
on notes payable and payments on advances from officer.

 



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.  Repricing 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 repricing 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 repricing 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 year ended June 30, 2002, $225,000 of the notes and accrued interest
and other fees of $183,695, totaling $408,695, were converted to 170,288 shares
of Company's common stock. The market value of the stock issued for the conversion
was calculated and a gain of $383,455 resulted from this note conversion was recorded
as a gain on conversion of notes in the accompanying financial statements.
 





During the year ended June 30, 2003, $425,000 of the notes and accrued interest
and other fees of $447,494, totaling $872,494, were converted to 363,637 shares
of Company's common stock.  The market value of the stock issued for the conversion
was calculated and a gain of $472,420 resulted from this note conversion was recorded
as a gain on conversion of notes in the accompanying financial statements. 
In addition, 8,726,425 shares of the Company's common stock were issued to exercise
the repricing warrants relating to the notes converted.
 



PROMISSORY NOTES:
 



As of June 30, 2003, 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 Labor plus 1%. 
 

As of June 30, 2003, the Company has notes payable amounting $14,310 against acquisition
of two automobiles. The notes are secured by auto, carry interest rate of 8.5%.
$12,089 of the notes payable is due by June 30, 2004 and $2221 is due by June 30,
2005. 
 



The Company has a note payable to a financial institution amounting $125,000. The
note bears an interest rate of 8% and is past due.



Following is the maturity schedule of notes payable:
 



                       
Year ended June 30:

                                               

                                     
2004        $137,089



                                     
2005            --



                                     
2006        $196,011



 



SHORT TERM NOTES PAYABLE:
 



As of June 30, 2003, the Company has short term notes payable amounting $1,541,498
including accrued interest of $476,000. 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.
 



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.
 



The dividend amount payable to holders of preferred stock amounting $165,055 at
June 30, 2003 has been classified as other current liabilities.
 

EQUITY LINES OF CREDIT

 

During the year ended June 30, 2002, the Company
secured a $20 million equity line of credit from Boston-based Dutchess Private Equities
Fund, L.P. but this line of credit was terminated in June 2002 because the Company
was unable to file a registration statement on time to draw down on the line.

 

In July 2002, the Company secured a $10 million
equity line of credit from Los Angeles-based Mercator Momentum Fund, L.P. The line
of credit's term was three

years. The amount the company could have received
was dependent on the amount of free trading shares put in an escrow account or an
effective registration statement.

 

The company could draw down up to 90 percent
of the market price (as defined in the agreement) of the registered shares or the
free-trading shares deposited in escrow. The Company agreed to pay a 2 percent fee
on the total value of the equity line, 1 percent of which would be payable in cash
on the gross proceeds from the first draw-down and the remaining 1 percent fee payable
in shares of the Company's common stock.

 

This equity line of credit was terminated
on February 18, 2003 because the Company did not make Form SB-2 registration Statement
effective within the one

hundred eighty (180) days following the subscription
date.



 

Our operations are currently financed through
various loans. Management has taken action and is formulating additional plans to
strengthen the Company's working capital position and generate sufficient cash to
meet its operating needs. Among the actions taken, we will be filing a Form SB-2
Registration Statement to raise additional capital and to draw down on the equity
line of credit noted above. We have also engaged the services of certain investment
banking groups to arrange for senior debts, mezzanine financing and purchase order
financing. In addition, the Company also anticipates generating more revenue through
its proposed merger and acquisition activities. No assurance 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.

 

COMPANY'S PLAN OF OPERATION FOR NEXT 12 MONTHS

 







After the divestiture of its Diva subsidiaries
in June 2000 and the discontinuance of its securities brokerage operations in October
2000, we have restructured and updated our primary scope of business to focus on
the following areas: (1) PHI Technologies, (2) PHI Financial services, (3) PHI International
markets, and (4) PHI Special Situations.

 

1) PHI Technologies:

 

ATC TECHNOLOGY CORP.

 

On October 6, 2003, the Company completed
the acquisition of 100% of ATC Technology Corp. in exchange for $500,000 non-interest
bearing notes and 4,000,000 shares of restricted common stock of the Company. ATC
Technology Corporation, established in 2001 as an Arizona corporation, manufactures
mobile entertainment products, including VidegoTM, GamegoTM and MoviegoTM. 
The VidegoTM, winner of the prestigious 2001 Innovation Engineering and Design Award
from IDSA (Industrial Designers Society of America), is one of the finest and affordable
car theater systems available to consumers. With its wireless viewing monitor, which
attaches easily to the back of any automobile headrest, the patent-pending VidegoTM
system provides consumers with the highest quality DVD and Video players and hours
of entertainment while traveling.

 

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

 

ATC Technology Corp. currently sells both
of these U.S. manufactured products in the United States, Mexico, Canada, Denmark,
Panama, and Great Britain. It is also selling direct to well-known car dealers such
as: Land Rover, Mercedes Benz, Lexus, Ford, Honda and Toyota.

 

ATC Technology Corp. has recently received
an order from Wal-mart USA and expects to increase its sale of these existing products
as well as adding new ones in the near future.

 

CLEARPASS

 

On November 20, 2002 the Company entered into
an agreement to acquire 51% of the outstanding common stock of Clear Pass, Inc.,
a Nevada corporation, in exchange for $1,500,000 and 3,000,000 shares of restricted
common stock of the Company.  Under an agreement with PASS21 Co, Ltd., a Korean
corporation, Clear Pass had the licensing rights to distribute and market PASS21
Co.'s biometric products in the US, Canada and Europe. Besides a total of $175,500.00
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, Inc. This agreement between Clear Pass and the Company was rescinded on May
9, 2003. The Company has received 3,000,000 shares of the Company's restricted common
stock back from Clear Pass, Inc. and has cancelled the $1,324,500.00 promissory
note. Concurrently, the Company has set up a new wholly-owned subsidiary under the
name of ClearPass, a DBA of Providential Holdings, Inc., to operate as a systems
integrator and provider of total biometric security and access management solutions.
On March 26, 2003 the Company signed a stock purchase agreement to acquire up to
51% of Real ID Technology Co, Ltd., a Korean corporation, and planned to market
Real ID Technology's biometric products through the ClearPass subsidiary. The stock
purchase agreement with Real ID Technology was later rescinded on  August 26,
2003. ClearPass is forming alliance with other biometric manufacturers and developing
its own products to provide security and access management solutions.





 







TOUCHLINK COMMUNICATIONS



 



A wholly-owned DBA of Providential Holdings,
Inc, Touchlink Communications was formed on July 7, 2003 to provide point-of-sale
(POS) terminals and prepaid calling cards to retailers, convenient stores 
and non-profit organizations across the US. This POS system enables merchants and
participating partners to offer prepaid products without purchasing or storing any
inventory in advance.  Touchlink Communications has signed an agreement with
KAGRO (Korean American Grocer Association) to provide pre-paid services to its network
of 25,000 member stores in the US and Canada.







 







 



NETTEL HOLDINGS, INC.

 

On March 13, 2002 the Company entered into
a Letter of Intent to acquire a 51% common stock of Nettel Global Communication
Corp. ("Nettel"), a Delaware corporation,  for a combination of $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 period commencing the closing
of this transaction were equal or greater than the threshold amount of $2,500,000
then Nettel would be entitled to a dividend payment of fifty percent (50%) of any
and all profits in excess of said threshold amount for the above-mentioned period.

 

On December 3, 2002 the Company entered into
a Stock Purchase Agreement with Nettel whereby the Company would acquire 46.5% of
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 90 days after closing. On January 17, 2003 an Amendment
to Stock Purchase Agreement was entered into by and between the Company and Nettel
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 2% penalty
per month on any unpaid balances of the notes for a maximum period of 60 days after
the respective maturity dates. If the notes were not liquidated in their entirety
after the penalty periods, the Company would surrender any unpaid portions of Nettel's
stock back to Nettel. 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 later rescinded on May 19, 2003. The Company cancelled
the afore-mentioned promissory notes and treated the total of $49,000 investment
as of the end of June 30, 2003 as a receivable from Nettel.

 

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 plan with a fully reporting publicly-traded
company. On May 23, 2003 Nettle consummated a merger plan with Bio Standard Corp,
a Florida corporation,

and changed the name of the combined company
to Nettel Holdings, Inc., a Florida corporation. The Company received 2,250,000
shares of common stock of Nettel Holdings, Inc. as compensation for its advisory
and consulting services to Nettel.



 

Nettel provides long-distance telephony and
VoIP (Voice-Over-Internet-Protocol) services to over 40 countries, owns a software
development company (Entec Software) and operates an export and import division
(Nettel Trading). Based on existing and pending contracts, Nettel expects combined
revenues of the long-distance business, Nettel Trading and other divisions to exceed
$100 million over the next twelve months.

 

    

    2) PHI Financial services:

 

The Company will continue to develop its financial
services portfolio by building, acquiring and investing into companies that operate
in this area, including M&A consulting services, investment advisory services, and
banking and insurance services.

 

PROVIDENTIAL CAPITAL

 

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.

 

    

    3) PHI International markets:

 

We currently focus on opportunities in and
with Vietnam, China and Taiwan. These are the areas where we have most intimate
knowledge and working relationships.

 

PROVIMEX DIVISION

 

Provimex is a wholly-owned division of the
Company originally formed on April 10, 2001 under the name "Providential Imex",
to focus on trade commerce with Vietnam. This division changed its name to Provimex
on July 5, 2001. Provimex is engaged in exporting and importing of industrial and
consumer goods.

 

The Company believes that its trade commerce
business will grow substantially as a result of the ratification of the Trade Agreement
between Vietnam and the United States. During the twelve months ended June 30, 2003,
the Company generated $61,800 revenue from this operation.

 

In December 2001, Provimex signed a principle
contract with Ky Ha Chu Lai Development & Investment Company "(CDI, Co") to supply
certain consumer and

industrial goods to CDI, Co. 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, Co. Provimex will
continue to work with CDI, Co. and other companies in Asia to advance its trade
commerce business.

 

PROVIDENTIAL JVC

 

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 will include industrial
garments, packaging products and accessories. The Company intends to terminate this
agreement.

 

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 entities.
PHI and ICTC signed an agreement in March 2001 to cooperate in the areas of trade,
economics, and technology. ICTC is responsible for representing PHI 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 PHI. Fees between the parties will be negotiated on an as project basis. PHI
intends to maintain its relationship and explore new business opportunities with
ICTC.

 

CHU LAI INDUSTRIAL ZONE, QUANG NAM PROVINCE,
VIETNAM

 

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

 

Chu Lai is centrally located near three Southeast
Asian nations and is convenient to Vietnam's Highway One, the Trans-Viet Railroad,
an international port suitable for ocean-going ships and a major airport. Part of
the overall plan that includes 27,000 acres, the North Chu Lai Industrial Zone has
set aside 740 acres for facilities engaged in paper products, agricultural, maritime
and forest products, consumer electronics, leather and footwear manufacturing, food
and beverage operations and glassware and crystal fabrication.

 

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

 

The Company plans to be the manager organizing
the different companies that will operate their businesses at this location.

 

CENTER OF TELECOM TECHNOLOGY, VIETNAM

 

Center of Telecom Technology (CTT) is an organization
under the National Center for Natural Science and Technology of Vietnam. Established
in 1990, CTT's

mission is to recruit and develop professionals
in the areas of electronics, telecommunications, and information technology and
to provide related products based on advanced technologies. One of CCT's largest
customers is the Vietnamese Postal and Telecommunications Services. CTT also focuses
on rural telecommunications in Vietnam.

 

On March 23, 2002, the Company entered into
a Memorandum of Agreement and Principle Contract with the Center of Telecom Technology
(CTT), Vietnam to cooperate in the areas of wireless access networks, consultancy
services and other business ventures in Vietnam. The two parties will collaborate
to form a joint venture enterprise or strategic alliances with appropriate Vietnamese
entities to provide wireless access services to consumers, businesses and government
organizations throughout Vietnam.

 

4) PHI Special situations:

 

By Special Situations we mean special opportunities
that may generate significant value for our shareholders. The Company will continue
to identify, evaluate and participate in such opportunities in the near term. Transactions
falling under this category do not necessary fit into our technologies, financial
services or international market initiatives.

 

LEXOR HOLDINGS, INC.

 

On October 9, 2001, the Company entered into
an 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 Pan American Automotive Corporation, 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. The Company
has received 2,476,191 restricted shares of Lexor International Inc.'s common stock
(after a seven-to-one reverse split and a subsequent ten-to-one reverse split) as
a fee for its service.

 



The transaction between Pan American and Lexor
was rescinded on October 23, 2002, after which Pan American changed its name to
Grayling Wireless USA Inc. and effected a one-for-hundred reverse split. The Company
currently holds 24,762 shares of common stock of Grayling Wireless but has not recognized
the value of these shares on its books.



 



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 received 1,500,000 shares
of common stock of Lexor Holdings, Inc. (approximately 10% of the issued and outstanding
shares) as compensation for its advisory and consulting services.



 

Lexor International, Inc. is a leading manufacturer
and supplier of premium pedicure spa products. The Company is positioned to provide
other product lines to 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.

 

The Company intends to continue providing
consulting and advisory services to Lexor Holdings, Inc. with respect to its further
merger and acquisition plans, management, and other corporate activities.

 

 

FINANCIAL PLANS

 

Management has taken action and is formulating
additional plans to strengthen the Company's working capital position and generate
sufficient cash to meet its

operating needs through June 30, 2004 and
beyond. Among the actions to be taken, the Company intends to raise additional capital
from the US and international markets and is currently in the process of attaining
additional financing. In addition, the Company also anticipates generating more
revenue through its proposed mergers and acquisitions. No assurances can be made
that management will be successful in achieving its plan.



 







ITEM 7. FINANCIAL STATEMENTS

 







INDEPENDENT AUDITORS' REPORT

 







To the Board of Directors and Stockholders







Providential Holdings, Inc.









We have audited the accompanying consolidated balance
sheet of Providential Holdings, Inc. (a Nevada corporation) and subsidiaries as
of June 30, 2003 and the related consolidated statements of operations, stockholders'
deficit, and cash flows for the years ended June 30, 2003 and 2002. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements based on our
audits.

 







We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

 







In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated financial
position of Providential Holdings, Inc. and subsidiaries as of June 30, 2003, and
the results of its consolidated operations and its cash flows for the years ended
June 30, 2003 and 2002 in conformity with accounting principles generally accepted
in the United States of America.

 







The Company's financial statements are prepared using
the generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the normal
course of business. The Company has a negative accumulated deficit and incurred
losses in the years ended June 30, 2003 and 2002. These factors as discussed in
Note 17 to the consolidated financial statements, raises substantial doubt about
the Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 17. The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

 







As discussed on note 3 and 11 to the financial statements,
the Company is subject to various law suits and during most recent NASD examination
(July - August, 2000) of Providential Securities, Inc. (the wholly owned subsidiary),
the NASD declared a net capital deficiency violation pursuant to conduct rules section
17 (a) 3 and 17 (a) 4. As a result of which, Providential Securities, Inc. withdrew
the membership from the NASD in October 2000 and ceased its securities brokerage
operations.









/s/ KABANI & COMPANY, INC.









CERTIFIED PUBLIC
ACCOUNTANTS







Fountain Valley,
California







October 6, 2003













PROVIDENTIAL HOLDINGS, INC.









CONSOLIDATED BALANCE SHEET









JUNE 30,2003









ASSETS







 







 







CURRENT ASSETS







 







 







Cash and cash
      equivalents







 $ 96,747







 







Other current
      assets







                    
      3,300







 







 







Total Current
      Assets







                    
      1,202,382







 







 







 







 







PROPERTY & EQUIPMENT,
      net of accumulated depreciation of $164,481







23,627







 







 







 







                 
      $1,226,009  







 







 







 







 









LIABILITIES
      AND SHAREHOLDERS' DEFICIT







 







CURRENT LIABILITIES







 







 







Accounts payable
      and accrued expenses







 $ 4,062,761







 







Convertible
      promissory notes







               
      1,100,000







 







Short-term notes
      payable







               
      1,541,498







 







Current portion
      of notes payable







                  
      137,089







 







Due to officer







                  
      146,916







 







Other current
      liabilities







                  
      165,055







 







 







Total Current
      Liabilities







               
      7,603,319







 







 







 







 







NOTES PAYABLE







                   
      198,332







 







 







Total liabilities







               
      7,801,651







 







 







 







 

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, 61,253,119 shares issued and
      outstanding







               
      2,570,125







 







Treasury stock,
      14,805,200 shares, $.04 par value common stock







                 
      (772,312)







 







Additional paid-in
      capital





               
      5,393,054







 







Accumulated
      other comprehensive loss







                 
      (408,004)







 







Accumulated
      deficit







            
      (12,402,655)







 







 







Total shareholders'
      deficit







              
      (6,575,642)







 







 







 







 $ 1,226,009









SEE THE ACCOMPANYING
NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.









PROVIDENTIAL HOLDINGS, INC.









CONSOLIDATED STATEMENTS OF OPERATIONS
 







 







 







 









The Years Ended
      June 30,







 







 







 









2003







 









2002







REVENUES







 







 







 







 







Consulting and
      advisory fee income







 $ 1,386,635







 







 $ 602,000







 







 







Net Revenues







1,448,435







 

          
      602,000







OPERATING EXPENSES







 







 







 







 







Salaries and
      wages







                         
      -







 







              
      7,280







 







Professional
      services, including non-cash compensation







                         
      1,221,054







 







              
      626,878







 







General and administrative







663,863







 







432,207







 







 







Total Operating
      Expenses







         
      1,884,917







 







1,066,365







LOSS FROM OPERATIONS







(493,110)







 







(464,365)







OTHER INCOME
      (EXPENSE)







 







 







 







 







Interest expense







 (691,120)







 







(922,209)







 







Loss on sale
      of marketable securities







             
      (432,775)







 







             
      (9,155)







 







Impairment of
      assets







   
      (180,500)







 







(381,560)







 







Gain on sale
      of fixed assets







                     
      -







 







                
      3,768







 







Gain on legal
      settlement







                 
      81,850







 







            
      140,000







 







Other income
      (expense)







                
      (2,256)







 







11,323







 







 







Net Other Income
      (Expense)







(757,589)







 







(774,378)







LOSS FROM CONTINUING
      OPERATIONS BEFORE INCOME TAX







(1,250,699)







 







(1,238,743)







PROVISION FOR
      INCOME TAX







                      
      800







 







800







LOSS FROM CONTINUING
      OPERATIONS







(1,251,499)







 







(1,239,543)







GAIN ON DISPOSAL
      OF A SUBSIDIARY







               
      248,560







 







-







NET LOSS







(1,002,939)







 







(1,239,543)







DIVIDEND REQUIREMENT
      OF PREFERRED STOCK







(54,000)







 







(54,000)







NET LOSS APPLICABLE
      TO COMMON SHAREHOLDERS







(1,056,939)







 







(1,293,543)







 







OTHER COMPREHENSIVE
      (LOSS)/GAIN







 







 







 







 







     
      Unrealized loss on investments available for sale







(262,995)







 







              
      (366,820)







COMPREHENSIVE
      LOSS







$(1,319,934)







 







         
      $(1,660,363)







 







 







 







 







 







Weighted average
      number of shares outstanding - basic and diluted







42,858,502







 







     
      28,648,000

SEE THE ACCOMPANYING
NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.









PROVIDENTIAL
HOLDINGS, INC.







CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)







For
the years ended June 30, 2003 and June 30, 2002
 











SEE THE ACCOMPANYING
NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.

 

PROVIDENTIAL HOLDINGS, INC.











CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30, 2003 and 2002



 

 





 







 









 







2003











2002









CASH FLOWS FROM
      OPERATING ACTIVITIES







 









 



 





Net loss from
      continuing operations







$ (1,002,938)







  
      $ (1,239,543)





 





Adjustments to
      reconcile net loss from continued operations to







 









 



 





  net cash
      used in continued operating activities:







 









 



 





 











Gain on disposal
      of property







   
      -







        
      ( 3,768)





 





 











Legal settlement







           
      (81,850)







             
      (140,000)





 





 











Shares issued
      for service







55,000







            
      1,803,600





 





 











Loss on sale
      of marketable securities







432,775







             
      9,155





 





 











Depreciation







28,831







           
      30,317





 





 











Amortization
      of deferred revenue







(11,552)







         
      (125,000)





 





 











Allowance for
      bad debt







217,577







           
      -





 





 











Beneficial conversion
      and registration penalty







400,073







          
      -





 





 











CHANGES IN OPERATING
      ASSETS AND LIABILITIES















                     





 





 











(Increase) decrease
      in prepaid expenses and other assets







                       
      29,371







          
      (1,761,168)





 





 











Increase (decrease)
      in accounts payable







55,442







           
      (506,868)





 





 











Increase (decrease)
      in accrued expenses







292,856







          
      1,548,700





 





 











Minority interest







-







                
      128,560





 





 











Increase (decrease)
      in other liabilities







113,448







          
      (69,864)





 





 







 











NET CASH USED
      IN OPERATING ACTIVITIES







(767,219)







(711,594)





 





 







 









 





 









 





CASH FLOWS FROM
      INVESTING ACTIVITIES







 









 



 





Sale of fixed
      assets







-







                     
      4,268





 





Proceeds received
      from sale of marketable securities







24,243







          
      19,024





 





 







 











NET CASH PROVIDED
      BY INVESTING ACTIVITIES







24,243







         
      23,292





 





 







 









 





 









 





CASH FLOWS FROM
      FINANCING ACTIVITIES







 









 



 





Proceeds from
      sale of common stock







657,908







          
      -





 















































Proceeds from the
      exercise of stock options





         
      125,000







      
      -





 





Borrowings on
      notes payable







147,908







           
      594,277





 





Payments on notes
      payable







                    
      (70,225)







         
      (13,337)





 





Payments on advances
      from officer







                    
      (25,581)







          
      -





 





 







 











NET CASH PROVIDED
      BY FINANCING ACTIVITIES







835,010







      
      678,795







NET INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS







           
      92,034







        
      (9,507)





 





 







 









 





 









 





CASH AND CASH
      EQUIVALENTS, beginning of period







4,713







          
      14,220





 





 







 









 





 









 





CASH AND CASH
      EQUIVALENTS, end of period







$ 96,747







 $ 4,713





 





 







 









 





 









 





SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATION:







 









 



 





Cash paid during
      the period for:







 









 



 





 







 











Interest







    
      $ 35,585







 $ 15,394





 





 







 











Income taxes







    
      $          -







 $     
      800





 
 

SEE THE ACCOMPANYING
NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
 

 

 











 PROVIDENTIAL
HOLDINGS, INC.







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 

  
  
  NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



     



NATURE OF BUSINESS AND REORGANIZATION



 

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. The company changed its name to Providential Securities,
  Inc., a Nevada corporation, on January 12, 2000, and 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.  Due to the results of a NASD examination, Providential
  Securities withdrew its membership and ceased its securities brokerage business
  in October 2000.  (See Note
  3)



 



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 to Havilland
  Limited, all of the shares of Diva owned by PHI as well as to assign all of its
  rights, title and interest in an Option Agreement to Havilland Limited. 
  (The Option Agreement gave PHI the option to purchase additional shares of Diva's
  common stock at its $.001 par value in order for PHI to maintain at least a 65%
  interest in Diva's outstanding common shares.)  PHI's officers and directors
  resigned their positions and the shareholders of Providential assumed control
  of the two entities (together as "the Company"). The PHI shares are restricted
  against resale pursuant to the provisions of federal and state securities laws.
  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.  In the accompanying financials statements,
  the capital structure and losses per share of Providential have been retroactively
  restated to reflect the acquisition as if it occurred at the beginning of the
  period. The operations of PHI have been included with those of Providential from
  the acquisition date.



 

The sale of Diva was consummated on June
  30, 2000, whereby all of the shares of Diva owned by PHI 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 PHI to officers of
  Diva amounting to $617,781, the amounts due to PHI from Diva amounting to $94,843
  and the return of 135,000 shares of common stock of PHI owned by 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 the assets and liabilities
  of PHI.  Included in the total gain of $1.2 million was Diva's net profit
  of $245,606 earned during the holding period from January 14, 2000 to June 30,
  2000.

 



During February 2000 the Company formed
  a California corporation, Providential Clearing, Inc. as a vehicle to effectuate
  the purchase of a self‐clearing broker‐dealer and to operate a securities clearing
  firm.  As of June 30, 2003 this subsidiary has had no operations.



 



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 has cancelled them subsequently.



 



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 purchase transaction with ATC
  has not been consummated as of June 30, 2003. 



 



On November 20, 2002 the Company entered into an agreement to acquire
  51% of the outstanding common stock of Clear Pass, Inc. ("ClearPass"), 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. 



 



In May
  2003, the Company formed a new subsidiary under the name of Providential Capital
  to provide financial products and services for the micro-small cap arenas and
  to manage the Company's proprietary merger and acquisition activities.  Providential
  Capital will focus its attention on the underserved segment of smaller companies
  in the United States and abroad. Providential Capital began providing merger and
  acquisition advisory services to its clients since the fourth quarter of the fiscal
  year ended June 30, 2003.
  <p span style="font-family:
"Times New Roman"; margin-top:1; margin-bottom:1"> 



NOTE 2 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES



 



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.



 



CASH AND CASH EQUIVALENTS



 



The Company considers all liquid investments
  with a maturity of three months or less from the date of purchase that are readily
  convertible into cash to be cash equivalents.



 



MARKETABLE SECURITIES



 



The Company's securities are classified
  as available‐for‐sale and, as such, are carried at fair value. Securities classified
  as available‐for‐sale may be sold in response to changes in interest rates, liquidity
  needs, and for other purposes. The Company does not currently have any held‐to‐maturity
  or trading securities.



 



Unrealized holding gains and losses for
  available‐for‐sale securities are excluded from earnings and reported as a separate
  component of stockholder's equity. Realized gains and losses for securities classified
  as available‐for‐sale are reported in earnings based upon the adjusted cost of
  the specific security sold.



 



IMPAIRMENT OF LONG‐LIVED ASSETS



 



Long‐lived assets are reviewed for impairment
  whenever events or changes in circumstances indicate that the carrying amount
  may not be recoverable. If the sum of the expected undiscounted cash flows is
  less than the carrying value of the related asset or group of assets, a loss is
  recognized for the difference between the fair value and carrying value of the
  asset or group of assets.



        



PROPERTY AND EQUIPMENT



 



Property and equipment are stated at cost.
  Maintenance and repair costs are charged to expense as incurred; costs of major
  additions and betterments are capitalized. When property and equipment are sold
  or otherwise disposed of, the cost and related accumulated depreciation are eliminated
  from the accounts and any resulting gain or loss is reflected in income.



 



DEPRECIATION AND AMORTIZATION



 



The cost of property and equipment is depreciated
  over the estimated useful lives of the related assets.  Depreciation and
  amortization of fixed assets are computed on a straight‐line basis.



 







NET EARNINGS (LOSS) PER SHARE



 



The Company adopted the provisions of Statement
  of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 128").
  SFAS No. 128 eliminates the presentation of primary and fully diluted earnings
  per share ("EPS") and requires presentation of basic and diluted EPS. Basic EPS
  is computed by dividing income (loss) available to common stockholders 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.
  Common stock equivalents have been excluded from the calculation of weighted‐average
  shares for purposes of calculating diluted earnings per share for 2002 and 2001;
  as such inclusion is anti‐dilutive. 



 

 



STOCK‐BASED COMPENSATION



 



In October 1995, the FASB issued SFAS No.
123, "Accounting for Stock‐Based Compensation". SFAS No. 123 prescribes accounting
and reporting standards for all stock‐based compensation plans, including employee
stock options, restricted stock, employee stock purchase plans and stock appreciation
rights. SFAS No. 123 requires compensation expense to be recorded (i) using the
new fair value method or (ii) using the existing accounting rules prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for stock issued to employees"
(APB 25) and related interpretations with proforma disclosure of what net income
and earnings per share would have been had the Company adopted the new fair value
method. The Company has elected to account for stock‐based compensation plans under
the intrinsic value method and to disclose the pro forma amounts using the fair
value method. 



 



FAIR VALUE OF FINANCIAL INSTRUMENTS



 



Statement of financial accounting standard
No. 107, Disclosures about fair value of financial instruments, requires that the
Company disclose estimated fair values of financial instruments. The carrying amounts
reported in the statements of financial position for current assets and current
liabilities qualifying as financial instruments are a reasonable estimate of fair
value.



 



REVENUE RECOGNITION



 

The Company recognizes its revenue in accordance
with the Securities and Exchange Commissions ("SEC") Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements" ("SAB 101"). The Company recognized
commission and fee revenue when the security transaction was complete and the commission
or fee had been earned.  The Company recognizes other service income when the
service has been completed.  Expenses are recognized in the period in which
the corresponding liability is incurred.





 



ADVERTISING



 



The Company expenses advertising costs as
incurred.



 



COMPREHENSIVE INCOME



 



Statement of Financial Accounting Standards
No. 130, Reporting Comprehensive Income ("SFAS No. 130"), establishes standards
for reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in equity, except
those resulting from investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to be recognized
under current accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other financial
statements. 





 





INCOME TAXES



 



Deferred income tax assets and liabilities
are computed annually for differences between the financial statements and tax basis
of assets and liabilities that will result in taxable or deductible amounts in the
future based on enacted laws and rates applicable to the periods in which the differences
are expected to affect taxable income (loss). Valuation allowance is established
when necessary to reduce deferred tax assets to the amount expected to be realized.



 



REPORTING OF SEGMENTS



 



Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS
No. 131"), which supersedes Statement of Financial Accounting Standards No. 14,
Financial Reporting for Segments of a Business Enterprise, establishes standards
for the way that public enterprises report information about operating segments
in annual financial statements and requires reporting of selected information about
operating segments in interim financial statements regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of an enterprise about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance.



   



PENSION AND OTHER BENEFITS



 



In February 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 132, Employers'
Disclosures about Pensions and Other Post‐retirement Benefits ("SFAS No. 132"),
which standardize the disclosure requirements for pensions and other post‐retirement
benefits. The Company adopted this standard in fiscal 1999 and the implementation
of this standard did not have any impact on its financial statements.



 



RISKS AND UNCERTAINTIES



 



In the normal course of business, the Company
is subject to certain risks and uncertainties. The Company provides its product
on unsecured credit to most of its customers. Consequently, the Company's ability
to collect the amounts due from customers is affected by economic fluctuations and
each customer's ability to pay.



 



ACCOUNTING DEVELOPMENTS

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangibles." SFAS No. 142 addresses the initial recognition, measurement and amortization of 
intangible assets acquired individually or with a group of other assets (but not those acquired in a business combination) and addresses the amortization provisions 
for excess cost over fair value of net assets acquired or intangibles acquired in a business combination. The statement is effective for fiscal years beginning after 
December 15, 2001, and is effective July 1, 2001 for any intangibles acquired in a business combination initiated after June 30, 2001. The Company had evaluated any 
accounting effect arising from the recently issued SFAS No. 142, "Goodwill and Other Intangibles" on the Company's financial position. As a result, the Company wrote 
off the Goodwill that was derived from the business acquisition during the fiscal year ended June 30, 2002.
 
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning after 
December 15, 2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121 
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB Opinion 
No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring 
Events and Transactions," for the disposal of a segment of a business. The Company had evaluated the accounting effect, arising from the recently issued SFAS No. 
144 and recognized the loss on impairment of long-lived assets in the financial statements.

In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections 
("SFAS 145"). SFAS 145 rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary unless they meet the criteria for extraordinary 
items as outlined in APB Opinion No. 30, Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual 
and Infrequently Occurring Events and Transactions. SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that 
are similar to sale-leaseback transactions and makes various technical corrections to existing pronouncements. The provisions of SFAS 145 related to the rescission 
of FASB Statement 4 are effective for fiscal years beginning after May 15, 2002, with early adoption encouraged. All other provisions of SFAS 145 are effective for 
transactions occurring after May 15, 2002, with early adoption encouraged. The adoption of SFAS 145 did not have a material effect on the earnings or financial position 
of the Company.

 
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities."  This statement addresses financial accounting and 
reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain 
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)."  This statement requires that a liability for
a cost associated with an exit or disposal activity be recognized when the liability is incurred.  Under EITF Issue 94-3, a liability for an exit cost, as defined, was 
recognized at the date of an entity's commitment to an exit plan.  The provisions of this statement are effective for exit or disposal activities that are initiated after 
December 31, 2002 with earlier application encouraged.  The adoption of SFAS 146 did not have a material effect on the earnings or financial position of the Company.

 

On January 1, 2002, the Company adopted Financial
Accounting Standards Board Emerging Issues Task Force No. 01-14, "Income Statement
Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses Incurred,"
("EITF 01-14").  EITF 01-14 requires companies to characterize reimbursements
received for out-of-pocket expenses incurred as revenue and to reclassify prior
period financial statements to conform to current year presentation for comparative
purposes.  The Company's "Services" revenues now include reimbursable out-of-pocket
expenses and "Cost of services" expenses include the costs associated with reimbursable
out-of-pocket expenses.  Prior to the adoption of EITF 01-14 the Company's
historical financial statements recorded these expenses as net amounts in "Cost
of services."  The adoption of EITF 01-14 did not have a significant impact
on the services gross margin percentage and had no effect on net loss.

 

In November 2002, the FASB issued Interpretation
No. 45, Guarantors' Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others ("FIN 45").  FIN 45 elaborates
on the existing disclosure requirements for most guarantees, including loan guarantees
such as standby letters of credit.  It also requires that at all times a company
issues a guarantee, ANZA must recognize an initial liability for the fair market
value of the obligations it assumes under that guarantee and must disclose that
information in its interim and annual financial statements.  The initial recognition
and measurement provisions of FIN 45 apply on a prospective basis to guarantees
issued or modified after December 31, 2002.  The adoption of this requirement
has not had a material effect on its financial position or results of operations.

 

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities ("FIN 46").  FIN 46 clarifies
the application of Accounting Research Bulletin No. 51 for certain entities in which
equity investors do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties.  FIN
46 applies to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date.  The adoption of the disclosure provisions of this statement did not
have a material effect on its financial position or results of operations.

 

In March 2003, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure."  This
Statement 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, SFAS
No. 148 amends the disclosure requirements of SFAS No. 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 Company does not expect to adopt SFAS No. 123. 
The additional presentation requirements are not meaningful since few employee options
were granted during the periods presented. The proforma information regarding net
loss and loss per share, pursuant to the requirements of FASB 123 for the years
end June 30, 2003 and 2002 have been presented in the note 15.



 



On April 30, the FASB issued FASB Statement
No. 149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. SFAS 149 amends and clarifies the accounting guidance on
(1) derivative instruments (including certain derivative instruments embedded in
other contracts) and (2) hedging activities that fall within the scope of FASB Statement
No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities.
SFAS 149 also amends certain other existing pronouncements, which will result in
more consistent reporting of contracts that are derivatives in their entirety or
that contain embedded derivatives that warrant separate accounting. SFAS 149 is
effective (1) for contracts entered into or modified after June 30, 2003, with certain
exceptions, and (2) for hedging relationships designated after June 30, 2003. The
guidance is to be applied prospectively. The adoption of SFAS 149 does not have
a material effect on the earnings or financial position of the Company.

 

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of Both Liabilities
and Equity, ("SFAS No. 150").  SFAS No. 150 establishes standards for how an
issuer classifies and measurers in its statement of financial position certain financial
instruments with characteristics of both liabilities and equity.  In accordance
with SFAS No. 150, financial instruments that embody obligations for the issuer
are required to be classified as liabilities.  SFAS No. 150 shall be effective
for financial instruments entered into or modified after May 31, 2003, and otherwise
shall be effective at the beginning of the first interim period beginning after
June 15, 2003.  The adoption of SFAS 150 does not have a material effect on
the earnings or financial position of the Company.



 



 



RECLASSIFICATIONS



 



Certain amounts in the 2002 financial statements
have been reclassified to conform to the 2003 presentation.



 



NOTE 3 - 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 4 - IMPAIRMENT OF ASSETS



 



In May 2003, the Company wrote-off its investment in Clear Pass (see
Note 5) and recorded a loss on impairment of $180,500.



 



The Company wrote off the fixed asset amounting $80,000 and receivables
of $172,868 that deemed to be unrecoverable during the year ended June 31, 2002.
The Company also wrote off $128,560 of goodwill, which was resulted from a business
acquisition in the year ended June 30, 2002.  These were recorded as a loss
on impairment of assets in the financial statement.



 



NOTE 5 ‐ INVESTMENTS



 



INVESTMENT IN CLEARPASS



 



On November 20, 2002 the Company entered into an agreement to acquire
51% of the outstanding common stock of Clear Pass, Inc. ("ClearPass"), 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.  
The Company invested $165,500 and $15,000
during the fiscal years ended June 30, 2003 and 2002. On May 9, 2003, the agreement
with Clear Pass was rescinded and accordingly the balance of the investment of $180,500
was written off as an impairment of asset.



 



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.



 



INVESTMENT IN PROVIDENTIAL TECHNOLOGY, INC.



 



The Company purchased less than 10 percent
of the outstanding shares of Providential Technology, Inc.  This corporation
was engaged in software development for financial service providers. The Company
provided the initial funding of $165,000 for Providential Technology to develop
a market‐timing program and an online trading platform for equities. These projects
were discontinued in October 2000 due to lack of additional funding.  This
investment has been recorded at no value and any funds invested into this corporation
have been written off in the accompanying financials.



 

NOTE 6 ‐ MARKETABLE EQUITY SECURITIES AVAILABLE
FOR SALE

 



Following is a summary of marketable equity
securities classified as available for sale as of June 30, 2003:



 



                                                    
Cost Basis                     
Fair Value                
Accumulated



                                                                                                                              
Unrealized Loss



                                                     
‐‐‐‐‐‐‐‐‐‐                            
‐‐‐‐‐‐‐‐‐‐                    
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐



Marketable securities             
$1,510,309                        
$1,102,305                     
$408,004



 



The changes in net unrealized holding loss
on securities available for sale that has been included as a separate component
of stockholders' equity for the fiscal years ended June 30, 2003 and 2002 was a
gain of $109,004 and a loss of $366,820, respectively.



 



During the fiscal year ended June 30, 2003,
the Company sold 1,322,606 shares of Datalogic International which it held as marketable
securities for $24,243 and recorded a realized loss of $432,775.



 



On June 9, 2003, the Company received 2,250,000
shares of Nettel Corporation as payment for advisory services and has been classified
as consulting and advisory fee in the accompanying consolidated financial statements. 
The stock was valued at $1,365,300 or $0.61 per share.  That market value at
June 30, 2003 was $1,102,305.



 



 

NOTE 7 ‐ PROPERTY AND EQUIPMENT

 



Property and equipment at June 30, 2003 consist
of the following:



    



     Furniture and equipment:                          
$107,005



     Automobiles:                                                  
81,103



                                                                               
---------



                                                                           
$188,108



    Less: Accumulated depreciation:             
(164,480)



                                                                              
---------



    Net:                                                                
$ 23,627



                                                                      
=========



 



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



 



Depreciation expense was $28,830 and $30,317
for the fiscal years ended June 30, 2003 and 2002, respectively.



 



 

NOTE 8 ‐ DUE TO OFFICER

 



Due to officer, represents advances made by
an officer of the Company, which are non‐interest bearing, unsecured and due on
demand.  As on June 30, 2003, the total amount due to officer was $146,916.
..



 



NOTE 9 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.  Repricing 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 repricing 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 repricing 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 year ended June 30, 2002, $225,000 of the notes and accrued
interest and other fees of $183,695, totaling $408,695, were converted to 170,288
shares of Company's common stock. The market value of the stock issued for the conversion
was calculated and a gain of $383,455 resulted from this note conversion was recorded
as a gain on conversion of notes in the accompanying financial statements.



 



During the year ended June 30, 2003, $425,000 of the notes and accrued
interest and other fees of $447,494, totaling $872,494, were converted to 363,637
shares of Company's common stock.  The market value of the stock issued for
the conversion was calculated and a gain of $472,420 resulted from this note conversion
was recorded as a gain on conversion of notes in the accompanying financial statements. 
In addition, 8,726,425 shares of the Company's common stock were issued to exercise
the repricing warrants relating to the notes converted.



 



PROMISSORY NOTES:



 



As of June 30, 2003, 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 Labor plus 1%.



 



As of June 30, 2003, the Company has notes payable amounting $14,310
against acquisition of two automobiles. The notes are secured by auto, carry interest
rate of 8.5%. $12,089 of the notes payable is due by June 30, 2004 and $2221 is
due by June 30, 2005.



 



The Company has a note payable to a financial institution amounting
$125,000. The note bears an interest rate of 8% and is past due.



 



Following is the maturity schedule of notes payable:



 



                        
Year ended June 30

 
 







SHORT TERM NOTES PAYABLE:



 



As of June 30, 2003, the Company has short term notes payable amounting
$1,541,498 including accrued interest of $476,000. 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.



 



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.



 



The dividend amount payable to holders of preferred stock amounting
$165,055 at June 30, 2003 has been classified as other current liabilities.







NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES



 



The accounts payable and accrued expenses 

at June 30, 2003 consist of the following:



 



      Accounts payable                                                  
$  745,347



      Accrued salaries & payroll tax                              
$   28,072



      Accrued interest                                                    
$2,224,853



      Accrued legal                                                          
$  945,625



      Accrued expenses -other                                      
$  118,864



      Total                                                                        
$4,062,761





 

NOTE 11 - LITIGATION

 

LEGAL PROCEEDINGS SETTLED AND UNPAID AS OF JUNE 30, 2003:



 



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.



 



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 and pledged 1,049,600 shares of common stock of Providential Holdings, Inc.
for a personal loan in the amount of $150,000.00 from Claimant. This note was amended
on February 22, 2001 to mature on March 19, 2001. Henry D. Fahman repaid $25,000.00
to Claimant 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 mutual friend
of both Claimant's and Henry D. Fahman's. On May 31, 2001, Claimant filed a complaint
with the Superior Court of California, County of Orange, Central Justice Center
(Case No. 01CC07055) seeking $125,000.00 plus interest at the highest rate allowed
by law from and after December 19, 2000, attorney fees and costs, exemplary and
punitive damages, and ownership of the pledged shares of common stock of Providential
Holdings, Inc. Henry Fahman is committed to repaying his personal obligation to
Claimant.  This case was settled on June 30, 2003 after proceeds from the sale
of the pledged securities were paid to the Claimant.



 



COFFIN COMMUNICATIONS GROUP VS. PROVIDENTIAL HOLDINGS, INC.



 



On February 19, 2002 Coffin Communications Group filed a complaint
with Superior Court of California, County of Los Angeles Limited Jurisdiction, against
the Company (Case No. 02E01535) for $8,500 plus prejudgment interest, attorney's
fees and costs, and other and further relief. This claim is in connection with investor
relations' services rendered by Coffin Communications Group. This case was settled
for $8,500 when the acknowledgment of satisfaction of judgment was filed on July
2, 2003.



 



ARBITRATION CASES



 



During the fiscal year ended June 30, 2002, the arbitration case
brought by Richard Shaffer against Providential Securities, Inc., was closed. 
The total claim requested by the claimant of $100,000 plus interest was denied. 
This amount was recorded as a gain on legal settlement in the financial statements
since this amount has been accrued in the prior period.



 



During the fiscal year ended June 30, 2002, the arbitration case
for Tam was never filed. The prior year's accrued expense of $40,000 was reversed
and the amount was recorded as a gain on legal settlement.



 



During the fiscal year ended June 30, 2003, the arbitration case
brought by Mohammad Bagherabadi against Providential Securities, Inc., was closed. 
The total claim requested of $81,849 was reversed and the amount was recorded as
a gain on legal settlement.



 



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") r

elied 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 retainage. Because
Mark Tow was unable to complete the work according to schedule, the Company hired
Stradling Yocca Carson & Rauth to replace Mark Tow. Stradling Yocca Carson & Rauth
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 intends to vigorously defend this case. 
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.



 



ARBITRATION CASES



 



The Company has several arbitration cases that are either pending
or in preliminary stages against Providential Securities, Inc. relating to the daily
trading operations of the Company.  The Company intends to defend each of the
matters vigorously but may enter into a settlement where appropriate based on the
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 $57,105. 
This amount has been accrued in the accompanying consolidated financial statements.



 

NOTE 12 ‐ INCOME TAXES

 



The Company's income tax provision in the
current year represents mandatory state taxes for each corporation and some penalties
and interest relating to late payments.



 



The reconciliation of income tax expense (benefit)
computed at the U.S. Federal statutory rate to income tax expense (benefit) is as
follows:



 



                                                                       
June 30, 2003                        
June 30, 2002     



                                                                         
‐‐‐‐‐‐‐‐‐‐‐‐‐‐                               
‐‐‐‐‐‐‐‐‐‐‐‐‐‐



Tax at U.S. Federal statutory rates:             
$  (359,000)                         
$   (421,400)



 



State income taxes, net of federal effect:    
$  ( 63,400)                          
$   ( 74,400)



 



Change in valuation allowance:                   
$  422,400                            
$    495,800     



                                                                         
‐‐‐‐‐‐‐‐‐‐‐‐‐‐                            
‐‐‐‐‐‐‐‐‐‐‐‐‐-



                                                                           
$             -                            
$               
-     



                                                                   
==============              
==============



 



As of June 30, 2003 the Company's deferred
tax asset amounted to approximately $4.9 million, which relates primarily to NOL
carryforwards.  The deferred tax asset for the year had a related valuation
allowance in the same amount.



 



The Company had no significant deferred tax
liabilities as of June 30, 2003.



 



As of June 30, 2003, the Company estimated
the available NOL carryforwards to be approximately $12.4 million, subject to certain
limitations, which will expire on various dates through 2023.



 

NOTE 13 - 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. Common stock
equivalents have been excluded from the calculation of weighted-average shares for
purposes of calculating diluted net loss per share for 2003 and 2002 periods, as
such inclusion is anti-dilutive. 



 



                                                                         
2003                            
 2002



                                                                            



    Basic and diluted net loss
per share:



    Numerator:



         
Net Loss                                          
$(1,056,939)               
$(1,293,543)



 



    Denominator:



 



         
Basic and diluted weighted average



         
number of common shares outstanding



         
during the period:



                                                                      
42,858,502                 
28,648,000



                                       



    Basic and diluted net loss
per share:        $  (0.02)                    
$    (0.05)



                                                                
============            ===========



 

NOTE 14 - STOCKHOLDER'S DEFICIT


 



Treasury Stock:

 



During November and December 2000, the Company
issued 11.8 million shares of common stock to its treasury. These shares were issued
at their par value of $.04 per share for a total amount of $472,000.  During
fiscal year 2002, an additional 3,375,000 shares were added at a value of $328,875. 
During fiscal year 2003, an additional 11,100 shares were added at a value of $666.
During the year ended June 30, 2003, the Company settled a loan payable amount of
$24,021 in exchange of 380,900 shares issued out of treasury with a value of $29,229
resulting in loss on settlement of debts of $5,208.



 



Common Stock:



 



Fiscal year ended June 30, 2002:



 



During the year ended June 30, 2002, the Company
issued 170,288 shares of common stock for conversion of notes. The difference of
$383,455 from the notes amounting $225,000 and accrued interest and other fees of
$183,695 exchanged for the stock valued at market price of $25,240 was recorded
as an extraordinary gain.



 

During the year ended June 30, 2002, the Company
issued 3,000,000 shares of common stock for consulting service amounting $1,620,000.
In addition, 710,000 shares of common stock were issued for consulting services
amounting $183,600.  The Company issued 3,000,000 shares of common stock for
acquisition of SlimTech, recorded at $300,000.

 

Fiscal year ended June 30, 2003:

 

During the year ended June 30, 2003, the Company
issued 1,160,000 shares of common stock for services valued at $55,000.  The
Company also issued stock options for 3,000,000 shares of common stock, at exercise
price $0.05 per shares during the year ended June 30, 2003. The Company received
$125,000 for exercise of 2,500,000 options of common stock at $0.05 per share. The
Company recorded $25,000 as receivable for exercise of 500,000 options of common
stock at $0.05 per share.

 

The Company also issued stock options for
5,000,000 shares of common stock, at exercise price $0.07 per shares during the
year ended June 30, 2003. The Company received $130,340 for exercise of 1,862,000
options of common stock at $0.07 per share. The Company recorded $219,660 as receivable
for exercise of 3,138,000 options of common stock at $0.07 per share.

 

The Company issued 8,726,425 shares of common
stock for exercise of the repricing warrants for the notes converted during the
years ended June 30, 2003.







 

During the year ended June 30, 2003, $425,000
of the notes and accrued interest and other fees of $447,494, totaling $872,494
were converted into 363,537 shares of common stock valued at $400,073 resulting
in a gain of $472,420 from conversions of these notes.

 

In addition, the Company received back 3,000,000
shares of common stock valued at $120,000 from SlimTech when the agreement was rescinded
in May.  As of June 30, 2003, the shares were not cancelled and classified
as shares to be cancelled in the accompanying consolidated financial statements. 
These shares were subsequently cancelled on October 1, 2003.



 

Prepaid Consulting:

 

On April 15, 2002, the Company signed an agreement
with an unrelated third-party for consulting services.  The consultant will
consult with the Company in identifying, locating and acquiring various business
opportunities for the Company over a two year period.  The Company issued 3,000,000
shares of common stock to the consultant valued at $1,620,000 based upon the market
value of the stock at the time of consummation of the agreement.  The Company
has recorded the shares issued as a contra-equity account.

 

During the years ended June 30, 2003 and 2002,
the Company has amortized $860,060 and $168,750 and has recorded these as an operating
expense.

 

NOTE 15 - 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 14 million options under the Plan to officers, directors and employees at
an exercise price of $.50 per share.  All the options were exercisable on July
1, 2001 and expire on December 31, 2005.  As of the date of this report there
have been no options exercised and seven 
million of these options have been forfeited.







 

During the year ended June 30, 2003, the Company
granted stock options for 8,000,000 shares of common stock, at exercise price in
range of $0.05 - $0.07. All 8,000,000 options were exercised during the year ended
June 30, 2003. As the Company complies with Accounting Principles
Board Opinion No. 25 "Accounting for Stock Issued to Employees" in accounting for
options issued to employees no compensation expense has been recorded.  Had
compensation costs for the Company's stock option plan been determined based upon
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 June 30, 2003 would have been as follows:





 



Net loss as reported                          
$ (1,056,938)



Net loss - pro forma                           
$ (4,096,938)



Loss per share as reported                        
$ (0.02)



Loss per share - pro forma                         
$ (0.10)



 



The weighted average fair value of options granted for the period
ending June 30, 2003 is $.38.  The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option pricing model.  The following
assumptions were used for grants in fiscal year 2001: risk-free rate of 6.0 percent;
no expected dividend yield; expected volatility of 540 percent; and an expected
life of 5.4 years.



 



NOTE 16 - CONTRACTS AND COMMITMENTS 
 

AGREEMENT WITH DATALOGIC CONSULTING, INC.



 



DataLogic Consulting, Inc., a Texas corporation, is an IT consulting
firm and a SAS Institute Quality Partner. The Company has assisted Datalogic in
connection with its merger plan with Topclick International, Inc. and other development
strategies. On April 25, 2001, but effective April 18, 2001, Datalogic Consulting,
Inc. and the Company entered into an agreement whereby the Company would receive
10% equity in the new company that would result from the consummation of the proposed
merger between Datalogic Consulting, Inc. and Topclick International, Inc. The merger
plan between Datalogic and Toplick was consummated on July 20, 2001. The Company
received 2,666,922 shares of Datalogic International, Inc. (the new name for Topclick
International, Inc.) as the fee for the merger and acquisition consulting services
it has performed. This investment in Datalogic International, Inc. is carried on
the financial statements of Providential Holdings, Inc. at its market value as of
June 30, 2002 as a marketable security.  During the year ended June 30, 2003,
the Company had sold all of the shares it owned in Data

L
ogic (see Note 6).   





 

JOINT VENTURE AGREEMENT WITH MIMI BAN





On November 27, 2001
by effective November 23, 2001, the Company signed a joint venture agreement with
Mimi Ban, an individual, whereby Mimi Ban would transfer the liquid crystal display
(LCD) technologies to Providential for the purpose of setting up and operating one
or more LCD manufacturing plants in Vietnam. According to the joint venture agreement,
Mimi Ban will share 30%, Providential Holdings, Inc. will share 60% and other business
partners and investors, including HTV Co., Ltd., will share 10% of the net profits
that will be generated 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
supersedes all prior agreements, arrangements and covenants, including but not limited
to the 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 December
20, 2000 and any amendment thereof. As of the date of this report there have been
no manufacturing plants operating or has been set-up. Due to the lack of funding,
the Joint Venture Agreement between HTV CO, Ltd and the Company was rescinded on
May 19, 2003.



 



 



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.



 



 



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.



 



 



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 imminent
ratification of the Trade Agreement between Vietnam and the United States. During
the year ended June 30, 2003 the Company generated $61,800 in revenue and $56,628
of cost of sales from this operation.



 



In December 2001, Provimex signed a 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, Provimex has not shipped any goods to CDI under this contract.



 





PROVIDENTIAL ADVISORY SERVICES, INC.







Providential Advisory Services, Inc. (PAS) was formed in February
2000 as a California corporation. Its mission is to create distinctive value and
enrich client's lives by providing high quality investment advisory services that
will help improve their asset value over time. The Company purchased 60 percent
of the outstanding shares of this entity in July 2001 for $1,000.  As of the
date of this report this corporation has had no sales, cost of sales or gross profit. 
The Company discontinued its interest in PAS and recorded its investment in PAS
as a loss during the quarter ended March 31, 2003.



 

AGREEMENT WITH LEXOR INTERNATIONAL, INC.



 



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.



 

EQUITY LINES OF CREDIT







The Company received a $20 million equity line of credit at the beginning
of November 2001 with Boston-based Dutchess Private Equities Fund, L.P. The line
of credit's term is three years. The amount the Company could receive was dependent
on the amount of free trading shares put in an escrow account or an effective registration
statement and certain other conditions. The Company could borrow up to 95 percent
of the market price (as defined by the agreement) of the registered shares or the
free-trading shares deposited in escrow. If the Company received funds against this
line of credit it would incur a 3 percent fee, payable in cash on the gross proceeds,
and an additional 1 percent fee on the total value of the equity line, payable in
shares of the Company's common stock. The equity line of credit was terminated during
the year ended June 30, 2002



 



In July 2002, the Company secured a $10 million equity line of credit
from Los Angeles-based Mercator Momentum Fund, L.P. The line of credit's term is
three years. The amount the company could receive was dependent on the amount of
free trading shares put in an escrow account or an effective registration statement.



 



The company could draw down up to 90 percent of the market price
(as defined in the agreement) of the registered shares or the free-trading shares
deposited in



escrow. The Company agreed
to pay a 2 percent fee on the total value of the equity line,
1 percent of which would be payable in cash on the gross proceeds from the first
draw-down and the remaining 1 percent fee payable in shares of the Company's common
stock.





 



This equity line of credit was terminated on February 18, 2003 because
the Company had not made Form SB-2 registration Statement effective within the one



hundred eighty (180) days following the subscription date.



 



 

 

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.

 

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 scheduled closing date of September 12,
2002 was postponed until the additional required financial information is provided.

 



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 (note 6), and recorded consulting income of $1,365,300 on this transaction.





 





 



The Company currently leases its office space from PAUB ENTERPRISES,
LLC at $4,263.00 per month.  This lease commenced on April 1, 2001 and expires
on March 31, 2004.



 



 



 



The Company also 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 17‐ GOING CONCERN UNCERTAINTY







As shown in the accompanying consolidated
financial statements, the Company incurred a net loss of $1 million for the year
ended June 30, 2003. As of June 30, 2003, the Company had a negative working capital
of $6.4 million and a shareholder deficit of $6.5 million. 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. 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 and is formulating
additional plans to strengthen the Company's working capital position and generate
sufficient cash to meet its operating needs through June 30, 2003 and beyond. The
Company intends to raise additional capital and is currently in the process of attaining
additional financing. In addition, the Company also anticipates generating more
revenue through its proposed mergers and acquisitions.  (See Notes 18) No assurances
can be made that management will be successful in achieving its plan.



 

 

Subsequent to June 30, 2003, the Company cancelled
3,000,000 shares issued to ClearPass, Inc. and 3,000,000 shares issued to Slimtech.
(note 1).  Subsequent to June 30, 2003, the Company issued
5,141,748 for conversion of notes and 461,391 shares in connection with a letter
of intent entered into a distributor agreement. In addition, the Company issued
16,906,473 to related parties for compensation and 700,000 shares for payment of
notes, and 253,114 for repricing warrants and 2,781,435 shares to various parties
for services.









ITEM 8. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 







   
None.
 

 







PART III 
 







ITEM 9. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
 







The following table
sets forth certain information as of June 30, 2002, with respect to the Directors
and Executive Officers of the Company. 
              







NAME  
                                                 
AGE                                         
POSITION















Henry D. Fahman                                    
50                        
Chairman of the Board, President

      
Tina T. Phan                                            
36                        
Director, Secretary and Treasurer







Gene Bennett                                           
49                        
Chief Financial Officer







Tam T. Bui                                                
43                        
Chief Technology Officer





Thorman Hwinn                                       
54                        
Director
Robert W. Stevenson                            
64                         
Director

 







Directors are elected
at the annual meeting of shareholders and hold office until the following annual
meeting and until their successors are elected and qualified. All Executive Officers
serve at the discretion of the Board of Directors.

 







Henry D. Fahman has
been President and Chairman of the Board of Providential Holdings, Inc. since January
14, 2000. Mr. Fahman served as President and Chairman of the Board of Providential
Securities, Inc. from its inception in October 1992 to October 2000. He holds a
B.S., magna cum laude, in business administration from the University of California
at Berkeley, with emphasis in finance and economic analysis and policy, and has
also attended Executive Education at Harvard Business School and Stanford University.
Previously, he served as a Resettlement Coordinator for the United Nations High
Commissioner for Refugees. Mr. Fahman is currently a member of the Board of Trustees
of Union College of California and President of Providential Foundation, Inc., both
of which are non-profit organizations. Mr. Fahman is the husband of Tina T. Phan,
our Secretary and Treasurer and a member of our Board of Directors.

 







Tina T. Phan has
been a Director and Secretary of the Company since January 2000 and was Vice President
of Operations of Providential Securities, Inc. from 1995 to 2000. Mrs. Phan holds
a B.S. in management information system from California State University, Los Angeles.
Currently Mrs. Phan also serves as Treasurer of the Company and President of Providential
Advisory Services, Inc., a California corporation. Mrs. Phan was employed by the
World Relief Corporation from 1992 to 1995. Mrs. Phan is the wife of Henry D. Fahman.

 







Gene M. Bennett has
been serving as Chief Financial Officer of the Company since November 2001. 
Bennett, a CPA, has more than 20 years of experience as a chief financial officer,
controller, professor and consultant and holds an MBA with honors from Michigan
State University. He also attended law school at the University of Michigan and
Coolidge. He has assisted firms in going public, in participating in mergers and
acquisitions, and in forming strategic partnerships. He has served as Chief Financial
Officer of many companies operating in various fields, including, ProCFO, Ltd.,
BBI Holdings, Inc., Argonaut Network Systems, Inc. He has served as Vice President
of Finance for National Automobile Club of California, Certified Public Accountant
for Gerbel&Butz Baugh, CPA in Michigan and also has been a professor of law and
business, quantitative methods, audit, tax and cost accounting at University of
Honolulu, California State University, Fullerton, and Chapman University. 

 















Tam
Bui has been serving as Chief Technology Officer of the Company since May 2002.
Mr. Bui holds Bachelor and Master of Science degrees from the University of Minnesota
and has attended continuing Education at the University of California, Los Angeles.
He has over 18 years of experience with Honeywell, Inc. and TRW as Senior Production
Engineer/Computer Application Engineer, Project Manager, Department Manager, Program
Manager and Implementation Manager. His most recent responsibility has been the
implementation of LAPD Emergency Command Control Communications Systems. He has
a broad knowledge and experience in the areas of information technology, intranet/internet
technology, inventory management, material resource planning, enterprise resource
planning, human resource management, and international business.  

 
Thorman
Hwinn has been a Director of the Company since June 30, 2001. Most recently he has
held managerial positions for retailers catering to the Vietnamese-American community
in California. From 1993 to 1994, he was Vice President of Vinusa Investment & Holding
Company, a California corporation. From 1978 to 1987, he was a Professor with Vietnam's
University of Finance, serving as Chief of the Mathematics Department. From 1970
to 1975, Mr. Hwinn was an economic specialist at the Cabinet level for the Vice
Prime Minister's Office for Economic Development and a banking specialist with the
Agricultural Development Bank, Vietnam. Thorman holds an MBA, a Master's Degree
in Economics and Bachelor's degrees in philosophy, economics and mathematics.
 
Robert
W. Stevenson has been a Director of the Company since June 2003.  Mr. Stevenson
is a retired industrial executive with more than 30 years of experience in the corporate
office of Esterline Technologies Corporation and its predecessors.  He served
for 25 years in the roles of Executive Vice President and Chief Financial Officer. 
Prior positions within the corporation included Controller, Secretary and Assistant
Controller.  Prior to joining Esterline, Mr. Stevenson worked in several finance
positions for The Boeing Company, Aerospace Group including as Chief, Financial
Statements and Financials Planning for Aerospace.
 
Aside
from business consulting, Mr. Stevenson spends most of his time supporting community
activities.  He has been a member of the Mercer Island Presbyterian Chruch
since 1965.  He has served on many boards and committees for the church including
as a deacon and elder.  Currently he is representing the Presbytery of Seattle
on the chaplaincy oversight board (The Pastoral Care and Education Board) at Harborview
Hospital in Seattle, Washington.  In addition, he currently serves as a trustee
of the Presbyterian Church (U.S.A.) Foundation and is a member of its Investment
Committee; Trustee and Treasurer for Union College of California (Vietnamese Theological
College, Westminster, CA); and he is Trustee and Treasurer of Sheldon Jackson College
(in Sitka, Alaska).  Also, he is on the board of the Pacific Association for
Theological Studies and Prosthetics Outreach Foundation (also Treasurer) in Seattle,
Washington.  Over the years, he has been active in other community organizations
and currently participates on several boards and committees of the YMCA of Greater
Seattle.
 





The
Company's securities are not registered under Section 12(g) of the Exchange Act.
Accordingly, the Directors and Executive Officers of the Company are not required
to file reports under Section 16(a) of that act.

 

 







ITEM 10. EXECUTIVE COMPENSATION

 







  
 (a) Any compensation received by officers, directors, and management
personnel of the Company will be determined and approved from time to time by the
Board of Directors of the Company as it deems appropriate and reasonable. Officers,
directors, and management personnel of the Company will be reimbursed for any out-of-pocket
expenses incurred on behalf of the Company.

 







Except
for non-cash payments mentioned in the subsequent events of this report, there was
no compensation paid to any officers of the Company during the year ended June 30,
2003.

 







   
(b) There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors, or employees of the Company in the event of retirement at normal
retirement date as there is no existing plan provided for or contributed to by the
Company. 

 







   
(c) All members of the Company's Board of Directors, whether officers of the Company
or not, may receive an amount yet to be determined annually for their participation
in meetings of the Board and will be required to attend a minimum of four meetings
per fiscal year. The Company reimburses all expenses for meeting attendance or out
of pocket expenses connected directly with their Board participation.

 







  
(d) 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 fully vested 14 million options under the Plan to officers, directors and
employees at an exercise price of $.50 per share. All the options were exercisable
on July 1, 2001 and would expire on December 31, 2002. On June 15, 2002, the Company
extended the expiration date of these employee stock to 12/31/2005. As of the date
of this report, there have been no options exercised and 7 million of these options
have been forfeited.
 





                                              
NUMBER OF







                                              
SECURITIES                   
% OF TOTAL







                                              
UNDERLYING                 
OPTIONS







                                              
OPTIONS                         
GRANTED TO







                                              
GRANTED                       
EMPLOYEES                
EXERCISE               
EXERCISE              
EXPIRATION







NAME                                  
TO DATE                          
 TO DATE                      
PRICE                       
DATE                        
DATE







      
Henry D. Fahman









CEO
and Chairman of          5,000,000                                
71.43%                          
$.50                       
7/01/2001                  
12/31/2005







the
Board 

 











Tina
T. Phan







Director/Treasurer               
2,000,000                               
28.57%                          
$.50                       
7/01/2001                 
12/31/2005







& Secretary

 







The
options contain no vesting provisions, but rather must be exercised by the end of
2005. They have not been exercised by the date of this report. 
 







ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 







       
The following table sets forth information regarding the beneficial ownership of
shares of the company's common stock as of October 13, 2003 (93,497,280 issued and
outstanding, including 6,805,200 shares of treasury stock) by (i) all shareholders
known to the company to be beneficial owners of more than 5% of the outstanding
common stock; and (ii) all directors and executive officers of the company, and
as a group:

 







                                                    
NAME AND ADDRESS OF               
AMOUNT OF BENEFICIAL                 
PERCENT OF







TITLE OF CLASS                    
BENEFICIAL OWNER(1)                            
OWNERSHIP                                      
 CLASS
 





Common
Stock                               
Henry D. Fahman,                                        
17,955,328 (2),(3)                                 
19.20%







                                                          
8700 Warner Ave.,







                                                          
Fountain Valley, CA 92708



 







Common
Stock                               
Tina T. Phan (4)                                             
4,207,380                                             
4.50%                

                                                          
8700 Warner Ave.,









                                                          
Fountain Valley, CA 92708
 
Common
Stock                              
Thorman Hwinn                                                 
150,000                                                
(5)

 







Common
Stock                               
Shares of all directors and                           
22,312,708                                          
23.86%







                                                          
executive officers as a group







                                                          
(2 persons)

 

 

 













(1)
Each person has sole voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them

 







(2)
Certain of these shares have been pledged to secure certain obligations of the company.

 







(3)
Included within this total is 25,000 shares of convertible preferred shares of Providential
Securities, Inc. which may be converted to common shares under the terms of a convertible
promissory note issued by the company. 

 







(4)
Tina Phan is the wife of Henry Fahman. 
 
(5)
Less than 1%.

 

 







ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 







Henry
D. Fahman, Chairman and Chief Executive Officer of the Company, has from time to
time made cash advances to the Company. The advances are unsecured, interest free
and payable on demand
 





Certain
of the officers and directors of the company are engaged in other businesses, either
individually or through partnerships and corporations in which they have an interest,
hold an office, or serve on a board of directors. As a result, certain conflicts
of interest may arise between the company and its officers and directors. The company
will attempt to resolve such conflicts of interest in favor of the company. The
officers and directors of the company are accountable to it and its shareholders
as fiduciaries, which requires that such officers and directors exercise good faith
and integrity in handling the company's affairs. A shareholder may be able to institute
legal action on behalf of the company or on behalf of itself and other similarly
situated shareholders to recover damages or for other relief in cases of the resolution
of conflicts is in any manner prejudicial to the company.

 

 







PART IV

 

 







ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K


 

 







EXHIBIT NO.                                            
DESCRIPTION









 







 2.1                                                              
Plan of Exchange between the company and Prima Eastwest







                                                                    
Model Management, Inc. (incorporated by reference to Exhibit







                                                                    
2 to the Form 8-K filed on March 1, 1996)

 







 2.2                                                              
Corporate Combination Agreement between the company and







                                                                    
Providential Securities, Inc., effective on January 14, 2000







                                                                    
(incorporated by reference to Exhibit 10.12 to the Form 10-







                                                                    
KSB filed on January 10, 2000).

 







 3.1                                                              
Articles of Incorporation (1)

 







 3.2                                                              
Amendment to Articles of Incorporation (incorporated by







                                                                    
reference to Exhibit 3.1 of the Form 10-KSB for the fiscal







                                                                    
year ended June 30, 1995).

 







 3.3                                                              
Amendment to Articles of Incorporation (6)

 







 3.4                                                              
Certificate of Amendment to Articles of Incorporation (6)

 







 3.5                                                              
Bylaws, as amended (6)

 







 4.1                                                              
Form of Series 1 Bridge Notes Purchase and Security







                                                                    
Agreement between the Company and investors, dated March 27,







                                                                    
2000 (6)

 







 4.2                                                              
Form of Series 1 Bridge Note executed by the Company issued







                                                                    
by the Company to Investors. (6)

 







 4.3                                                              
Form of Common Stock Purchase Warrant issued by the Company







                                                                    
to investors. (6)

 







 4.4                                                              
Form of Re-pricing Warrant issued by the Company to investors. (6)

 







 4.5                                                              
Form of Registration Rights Agreement between the company







                                                                    
and investors, dated March 27, 2000 (6)

 







 4.6                                                              
Form of Common Stock Purchase Warrant to be issued by the







                                                                    
company to Sovereign Capital Advisors, LLC (6)

 







 4.7                                                              
Form of Convertible Promissory Note issued by the Company to







                                                                    
preferred shareholders of Providential Securities, Inc. (6) 

 







 5.1                                                              
Opinion Re Validity of Agreements (6) 

 







10.1                                                             
Benatone Exchange Agreement, with Creditors (2)

 







10.2                                                             
Benatone Share Acquisition Agreement (for Weldnow







                                                                    
Enterprise, Ltd.) (2)

 







10.3                                                             
Benatone Share Acquisition Agreement (Dynedeem Limited) (2) 

 







10.4                                                             
Benatone Exchange Agreement (2) 

 







10.5                                                             
Benatone Asset Sale Agreement (2)

 







10.6                                                             
Benatone Royalty Agreement (2) 

 







10.7                                                             
Benatone Consultancy Agreement (2) 

 







10.8                                                             
Benatone Deed (2)

 







10.9                                                             
Autokraft Stock Purchase Agreement (3)     

 







10.10                                                           
Autokraft Stock Subscription Agreement (3)

 







10.11                                                           
Prima Agreement and Plan of Merger (4)

 







10.12                                                           
Escrow Agreement between the company and Warshaw Burstein







                                                                    
Cohen Schelsinger & Kuh, LLP, dated March 28, 2000. (6)

 







10.13                                                            
Placement Agency Agreement between the company and Sovereign







                                                                     
Capital Advisors, LLC, dated March 28, 2000. (6)

 







10.14                                                            
Guaranty Agreement between Henry Fahman and SovCap Equity







                                                                     
Partners, Ltd, dated March 28, 2000. (6)

 







10.15                                                            
Pledge Agreement between Henry Fahman and SovCap Equity







                                                                     
Partners, Ltd, dated March 28, 2000. (6)

 







10.16                                                            
Partnership Purchase Agreement between the company and Holt







                                                                     
+ Collins, dated May 31, 2000. (6)         

 







10.17                                                            
Memorandum of Agreement between DataLogic Consulting, Inc.







                                                                     
and Providential Holdings, Inc., dated April 25, 2001. (5)

 







10.18.1                                                         
Letter of Intent between Providential Holdings, Inc. and







                                                                     
Epicenter, Inc., dated October 30, 2000. (5)

 







10.18.2                                                         
Amendment to Letter of Intent between Providential Holdings,







                                                                     
Inc. and Epicenter, Inc., dated November 30, 2000. (5)

 







10.18.3                                                         
Amendment to Letter of Intent between Providential Holdings,







                                                                     
Inc. and Epicenter, Inc., dated January 12, 2001. (5)

 







10.18.4                                                         
Amendment to Letter of Intent between Providential Holdings,







                                                                     
Inc. and Epicenter, Inc., dated June 26, 2001. (5)

 







10.18.5                                                         
Amendment to Letter of Intent between Providential Holdings,







                                                                     
Inc. and Epicenter, Inc., dated October 02, 2001. (5)

 







10.19                                                             
Joint Venture Agreement between Providential Holdings, Inc







                                                                      
and Boxo, Inc., dated January 1, 2001. (5)

 







10.20                                                            
License of Manna Technologies Joint Venture Company, dated







                                                                     
March 21, 2001. (5)

 







10.21                                                            
Memorandum of Agreement between International Consulting and







                                                                     
Training Center, Ministry of Trade, Vietnam and the Company,







                                                                     
dated March 24, 2001. (5)

 







10.22                                                            
Memorandum of Agreement among General Transportation Company







                                                                     
No. 5, Chu Lai Industrial Zone and the Company, dated March







                                                                     
25, 2001. (5)

 







10.23                                                            
Letter of Intent between Providential Holdings, Inc. and







                                                                     
Global Systems and Technologies, Corp. dated October 18,







                                                                     
2001. (6)

 







10.24                                                            
Letter of Intent between Providential Holdings, Inc. and







                                                                     
Estate Planning and Investment Company dated November 7,







                                                                     
2001. (6)

 







10.25                                                            
Joint Venture Agreement between Providential Holdings, Inc.







                                                                     
and Mimi Ban dated November 23, 2001. (6)

 







10.26                                                            
Plan of acquisition of Nettel Global Communication Corp.







                                                                     
(incorporated by reference to the Company's Current Report         

                                                                     
on Form 8-K filed May 3, 2002).



 







10.27                                                            
Joint Venture Agreement with Vietnam's Minh Hieu Joint Stock







                                                                     
Company. (7)

 







10.28                                                            
Memorandum of Agreement with HDT Enterprises, LLC dated







                                                                     
March 15, 2002. (7)

 







10.29                                                            
Memorandum of Agreement and Principle Contract with Vietnam's







                                                                     
Center of Telecom Technology. (7)

 







10.30                                                            
Stock Purchase Agreement with SlimTech, Inc. (incorporated







                                                                     
by reference to the Company's Current Report on Form 8-K, filed







                                                                     
May 1, 2002).

 







10.31                                                            
Stock Purchase Agreement with ATC Technology Corp. (incorporated







                                                                     
By reference to the Company's Current Report on Form 8-K,







                                                                     
Filed September 17, 2002) 
 
10.32                                                           
Mutual Rescission of Stock Purchase Agreement with Nettel Global Communication Corp.
(filed herewith).
 
10.33                                                           
Business Consulting Agreement with Nettel Global Communication Corp. (filed herewith)
 
10.34                                                           
Business Consulting Agreement with Medical Career College (filed herewith)
 
10.35                                                           
Mutual Rescission of Stock Purchase Agreement with Slimtech (filed herewith).
 
10.36                                                           
Mutual Rescission of Stock Purchase Agreement with Clear Pass, Inc. (filed herewith).
 
10.37                                                           
Mutual Rescission of Joint Venture Agreement with HTV CO, Ltd. (filed herewith).
 
10.38                                                           
Mutual Rescission of Stock Purchase Agreement with Real ID Technology (filed herewith).
 
10.39                                                           
Business Consulting Agreement with Lexor Incorporated (filed herewith)
 
10.40                                                           
Amended Closing Memorandum with ATC Technology Corp. (filed herewith)

 







16.1                                                              
Notification of Change of Accountants, Kabani & Co.







                                                                     
appointed (incorporated by reference to exhibits filed with







                                                                     
Form 8-K/A, filed September 10, 2001)

 







17.1                                                              
Resignation of Nhi T. Le as director and officer and







                                                                     
appointment of Thorman Hwinn as Director (incorporated by







                                                                     
reference to exhibits filed with Form 8-K, filed July 9, 2001)

 







21.1                                                              
Subsidiaries of the Registrant 

 







         
(1) Incorporated by reference to the company's Registration







         
Statement on Form S-18, declared effective August 10, 1982







         
(SEC File No. 2-78335-NY), and to the company's Annual







         
Report on Form 10-K for the fiscal year ended June 30, 1995.

 







         
(2) Incorporated by reference to the company's Current







         
Report on Form 8-K, dated September 7, 1995

 







         
(3) Incorporated by reference to the Company's Current







         
Report on Form 8-K/A, dated September 12, 1995.

 







         
(4) Incorporated by reference to the Company's Current







         
Report on Form 8-K, dated March 1, 1996.

 







         
(5) Incorporated reference to Form 10KSB for the







         
year ended June 30, 2000 filed October 16, 2001.

 







         
(6) Incorporated by reference to Form 10KSB for the







         
year ended June 30, 2001 filed December 17, 2001.

 









    

         
(7) Incorporated by reference to Form 10QSB for the









         
quarter ended March 31, 2002 filed May 14, 2002. 
 
99.1                                                            
Certifications in Accordance with Sections 302 and  906 of the Sarbanes-Oxley
Act of 2002
 

Item 14.    Controls and Procedures 

As of the end of the period covered by this annual report, we carried out an evaluation,
under the supervision and with the participation of our management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to Rule
15d-15 under the Securities Exchange Act of 1934. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in ensuring that the information required
to be disclosed in the reports we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms.

There have been no changes in internal control over financial reporting that has
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting subsequent to the date the Chief Executive Officer
and Chief Financial Officer completed their evaluation. 

 

 







SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS.

 

 







No
annual report or proxy material has been sent to security holders nor are such materials
anticipated to be sent, with the exception of this Annual Report on Form 10-KSB
 

 





SIGNATURES 

 

        In accordance with Section
13 or 15 (d) of the Exchange Act, the Company caused this report to be signed on
its behalf by the









undersigned,
thereunto duly authorized.

 







PROVIDENTIAL HOLDINGS, INC.

 

 







Date:
October 10, 2002                                                                                                
By: /s/ Henry D. Fahman                   







                                                                                                                                        
Henry D. Fahman, President

 

 

 







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

 

 







SIGNATURE                                                                
TITLE                                                                    
 DATE

 

 







/s/ Henry D. Fahman
HENRY
D. FAHMAN                                      
President/Chairman                                                 
October 15, 2003

 







/s/ Thorman Hwinn







THORMAN
HWINN                                                 
Director                                                           
October 15, 2003 

 







/s/ Tina T. Phan















TINA
T. PHAN                                                
Secretary/Treasurer/Director                                 
October 15, 2003
 

/s/ Robert W. Stevenson
ROBERT
W. STEVENSON                                        
Director                                                          
October 15, 2003

 







/s/ Gene Bennett







GENE
BENNETT                                             
Chief Financial Officer                                             
October 15, 2003 

 

 

 

 





Exhibit No. 10.32   
Mutual Rescission of Stock Purchase Agreement with Nettel Global Communication Corp.





MUTUAL RESCISSION OF STOCK PURCHASE AGREEMENT 


  



AND OF AMENDMENT TO STOCK PURCHASE AGREEMENT


 




              
This Agreement of Mutual Rescission of a Stock Purchase Agreement and of an Amendment
to Stock Purchase Agreement is made and entered into this 19th 
day of May 2003, by and between Providential Holdings, Inc., a Nevada corporation,
(hereinafter referred to as "Providential") and Nettel Global Communication 
Corp., a Delaware corporation, (hereinafter referred to as "Nettel"). 



 



              
The parties recite and declare that:  


 



A.    On December 2, 2002, the parties entered into
a Stock Purchase Agreement, which Agreement is attached hereto and marked Exhibit
A. 



 



B.    On January 17, 2003, the parties entered into
an Amendment to Stock Purchase Agreement, which Amendment is attached hereto and
marked Exhibit B. 



 



C.    The parties to that Stock Purchase Agreement
and Amendment and to this Agreement of Mutual Rescission desire to rescind the referenced
Stock Purchase Agreement and Amendment to Stock Purchase Agreement.



 



              
For the reasons set forth above, and in consideration of the mutual covenants of
the parties hereto, the parties agree as follows:  


 



                   
(1)    Nettel shall return to Providential
two Promissory Notes in the amounts of $500,000 and $2,000,000, respectively, both
of which were dated January 17, 2003; 



 



                   
(2)    Nettel agrees to repay $34,000.00 to
Providential three months from the signing of this Mutual Rescission;



 



                   
(3)   Except as stipulated elsewhere in this Mutual Rescission, both 
Providential and Nettel agree to protect, save, defend, indemnify, and hold harmless
the other party from and against any and all expenses, damages, claims, suits, action,
judgments, and/or costs whatsoever, including attorney's fees, arising out of, or
in any way connected with any claim or action arising out this Agreement. 



 


              
The above-mentioned Stock Purchase Agreement and its Amendment
are hereby rescinded as of this day first above written, and neither party shall
have any further rights or duties thereunder except as stated above.



 



Dated: May 19, 2003                                          
Dated: May 19, 2003
 



Providential Holdings, Inc.                                                        
Nettle Global Communication Corp.



A Nevada corporation                                                                  
A Delaware corporation



/s/Henry D. Fahman                                                                      
/s/ Michael Nguyen



Henry D. Fahman, CEO                                                                 
President

 



 



Exhibit No. 10.33    Business
Consulting Agreement with Nettel Global Communication Corp.



        



 



 

BUSINESS CONSULTANT AGREEMENT

 

THIS BUSINESS CONSULTANT AGREEMENT ("Agreement")
is made and entered into in duplicate this 1st   day of May
2003, by and between Nettel Global Communication Corp., a Delaware corporation,
("Corporation"), and  Providential Capital, a DBA of Providential Holdings,
Inc., a Nevada corporation ("Consultant").

 

RECITALS

 

A.   It is the desire of the Corporation
to engage the services of the Consultant to consult with the Corporation regarding
certain business opportunities available to the Corporation and other relevant matters
relating to the business of the Corporation.

 

B.    It is the desire of the
Consultant to so consult with the Board of Directors of the Corporation ("Board")
and the officers of the Corporation concerning those matters.

 

C.  The parties desire that the Corporation
retain the Consultant to consult with the Corporation and assist the Corporation
in identifying, locating and, possibly, acquiring various business opportunities
for the Corporation, including but not limited to a reverse merger with a fully-reporting
publicly-traded company, further identification, introduction, and analysis of 
prospective merger candidates, major investors and strategic alliances in the areas
of investment banking, public relations, investor relations, as well as guidance
in any other matters or special projects, business development, additional financing,
corporate governance, and strategic planning that may be referred to the Company
from time to time effective upon signing of this agreement, on the terms and subject
to the conditions specified in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL
PROMISES,

UNDERTAKINGS AND COVENANTS SPECIFIED HEREIN,
AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY,
THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:

 

1. Incorporation of Recitals.
The recitals of this Agreement, specified above, by this
reference, are made a part of this Agreement, as though specified completely and
specifically at length in this Agreement.

 

2. Term of Agreement. 
The respective duties and obligations of the parties shall

commence on May 01 , 2003 ("Effective Date")
and shall continue until terminated by either of the parties. In the event either
party to this Agreement desires to terminate this Agreement, that party shall provide
to the other party notice of that party's intention to terminate this Agreement,
and which notice shall specify the date of termination of this Agreement; provided,
however, that such date of termination shall not be sooner than 60 days after the
date that such notice is given to such other party.

 

3. Confidential Information.

 

3.1 Definition of Confidential Information.
As used in this Agreement, 
"Confidential Information" shall, subject
to the provisions set forth at Section 3.2 of this

Agreement, include, but not be limited to,
computer programs, software, source codes, computations, data files, algorithms,
techniques, processes, designs, specifications, drawings, charts, plans, schematics,
computer disks, magnetic tapes, books, files, records, reports, documents, instruments,
agreements, contracts, correspondence, letters, memoranda, financial, accounting,
sales, purchase and employment data, capital structure information, corporate organizational
information, identities, names and addresses of shareholders, directors, officers,
employees, contractors, vendors, suppliers, customers, clients and all persons and
entities associated with the Corporation, information pertaining to projects, projections,
assumptions and analyses, and all other data and information and similar items relating
to the business of the Corporation and all other data and information and similar
items relating to the Corporation of whatever kind or nature and whether or not
prepared or compiled by the Corporation.

 

3.2 General Knowledge. 
Confidential Information, as that term is used in this 
Agreement, shall not include information
which:

 

(a) is already known without restriction to
the Consultant; or

(b) is or becomes publicly known as a result
of no wrongful act of the Consultant;   or

(c) is received from a third party without
restriction and without breach of this

Agreement; or

(d) is independently developed by the Consultant.

 

3.3. Non-Disclosure. 
The Consultant and the Consultant's representatives, heirs,
successors, employees, assigns,
attorneys, affiliates, agents and other representatives, as the case may be, and
each of their shareholders, partners, directors, officers, employees, representatives,
attorneys, and all other persons or entities acting by, through, under, or in connection
with them, or any of them, shall not, directly or indirectly, divulge, disclose,
disseminate, distribute, license, circulate, publish, use, sell or otherwise make
known any Confidential Information to any third party or person or entity not expressly
authorized by the Corporation in advance in writing to receive such Confidential
Information. The Consultant shall prevent disclosure of any Confidential Information
to any third party and shall exercise the most stringent care and discretion in
accordance with the Consultant's duty pursuant to this Agreement to prevent any
such disclosure.

 

3.4. Ownership and Reproduction or
Translation of Confidential Information. All Confidential
Information is and shall remain the property of the Corporation and may not be reproduced,
replicated, recreated, reconstructed, remanufactured, engineered, reverse engineered,
copied, translated, compiled, interpreted or decompiled, in any manner whatsoever
whether electronic, electromagnetic, electromechanical, mechanical, chemical or
photographic without the prior written consent of the Corporation.

 

3.5. Removal and Return of Confidential
Information. The Consultant shall only remove such original
or reproduced, replicated or photocopied Confidential Information from the premises
of the Corporation or any bailee or other place of repository as may be expressly
permitted in advance in writing by the Corporation. The Consultant shall promptly
return to the Corporation all Confidential Information upon the request of the Corporation
and shall not retain any reproductions, replications, photocopies or other copies
or renditions of any Confidential Information. The Consultant shall certify in writing
to the Corporation that the Consultant has either returned or destroyed all such
reproductions, replications, photocopies or copies or other

renditions.

 

3.6. Prohibition of Use. 
The Consultant shall not directly or indirectly make any use
whatsoever of Confidential Information or of any feature, specification, detail
or other characteristic contained in, or derived from, any Confidential Information,
except as may be expressly authorized by the Corporation in writing.

 

3.7. Competitive Activities.
Any unauthorized use, sale, licensing, marketing, transfer
or disclosure of Confidential Information obtained by the Consultant, including
information concerning the Confidential Information and any future or proposed activities
by the Corporation or any of the Corporation's employees, associates, affiliates,
agents, consultants or representatives, and the fact that those activities may be
considered or in production, as well as any description of the features, specifications,
or characteristics of those activities, shall constitute unfair competition and
shall be a breach of this Agreement and of the Consultant's fiduciary duties to
the Corporation. The Consultant shall not engage in any unfair competition with
the Corporation at any time, whether during or following the completion of the term
of this Agreement.

 

4. Consultations. 
The Consultant shall consult with the Board and the officers of the
Corporation, at reasonable times, concerning any issue of importance regarding certain
opportunities available to the Corporation and other relevant matters relating to
the business of the Corporation. Specifically, subject to those restrictions specified
in Paragraph 8 it is anticipated that the Consultant shall (i) assist the officers
of the Corporation in connection with certain delegated matters regarding the funding
and capital requirements of the Corporation and (ii) introduce the Corporation to
investment bankers, broker dealers, institutional investors and qualified prospective
merger or acquisition candidates for purposes of allowing the Corporation to consider
and, if appropriate, consummate and close certain mergers and acquisitions and other

opportunities. The provisions of this Agreement
notwithstanding, the services of the Consultant to be provided pursuant to the provisions
of this Agreement do not include investor relation services or the direct or indirect
promotion of the Corporation's securities in any manner whatsoever.

 

5. Management Power of the Consultant.
The business affairs of the Corporation and the operation
of business of the Corporation shall be conducted by the officers and administrative
staff and employees of the Corporation. It is the intention of the Corporation not
to confer on the Consultant, and the Consultant shall not have, any power of direction,
management, supervision or control of the administrative staff or other employees
of the Corporation, or to otherwise be involved with the management of the business
of the Corporation.

 

6. Authority to Contract. 
The Consultant shall have no power to, and the Consultant shall
not, obligate the Corporation in any manner whatsoever to any contract, agreement,
undertaking, commitment or other obligation.

 

7. Compensation. 
As consideration for the services to be provided by the Consultant
to the Corporation pursuant to the provisions of this Agreement, on the Closing
Date of the proposed merger between the Corporation and a fully-reporting publicly
traded company the Corporation shall issue or caused to be issued to the Consultant
fifteen percent (15%) of the newly-combined company's ("NewCo's") $.001 par value
common stock, which shares shall be "restricted securities" pursuant to the provisions
of Rule 144.  Consultant
acknowledges that the receipt of the Shares involves a high degree of risk and further
acknowledges that it can bear the economic risk of receiving the Shares, including
the total loss of its investment.

 





              
Consultant understands that the issuance of the Shares is being made pursuant to
an exemption from registration under state law and with the Securities and Exchange
Commission afforded by Section 4(2) of the Securities Act of 1933 and/or Regulation
D adopted by the Commission relating to transactions by an issuer not involving
any public offering. Consequently, the Shares are "restricted securities" as that
term is defined under the federal securities laws and the materials submitted to
Consultant have not been subject to the review and comment by the Staff of the Commission,
the National Association of Securities Dealers, Inc. or any state securities regulators. 
Consultant understands that it must bear the economic risks of receiving the Shares
because the securities have not been registered under the Act, and therefore are
subject to restrictions on transfer such that the securities may not be sold or
otherwise transferred unless they are registered under the Act and any applicable
state securities law or an exemption from such registration is available.

 

8. Registration Status of Consultant.
The Consultant is not engaged in the business of effecting
transactions in securities for the accounts of others. The Consultant is not registered
with any agency as a broker-dealer, investment advisor or investment manager, and,
as a result, is precluded by law from providing to the Corporation services which
would be considered to be those of a broker-dealer, investment advisor or investment
manager in connection with the placement, offer or sale of securities. In that regard,
the Consultant shall not offer, offer to sell, offer for sale, sell, or induce or
attempt to induce the purchase or sale of securities of the Corporation. None of
the services to be provided by the Consultant pursuant to the provisions of this
Agreement are intended to be or shall be construed as offering or selling securities,
or providing investment, legal or tax advice.

 

9. Services of Consultant Not Exclusive.
Subject to the provisions of Section 3.7 of this Agreement,
the Consultant may represent, perform services for, and be employed by, any additional
persons as the Consultant, in the Consultant's sole discretion, determines to be
necessary or appropriate.

 

10. Legal and Equitable Remedies.
Because of the uniqueness of the services to be performed
by the Consultant for the Corporation pursuant to the provisions of this Agreement,
and because the Consultant's reputation as a business and financial consultant may
be affected by the financial success or failure or the Corporation, in addition
to the other rights and remedies that the Consultant may have for a breach of this
Agreement, the Consultant shall have the right to enforce this Agreement, and all
of its provisions, by injunction, specific performance or other relief in a court
of equity. If any legal action is necessary to enforce or interpret any provision
of this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
that party may be entitled.

 

11. Relationship Created. 
The Consultant is not an employee of the Corporation for any
purpose whatsoever, but is an independent contractor. The Corporation is interested
only in the results obtained by the Consultant, who shall have the sole and exclusive
control of the manner and means of performing pursuant to this Agreement. The Corporation
shall not have the right to require the Consultant to collect accounts, investigate
customer or shareholder complaints, attend meetings, periodically report to the
Corporation, follow prescribed itineraries, keep records of business transacted,
make adjustments, conform to particular policies of the Corporation, or do anything
else which would jeopardize the relationship of independent contractor between the
Corporation and the Consultant. All expenses and disbursements, including, but not
limited to, those for travel and maintenance, entertainment, office, clerical and
general administrative expenses, that may be incurred by the Consultant in connection
with this Agreement shall be borne and paid wholly and completely by the Consultant,
and the Corporation shall not be in any way responsible or liable therefor.

 

12. Indemnification. 
Each party shall save the other party harmless from and against and
shall indemnify the other party for any liability, loss, costs, expenses, or damages
however caused by reason of any injury (whether to body, property, or personal or
business character or reputation) sustained by any person or to any person or to
property by reason of any act, neglect, default, or omission of such party or any
of such party's agents, employees, or other representatives, and, such party shall
pay any and all amounts to be paid or discharged in case of an action or any such
liability less costs, expenses, or damages. If either party is sued in any court
for damages by reason of any of the acts of the other party referred to in this
paragraph, such other party shall defend said action (or cause same to be defended)
at such other party's own expense and shall pay and discharge any judgment that
may be rendered in any such action; if such other party fails or neglects to so
defend in said action, the party sued may defend the same and any expenses, including
reasonable attorneys' fees, which such party may pay or incur in defending said
action and the amount of any judgment which such party may be required to pay as
a result of said action shall be promptly reimbursed upon demand.

 

13. Governmental Rules and Regulations.
The provisions of this Agreement and the relationship
contemplated by the provisions of this Agreement are subject to any and all present
and future orders, rules and regulations of any duly constituted authority having
jurisdiction of that relationship.

 

14. Notices. 
All notices, requests, demands or other communications pursuant to
this Agreement shall be in writing or by telex or facsimile transmission and shall
be deemed to have been duly given (i) on the date of service, if delivered in person
or by telex or facsimile transmission (with the telex or facsimile confirmation
of transmission receipt serving as confirmation of service when sent and provided
telexed or telecopied notices are also mailed by first class, certified or registered
mail, postage prepaid); or (ii) 48 hours after mailing by first class, registered
or certified mail, postage prepaid, and properly addressed as follows:

 

If to the Corporation:                                                           
Nettel Global Communication Corp.

2500 Columbia House Blvd 
Vancouver, Washington 98660 
Telephone: 360-696-3412 
Fax: 503-210-0279

                                            

 

 

If to the Consultant:                                              
Providential Capital

8700 Warner Avenue, Suite 200

Fountain Valley, CA 92708

Telephone: (714) 596-0244

Facsimile Machine: (714) 596-0302

 

or at such other address as the party affected
may designate in a written notice to such other party in compliance with this paragraph.

 

15. Entire Agreement. 
This Agreement is the final written expression and the complete and
exclusive statement of all the agreements, conditions, promises, representations,
warranties and covenants between the parties with respect to the subject matter
of this Agreement, and this Agreement supersedes all prior or contemporaneous agreements,
negotiations, representations, warranties, covenants, understandings and discussions
by and between and among the parties, their respective representatives, and any
other person, with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to amend
this Agreement and is signed by each of the parties.

 

16. Number and Gender. 
Whenever the singular number is used in this Agreement, and when
required by the context, the same shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders, and vice versa;
and the word "person" shall include corporation, firm, trust, estate, joint venture,
governmental agency, sole proprietorship, political subdivision, company, congregation,
organization, fraternal order, club, league, society, municipality, association,
joint stock company, partnership or other form of entity.

 

17. Execution in Counterparts.
This Agreement may be prepared in multiple copies and
forwarded to each of the parties for execution. All of the signatures of the parties
may be affixed to one copy or to separate copies of this Agreement and when all
such copies are received and signed by all the parties, those copies shall constitute
one agreement which is not otherwise separable or divisible.

 

18. Choice of Law and Consent to
Jurisdiction. All questions concerning the validity, interpretation
or performance of any of the terms, conditions and provisions of this Agreement
or of any of the rights or obligations of the parties, shall be governed by, and
resolved in accordance with, the laws of the State of California.

 

19. Assignability. 
Neither party shall sell, assign, transfer, convey or encumber this
Agreement or any right or interest in this Agreement or pursuant to this Agreement,
or suffer or permit any such sale, assignment, transfer or encumbrance to occur
by operation of law without the prior written consent of the other party. In the
event of any sale, assignment, transfer or encumbrance consented to by such other
party, the transferee or such transferee's legal representative shall agree with
such other party in writing to assume personally, perform and be obligated by, the
covenants, obligations, warranties, representations, terms, conditions and provisions
specified in this Agreement.

 

20. Severability. 
In the event any part of this Agreement or the subject matter of
this Agreement, for any reason, is determined by a court of competent jurisdiction
to be invalid, such determination shall not affect the validity of any remaining
portion or subject matter of this Agreement, which remaining portion or subject
matter shall remain in full force and effect as if this Agreement had been executed
with the invalid portion or subject matter thereof eliminated. It is hereby declared
the intention of the parties that they would have executed the remaining portion
or subject matter of this Agreement without including any such part, parts, portion
or subject matter which, for any reasons, may be hereafter determined to be invalid.

 

21. Force Majeure. 
If any party is rendered unable, completely or partially, by the
occurrence of an event of "force majeure" (hereinafter defined) to perform such
party's obligations created by the provisions of this letter of intent, such party
shall give to the other party prompt written notice of the event of "force majeure"
with reasonably complete particulars concerning such event; thereupon, the obligations
of the party giving such notice, so far as those obligations are affected by the
event of "force majeure," shall be suspended during, but no longer than, the continuance
of the event of "force majeure." The party affected by such event of "force majeure"
shall use all reasonable diligence to resolve, eliminate and terminate the event
of "force majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove specified,
shall not require the settlement of strikes, lockouts or other labor difficulties
by the party involved, contrary to such party's wishes, and the resolution of any
and all such difficulties shall be handled entirely within the discretion of the
party concerned. The term "force majeure" as used in this letter of intent shall
be defined as and mean any act of God, strike, civil disturbance, lockout or other
industrial disturbance, act of the public enemy, war, blockage, public riot, earthquake,
tornado, hurricane, lightning, fire, public demonstration, storm, flood, explosion,
governmental action, governmental delay, restraint or inaction, unavailability of
equipment, and any other cause or event, whether of the type enumerated specifically
in this section or otherwise, which is not reasonably within the control of the
party claiming such suspension.

 

22. Consent to Agreement. 
By executing this Agreement, each party, for himself, represents
such party has read or caused to be read this Agreement in all particulars, and
consents to the rights, conditions, duties and responsibilities imposed upon such
party as specified in this Agreement.

 

IN WITNESS WHEREOF the parties have executed
this Business Consultant and

Financial Consultant Agreement in duplicate
and in multiple counterparts, each of which shall have the force and effect of an
original, on the date specified in the preamble of this Agreement.

 

 

CORPORATION:                                                              
CONSULTANT:

 

Dated: May 1, 2003                                                                           
Dated: May 1, 2003

Nettel Global Communication Corp.,                                  
Providential Capital,                                    

a Delaware Corporation                                                      
DBA of Providential Holdings, Inc.,

a Nevada Corporation

By:/s/ Michael Nguyen                                                        
By:/s/ Henry D. Fahman

Its President:                                                                                      
Its President:

 



 





Exhibit No. 10.34    Business
Consulting Agreement with Medical Career College



 



 

BUSINESS CONSULTANT AGREEMENT

 

THIS BUSINESS CONSULTANT AGREEMENT ("Agreement")
is made and entered into in duplicate this 29th day of May 2003, by and
between  Medical Career College, a California corporation, Atlantis Career
College, a California corporation ("Company"), and  Providential Capital, a
DBA of Providential Holdings, Inc., a Nevada corporation ("Consultant").

 

RECITALS

 

A.   It is the desire of the Company
to engage the services of the Consultant to consult with the Company regarding certain
business opportunities available to the Company and other relevant matters relating
to the business of the Company.

 

B.    It is the desire of the
Consultant to so consult with the Board of Directors of the Company ("Board") and
the officers of the Company concerning those matters.

 

C.  The parties desire that the Company
retain the Consultant to consult with the Company and assist the Company in identifying,
locating and, possibly, acquiring various business opportunities for the Company,
including but not limited to a reverse merger with a fully-reporting publicly-traded
company, further identification, introduction, and analysis of  prospective
merger candidates, major investors and strategic alliances in the areas of investment
banking, public relations, investor relations, as well as guidance in any other
matters or special projects, business development, additional financing, corporate
governance, and strategic planning that may be referred to the Company from time
to time effective upon signing of this agreement, on the terms and subject to the
conditions specified in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL
PROMISES,

UNDERTAKINGS AND COVENANTS SPECIFIED HEREIN,
AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY,
THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:

 

1. Incorporation of Recitals.
The recitals of this Agreement, specified above, by this
reference, are made a part of this Agreement, as though specified completely and
specifically at length in this Agreement.

 

2. Term of Agreement. 
The respective duties and obligations of the parties shall

commence on May 27 , 2003 ("Effective Date")
and shall continue until terminated by either of the parties. In the event either
party to this Agreement desires to terminate this Agreement, that party shall provide
to the other party notice of that party's intention to terminate this Agreement,
and which notice shall specify the date of termination of this Agreement; provided,
however, that such date of termination shall not be sooner than 60 days after the
date that such notice is given to such other party.

 

3. Confidential Information.

 

3.1 Definition of Confidential Information.
As used in this Agreement, 
"Confidential Information" shall, subject
to the provisions set forth at Section 3.2 of this

Agreement, include, but not be limited to,
computer programs, software, source codes, computations, data files, algorithms,
techniques, processes, designs, specifications, drawings, charts, plans, schematics,
computer disks, magnetic tapes, books, files, records, reports, documents, instruments,
agreements, contracts, correspondence, letters, memoranda, financial, accounting,
sales, purchase and employment data, capital structure information, corporate organizational
information, identities, names and addresses of shareholders, directors, officers,
employees, contractors, vendors, suppliers, customers, clients and all persons and
entities associated with the Company, information pertaining to projects, projections,
assumptions and analyses, and all other data and information and similar items relating
to the business of the Company and all other data and information and similar items
relating to the Company of whatever kind or nature and whether or not prepared or
compiled by the Company.

 

3.2 General Knowledge. 
Confidential Information, as that term is used in this 
Agreement, shall not include information
which:

 

(a) is already known without restriction to
the Consultant; or

(b) is or becomes publicly known as a result
of no wrongful act of the Consultant;   or

(c) is received from a third party without
restriction and without breach of this

Agreement; or

(d) is independently developed by the Consultant.

 

3.3. Non-Disclosure. 
The Consultant and the Consultant's representatives, heirs,
successors, employees, assigns,
attorneys, affiliates, agents and other representatives, as the case may be, and
each of their shareholders, partners, directors, officers, employees, representatives,
attorneys, and all other persons or entities acting by, through, under, or in connection
with them, or any of them, shall not, directly or indirectly, divulge, disclose,
disseminate, distribute, license, circulate, publish, use, sell or otherwise make
known any Confidential Information to any third party or person or entity not expressly
authorized by the Company in advance in writing to receive such Confidential Information.
The Consultant shall prevent disclosure of any Confidential Information to any third
party and shall exercise the most stringent care and discretion in accordance with
the Consultant's duty pursuant to this Agreement to prevent any such disclosure.

 

3.4. Ownership and Reproduction or
Translation of Confidential Information. All Confidential
Information is and shall remain the property of the Company and may not be reproduced,
replicated, recreated, reconstructed, remanufactured, engineered, reverse engineered,
copied, translated, compiled, interpreted or decompiled, in any manner whatsoever
whether electronic, electromagnetic, electromechanical, mechanical, chemical or
photographic without the prior written consent of the Company.

 

3.5. Removal and Return of Confidential
Information. The Consultant shall only remove such original
or reproduced, replicated or photocopied Confidential Information from the premises
of the Company or any bailee or other place of repository as may be expressly permitted
in advance in writing by the Company. The Consultant shall promptly return to the
Company all Confidential Information upon the request of the Company and shall not
retain any reproductions, replications, photocopies or other copies or renditions
of any Confidential Information. The Consultant shall certify in writing to the
Company that the Consultant has either returned or destroyed all such reproductions,
replications, photocopies or copies or other

renditions.

 

3.6. Prohibition of Use. 
The Consultant shall not directly or indirectly make any use
whatsoever of Confidential Information or of any feature, specification, detail
or other characteristic contained in, or derived from, any Confidential Information,
except as may be expressly authorized by the Company in writing.

 

3.7. Competitive Activities.
Any unauthorized use, sale, licensing, marketing, transfer
or disclosure of Confidential Information obtained by the Consultant, including
information concerning the Confidential Information and any future or proposed activities
by the Company or any of the Company's employees, associates, affiliates, agents,
consultants or representatives, and the fact that those activities may be considered
or in production, as well as any description of the features, specifications, or
characteristics of those activities, shall constitute unfair competition and shall
be a breach of this Agreement and of the Consultant's fiduciary duties to the Company.
The Consultant shall not engage in any unfair competition with the Company at any
time, whether during or following the completion of the term of this Agreement.

 

4. Consultations. 
The Consultant shall consult with the Board and the officers of the
Company, at reasonable times, concerning any issue of importance regarding certain
opportunities available to the Company and other relevant matters relating to the
business of the Company. Specifically, subject to those restrictions specified in
Paragraph 8 it is anticipated that the Consultant shall (i) assist the officers
of the Company in connection with certain delegated matters regarding the funding
and capital requirements of the Company and (ii) introduce the Company to investment
bankers, broker dealers, institutional investors and qualified prospective merger
or acquisition candidates for purposes of allowing the Company to consider and,
if appropriate, consummate and close certain mergers and acquisitions and other

opportunities. The provisions of this Agreement
notwithstanding, the services of the Consultant to be provided pursuant to the provisions
of this Agreement do not include investor relation services or the direct or indirect
promotion of the Company's securities in any manner whatsoever.

 

5. Management Power of the Consultant.
The business affairs of the Company and the operation
of business of the Company shall be conducted by the officers and administrative
staff and employees of the Company. It is the intention of the Company not to confer
on the Consultant, and the Consultant shall not have, any power of direction, management,
supervision or control of the administrative staff or other employees of the Company,
or to otherwise be involved with the management of the business of the Company.

 

6. Authority to Contract. 
The Consultant shall have no power to, and the Consultant shall
not, obligate the Company in any manner whatsoever to any contract, agreement, undertaking,
commitment or other obligation.

 

7. Compensation. 
As consideration for the services to be provided by the Consultant
to the Company pursuant to the provisions of this Agreement, on the Closing Date
of the proposed merger between the Company and a fully-reporting publicly traded
company the Company shall issue or caused to be issued to the Consultant fifteen
percent (15%) of the newly-combined company's ("NewCo") common stock, which shares
shall be "restricted securities" pursuant to the provisions of Rule 144. These shares
will only be issued to the Consultant if and when said merger is closed. 
Consultant acknowledges that the receipt
of the Shares involves a high degree of risk and further acknowledges that it can
bear the economic risk of receiving the Shares, including the total loss of its
investment.

 





              
Consultant understands that the issuance of the Shares is being made pursuant to
an exemption from registration under state law and with the Securities and Exchange
Commission afforded by Section 4(2) of the Securities Act of 1933 and/or Regulation
D adopted by the Commission relating to transactions by an issuer not involving
any public offering. Consequently, the Shares are "restricted securities" as that
term is defined under the federal securities laws and the materials submitted to
Consultant have not been subject to the review and comment by the Staff of the Commission,
the National Association of Securities Dealers, Inc. or any state securities regulators. 
Consultant understands that it must bear the economic risks of receiving the Shares
because the securities have not been registered under the Act, and therefore are
subject to restrictions on transfer such that the securities may not be sold or
otherwise transferred unless they are registered under the Act and any applicable
state securities law or an exemption from such registration is available.

 

8. Registration Status of Consultant.
The Consultant is not engaged in the business of effecting
transactions in securities for the accounts of others. The Consultant is not registered
with any agency as a broker-dealer, investment advisor or investment manager, and,
as a result, is precluded by law from providing to the Company services which would
be considered to be those of a broker-dealer, investment advisor or investment manager
in connection with the placement, offer or sale of securities. In that regard, the
Consultant shall not offer, offer to sell, offer for sale, sell, or induce or attempt
to induce the purchase or sale of securities of the Company. None of the services
to be provided by the Consultant pursuant to the provisions of this Agreement are
intended to be or shall be construed as offering or selling securities, or providing
investment, legal or tax advice.

 

9. Services of Consultant Not Exclusive.
Subject to the provisions of Section 3.7 of this Agreement,
the Consultant may represent, perform services for, and be employed by, any additional
persons as the Consultant, in the Consultant's sole discretion, determines to be
necessary or appropriate.

 

10. Legal and Equitable Remedies.
Because of the uniqueness of the services to be performed
by the Consultant for the Company pursuant to the provisions of this Agreement,
and because the Consultant's reputation as a business and financial consultant may
be affected by the financial success or failure or the Company, in addition to the
other rights and remedies that the Consultant may have for a breach of this Agreement,
the Consultant shall have the right to enforce this Agreement, and all of its provisions,
by injunction, specific performance or other relief in a court of equity. If any
legal action is necessary to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which that party may
be entitled.

 

11. Relationship Created. 
The Consultant is not an employee of the Company for any purpose
whatsoever, but is an independent contractor. The Company is interested only in
the results obtained by the Consultant, who shall have the sole and exclusive control
of the manner and means of performing pursuant to this Agreement. The Company shall
not have the right to require the Consultant to collect accounts, investigate customer
or shareholder complaints, attend meetings, periodically report to the Company,
follow prescribed itineraries, keep records of business transacted, make adjustments,
conform to particular policies of the Company, or do anything else which would jeopardize
the relationship of independent contractor between the Company and the Consultant.
All expenses and disbursements, including, but not limited to, those for travel
and maintenance, entertainment, office, clerical and general administrative expenses,
that may be incurred by the Consultant in connection with this Agreement shall be
borne and paid wholly and completely by the Consultant, and the Company shall not
be in any way responsible or liable therefor.

 

12. Indemnification. 
Each party shall save the other party harmless from and against and
shall indemnify the other party for any liability, loss, costs, expenses, or damages
however caused by reason of any injury (whether to body, property, or personal or
business character or reputation) sustained by any person or to any person or to
property by reason of any act, neglect, default, or omission of such party or any
of such party's agents, employees, or other representatives, and, such party shall
pay any and all amounts to be paid or discharged in case of an action or any such
liability less costs, expenses, or damages. If either party is sued in any court
for damages by reason of any of the acts of the other party referred to in this
paragraph, such other party shall defend said action (or cause same to be defended)
at such other party's own expense and shall pay and discharge any judgment that
may be rendered in any such action; if such other party fails or neglects to so
defend in said action, the party sued may defend the same and any expenses, including
reasonable attorneys' fees, which such party may pay or incur in defending said
action and the amount of any judgment which such party may be required to pay as
a result of said action shall be promptly reimbursed upon demand.

 

13. Governmental Rules and Regulations.
The provisions of this Agreement and the relationship
contemplated by the provisions of this Agreement are subject to any and all present
and future orders, rules and regulations of any duly constituted authority having
jurisdiction of that relationship.

 

14. Notices. 
All notices, requests, demands or other communications pursuant to
this Agreement shall be in writing or by telex or facsimile transmission and shall
be deemed to have been duly given (i) on the date of service, if delivered in person
or by telex or facsimile transmission (with the telex or facsimile confirmation
of transmission receipt serving as confirmation of service when sent and provided
telexed or telecopied notices are also mailed by first class, certified or registered
mail, postage prepaid); or (ii) 48 hours after mailing by first class, registered
or certified mail, postage prepaid, and properly addressed as follows:

 

If to the Company:                                               
Atlantis Career College &

                                                                                           
Medical Career College

                                                                                           
12062 Valley View Street

                                                                                           
Suite 108

                                                                                           
Garden Grove, CA 92845

Telephone: (714) 799-0530
Fax: (714) 799-0531

                                            

 

 

If to the Consultant:                                              
Providential Capital

8700 Warner Avenue, Suite 200

Fountain Valley, CA 92708

Telephone: (714) 596-0244

Facsimile Machine: (714) 596-0302

 

or at such other address as the party affected
may designate in a written notice to such other party in compliance with this paragraph.

 

15. Entire Agreement. 
This Agreement is the final written expression and the complete and
exclusive statement of all the agreements, conditions, promises, representations,
warranties and covenants between the parties with respect to the subject matter
of this Agreement, and this Agreement supersedes all prior or contemporaneous agreements,
negotiations, representations, warranties, covenants, understandings and discussions
by and between and among the parties, their respective representatives, and any
other person, with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to amend
this Agreement and is signed by each of the parties.

 

16. Number and Gender. 
Whenever the singular number is used in this Agreement, and when
required by the context, the same shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders, and vice versa;
and the word "person" shall include Company, firm, trust, estate, joint venture,
governmental agency, sole proprietorship, political subdivision, company, congregation,
organization, fraternal order, club, league, society, municipality, association,
joint stock company, partnership or other form of entity.

 

17. Execution in Counterparts.
This Agreement may be prepared in multiple copies and
forwarded to each of the parties for execution. All of the signatures of the parties
may be affixed to one copy or to separate copies of this Agreement and when all
such copies are received and signed by all the parties, those copies shall constitute
one agreement which is not otherwise separable or divisible.

 

18. Choice of Law and Consent to
Jurisdiction. All questions concerning the validity, interpretation
or performance of any of the terms, conditions and provisions of this Agreement
or of any of the rights or obligations of the parties, shall be governed by, and
resolved in accordance with, the laws of the State of California.

 

19. Assignability. 
Neither party shall sell, assign, transfer, convey or encumber this
Agreement or any right or interest in this Agreement or pursuant to this Agreement,
or suffer or permit any such sale, assignment, transfer or encumbrance to occur
by operation of law without the prior written consent of the other party. In the
event of any sale, assignment, transfer or encumbrance consented to by such other
party, the transferee or such transferee's legal representative shall agree with
such other party in writing to assume personally, perform and be obligated by, the
covenants, obligations, warranties, representations, terms, conditions and provisions
specified in this Agreement.

 

20. Severability. 
In the event any part of this Agreement or the subject matter of
this Agreement, for any reason, is determined by a court of competent jurisdiction
to be invalid, such determination shall not affect the validity of any remaining
portion or subject matter of this Agreement, which remaining portion or subject
matter shall remain in full force and effect as if this Agreement had been executed
with the invalid portion or subject matter thereof eliminated. It is hereby declared
the intention of the parties that they would have executed the remaining portion
or subject matter of this Agreement without including any such part, parts, portion
or subject matter which, for any reasons, may be hereafter determined to be invalid.

 

21. Force Majeure. 
If any party is rendered unable, completely or partially, by the
occurrence of an event of "force majeure" (hereinafter defined) to perform such
party's obligations created by the provisions of this letter of intent, such party
shall give to the other party prompt written notice of the event of "force majeure"
with reasonably complete particulars concerning such event; thereupon, the obligations
of the party giving such notice, so far as those obligations are affected by the
event of "force majeure," shall be suspended during, but no longer than, the continuance
of the event of "force majeure." The party affected by such event of "force majeure"
shall use all reasonable diligence to resolve, eliminate and terminate the event
of "force majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove specified,
shall not require the settlement of strikes, lockouts or other labor difficulties
by the party involved, contrary to such party's wishes, and the resolution of any
and all such difficulties shall be handled entirely within the discretion of the
party concerned. The term "force majeure" as used in this letter of intent shall
be defined as and mean any act of God, strike, civil disturbance, lockout or other
industrial disturbance, act of the public enemy, war, blockage, public riot, earthquake,
tornado, hurricane, lightning, fire, public demonstration, storm, flood, explosion,
governmental action, governmental delay, restraint or inaction, unavailability of
equipment, and any other cause or event, whether of the type enumerated specifically
in this section or otherwise, which is not reasonably within the control of the
party claiming such suspension.

 

22. Consent to Agreement. 
By executing this Agreement, each party, for himself, represents
such party has read or caused to be read this Agreement in all particulars, and
consents to the rights, conditions, duties and responsibilities imposed upon such
party as specified in this Agreement.

 

IN WITNESS WHEREOF the parties have executed
this Business Consultant and

Financial Consultant Agreement in duplicate
and in multiple counterparts, each of which shall have the force and effect of an
original, on the date specified in the preamble of this Agreement.

 

 

 

COMPANY:                                                                                  
CONSULTANT:

 

Dated: May 25, 2003                                                                         
Dated: May 29, 2003

Atlantis Career College &                                             
Providential Capital,                           

Medical Career College,                                                  
DBA of Providential Holdings, Inc.,

California corporations                                                        
a Nevada Corporation

 

By: /s/ Raghu Singh                                                             
By: /s/ Henry D. Fahman

Its President:          
Raghu Singh                                                         
Its President:  Henry D. Fahman



 



 



 



Exhibit No. 10.35 Mutual Rescission of Stock
Purchase Agreement with SlimTech, Inc.



 

MUTUAL RESCISSION OF STOCK PURCHASE AGREEMENT


 




              
This Agreement of Mutual Rescission of a Stock Purchase Agreement is made and entered
into this 6th day of  May 2003, by and between Providential Holdings,
Inc., a Nevada corporation, (hereinafter referred to as "Providential") and SlimTech,
Inc., a Nevada corporation, (hereinafter referred to as "SlimTech"). 



 



              
The parties recite and declare that:  


 



A.    On April 30, 2002, the parties entered
into a Stock Purchase Agreement, which Agreement is attached hereto and marked Exhibit
A. 

 



B.    The parties to that Agreement and to
this Agreement of Mutual Rescission desire to rescind the referenced Stock Purchase
Agreement.



 



              
For the reasons set forth above, and in consideration of the mutual covenants of
the parties hereto, the parties agree as follows:  


 



                   
(1)    Providential shall return 10,200,000 shares of common stock
of SlimTech, Inc. to SlimTech;

 



                   
(2)    SlimTech shall return 3,000,000 shares of common stock of
Providential Holdings, Inc. to Providential;

 



                   
(3)    Both Providential and SlimTech agree to protect, save, defend,
indemnify, and hold harmless the other party from and against any and all expenses,
damages, claims, suits, action, judgments, and/or costs whatsoever, including attorney's
fees, arising out of, or in any way connected with any claim or action arising out
this Agreement.



 



The above-mentioned Stock Purchase Agreement is hereby rescinded
as of this day first above written, and neither party shall have any further rights
or duties thereunder.  

 


Dated: May 6, 2003                                            
Dated: May 6, 2003



Providential Holdings, Inc.                                    
SlimTech, Inc.



A Nevada corporation                                         
A 

Nevada 

corporation



/s/ Henry D. Fahman                                            
/s/ Johnny Park


Henry D. Fahman, CEO                                          
President



 



 



Exhibit No. 10.36    Mutual
Rescission of Stock Purchase Agreement with Clear Pass, Inc.



 



 

MUTUAL RESCISSION OF MEMORANDUM OF AGREEMENT


 




              
This Agreement of Mutual Rescission of a Memorandum of Agreement is made and entered
into this 9th day of May 2003, by and between Providential Holdings,
Inc., a Nevada corporation, (hereinafter referred to as "Providential") and Clear
Pass, Inc., a Nevada corporation, (hereinafter referred to as "ClearPass"). 



 



              
The parties recite and declare that:  


 


    A.    On November 20, 2002, the
parties entered into a Memorandum of Agreement, which Agreement is attached hereto
and marked Exhibit A. 



 

      B.    The parties
to that Memorandum of Agreement and to this Agreement of Mutual Rescission desire
to rescind the referenced Memorandum of Agreement.



 



              
For the reasons set forth above, and in consideration of the mutual covenants of
the parties hereto, the parties agree as follows:  


 



           
(1)    Providential shall return 510,000 shares of common stock of
Clear Pass, Inc. to ClearPass;

 



           
(2)    ClearPass shall return 3,000,000 shares of common stock of
Providential Holdings, Inc. to Providential;



 



           
(3)    ClearPass shall return the Promissory Note in the amount of
$1,324,500.00 dated January 14, 2003 to Providential;



 



           
(4)    ClearPass agrees to repay $175,000.00 to Providential one
year from the signing of this Mutual Rescission;



 



           
(5)    Except as stipulated elsewhere in this Mutual Rescission,
both Providential and ClearPass agree to protect, save, defend, indemnify, and hold
harmless the other party from and against any and all expenses, damages, claims,
suits, action, judgments, and/or costs whatsoever, including attorney's fees, arising
out of, or in any way connected with any claim or action arising out this Agreement.



 



The above-mentioned Memorandum of Agreement and its Amendment are
hereby rescinded as of this day first above written, and neither party shall have
any further rights or duties thereunder.  

 


Dated: May 9, 2003                                            
Dated: May 9, 2003



Providential Holdings, Inc.                                    
Clear Pass, Inc.



A Nevada corporation                                         
A 

Nevada 

corporation



/s/ Henry D. Fahman                                            
/s/ E. Yi


Henry D. Fahman, CEO                                          
President



 



 



Exhibit No. 10.37    Mutual
Rescission of Joint Venture Agreement with HTV CO, Ltd.



                    



 

MUTUAL RESCISSION OF JOINT VENTURE CONTRACT

 

This Agreement of Mutual Rescission of Joint
Venture Contract made and entered into this 19th day May, 2003 by and
between Providential Holdings, Inc., a Nevada corporation, (hereinafter referred
to as "Providential") and HTV CO, Ltd., a Vietnamese corporation, (hereinafter referred
to as "HTV").

 

The parties recite and declare that:

 

A.    On January 15, 2001,
the parties entered into a Joint Venture Contract to establish Manna Technologies
Joint Venture Company, Limited, which Agreement and Investment License are attached
hereto and marked as Exhibits A and B, respectively.

 



B.    The parties to that Joint
Venture Contract and to this Agreement of Mutual Rescission desire to rescind the
referenced Joint Venture Contract.



 

For the reasons set forth above, and in consideration
of the mutual covenants of the parties hereto, the parties agree as follows:

 

              
The above-mentioned Joint Venture Contract is hereby rescinded as of this day first
above written, and neither party shall have any further rights or duties thereunder.

 

              
The Board of Management of the Joint Venture Enterprise shall report to the investment
license issuing body regarding the rescission of the Joint Venture Contract, the
surrender of the Investment License, and the dissolution of Manna Technologies Joint
Venture Company, Ltd.

 

              
Both Providential and HTV agree to protect, save, defend, indemnify, and hold harmless
the other party from and against any and all expense, damages, claims, suits, action,
judgments, and/or costs whatsoever, including attorney's fees, arising out of ,
or in any way connected with any claim or action arising out of this Agreement.

 

Dated: May 19, 2003                                                                                        
Dated: May 19, 2003

Providential Holdings, Inc.                                                                  
HTV CO, Ltd.

a Nevada corporation                                                                                        
a Vietnamese corporation

/s/ Henry D. Fahman                                                                                          
/s/ Thanh Van T. Dinh

CEO                                                                                                                 
President



 



 



 



Exhibit No. 10.38    Mutual
Rescission of Stock Purchase Agreement with Real ID Technology



                         



 

                         




MUTUAL RESCISSION OF STOCK PURCHASE AGREEMENT 


  



AND OF AMENDMENT TO STOCK PURCHASE AGREEMENT


 




              
This Agreement of Mutual Rescission of a Stock Purchase Agreement dated March 23,
2003 and of an Amendment to said Stock Purchase Agreement dated April 29, 2003 is
made and entered into this 1st day of August 2003, by and between Providential
Holdings, Inc., a Nevada corporation, (hereinafter referred to as "Providential")
and Real ID Technology Corp., a Republic of Korea corporation, (hereinafter referred
to as "Real ID").  


 



              
The parties recite and declare that:  


 



A.   On March 23, 2003, the parties entered into a Stock
Purchase Agreement, which Agreement is attached hereto and marked Exhibit A. 



 



B.   On April 29, 2003, the parties entered into an Amendment
to Stock Purchase Agreement, which Amendment is attached hereto and marked Exhibit
B.  


 



C.   The parties to that Stock Purchase Agreement and Amendment
and to this Agreement of Mutual Rescission desire to rescind the referenced Stock
Purchase Agreement and Amendment to Stock Purchase Agreement due to unforeseen capital
market conditions

from Providential

.


 



              
For the reasons set forth above, and in consideration of the mutual covenants of
the parties hereto, the parties agree as follows:  


 



(1).    The above-mentioned Stock Purchase Agreement
and its Amendment are hereby rescinded as of this day first above written, and neither
party shall have any further rights or duties thereunder.  


 



(2).  Providential shall remove all the online or offline marketing
material prepared by Providential or its associates within one week from the signed
date of this document.


 



(3).Both parties may renegotiate and enter into a new Stock Purchase
or Investment Agreement at a later date as deems appropriate.


 



(4).Except as stipulated elsewhere in this Mutual Rescission, both
Providential and Real ID agree to protect, save, defend, indemnify, and hold harmless
the other party from and against any and all expenses, damages, claims, suits, action,
judgments, and/or costs whatsoever, including attorney's fees, arising out of, or
in any way connected with any claim or action arising out this Agreement. 



 



Dated: 9/01/2003                                                
Dated:9/29/03



Providential Holdings, Inc.                                    
Real ID Technology Corp.



A Nevada corporation                                         
A 

Republic of 

Korea corporation



/s/Henry D. Fahman                                             
/s/ G.M. Kim



Henry D. Fahman, CEO                                      
G.M. Kim, Chairman & President

 



 



Exhibit No. 10.39 Business Consulting Agreement
with Lexor Incorporated.



 



 

BUSINESS CONSULTANT AGREEMENT

 

THIS BUSINESS CONSULTANT AGREEMENT ("Agreement")
is entered into in duplicate this 26th day of September 2003 by and between
Lexor, Inc., a Maryland corporation with principal business at 1621 Cole Street,
Baltimore, MD 21223 ("Lexor" or the "Company") and Providential Capital, a DBA of
Providential Holdings, Inc., a Nevada corporation, with principal business address
at 8700 Warner Avenue, Suite 200, Fountain Valley, CA 92708 ("Consultant).

 

RECITALS

 

A.   It is the desire of the Company
to engage the services of the Consultant to consult with the Company regarding certain
business opportunities available to the Company and other relevant matters relating
to the business of the Company.

 

B.    It is the desire of the
Consultant to so consult with the Board of Directors of the Company ("Board") and
the officers of the Company concerning those matters.

 

C.  The parties desire that the Company
retain the Consultant to consult with the Company and assist the Company in identifying,
locating and, possibly, acquiring various business opportunities for the Company,
including but not limited to a reverse merger with a fully-reporting publicly-traded
company, further identification, introduction, and analysis of  prospective
merger candidates, major investors and strategic alliances in the areas of investment
banking, public relations, investor relations, as well as guidance in any other
matters or special projects, business development, additional financing, corporate
governance, and strategic planning that may be referred to the Company from time
to time effective upon signing of this agreement, on the terms and subject to the
conditions specified in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL
PROMISES,

UNDERTAKINGS AND COVENANTS SPECIFIED HEREIN,
AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY,
THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:

 

1. Incorporation of Recitals.
The recitals of this Agreement, specified above, by this
reference, are made a part of this Agreement, as though specified completely and
specifically at length in this Agreement.

 

2. Term of Agreement. 
The respective duties and obligations of the parties shall

commence on September 26, 2003 ("Effective
Date") and shall continue until the closing of the proposed merger between the Company
and a fully-reporting public company or terminated by either of the parties. In
the event either party to this Agreement desires to terminate this Agreement, that
party shall provide to the other party notice of that party's intention to terminate
this Agreement, and which notice shall specify the date of termination of this Agreement;
provided, however, that such date of termination shall not be sooner than 60 days
after the date that such notice is given to such other party.

 

3. Confidential Information.

 

3.1 Definition of Confidential Information.
As used in this Agreement, 
"Confidential Information" shall, subject
to the provisions set forth at Section 3.2 of this

Agreement, include, but not be limited to,
computer programs, software, source codes, computations, data files, algorithms,
techniques, processes, designs, specifications,  drawings, charts, plans, schematics,
computer disks, magnetic tapes, books, files, records, reports, documents, instruments,
agreements, contracts, correspondence, letters, memoranda, financial, accounting,
sales, purchase and employment data, capital structure information, corporate organizational
information, identities, names and addresses of shareholders, directors, officers,
employees, contractors, vendors, suppliers, customers, clients and all persons and
entities associated with the Company, information pertaining to projects, projections,
assumptions and analyses, and all other data and information and similar items relating
to the business of the Company and all other data and information and similar items
relating to the Company of whatever kind or nature and whether or not prepared or
compiled by the Company.

 

3.2 General Knowledge. 
Confidential Information, as that term is used in this 
Agreement, shall not include information
which:

 

(a) is already known without restriction to
the Consultant; or

(b) is or becomes publicly known as a result
of no wrongful act of the Consultant;   or

(c) is received from a third party without
restriction and without breach of this

Agreement; or

(d) is independently developed by the Consultant.

 

3.3. Non-Disclosure. 
The Consultant and the Consultant's representatives, heirs,
successors, employees, assigns,
attorneys, affiliates, agents and other representatives, as the case may be, and
each of their shareholders, partners, directors, officers, employees, representatives,
attorneys, and all other persons or entities acting by, through, under, or in connection
with them, or any of them, shall not, directly or indirectly, divulge, disclose,
disseminate, distribute, license, circulate, publish, use, sell or otherwise make
known any Confidential Information to any third party or person or entity not expressly
authorized by the Company in advance in writing to receive such Confidential Information.
The Consultant shall prevent disclosure of any Confidential Information to any third
party and shall exercise the most stringent care and discretion in accordance with
the Consultant's duty pursuant to this Agreement to prevent any such disclosure.

 

3.4. Ownership and Reproduction or
Translation of Confidential Information. All Confidential
Information is and shall remain the property of the Company and may not be reproduced,
replicated, recreated, reconstructed, remanufactured, engineered, reverse engineered,
copied, translated, compiled, interpreted or decompiled, in any manner whatsoever
whether electronic, electromagnetic, electromechanical, mechanical, chemical or
photographic without the prior written consent of the Company.

 

3.5. Removal and Return of Confidential
Information. The Consultant shall only remove such original
or reproduced, replicated or photocopied Confidential Information from the premises
of the Company or any bailee or other place of repository as may be expressly permitted
in advance in writing by the Company. The Consultant shall promptly return to the
Company all Confidential Information upon the request of the Company and shall not
retain any reproductions, replications, photocopies or other copies or renditions
of any Confidential Information. The Consultant shall certify in writing to the
Company that the Consultant has either returned or destroyed all such reproductions,
replications, photocopies or copies or other

renditions.

 

3.6. Prohibition of Use. 
The Consultant shall not directly or indirectly make any use
whatsoever of Confidential Information or of any feature, specification, detail
or other characteristic contained in, or derived from, any Confidential Information,
except as may be expressly authorized by the Company in writing.

 

3.7. Competitive Activities.
Any unauthorized use, sale, licensing, marketing, transfer
or disclosure of Confidential Information obtained by the Consultant, including
information concerning the Confidential Information and any future or proposed activities
by the Company or any of the Company's employees, associates, affiliates, agents,
consultants or representatives, and the fact that those activities may be considered
or in production, as well as any description of the features, specifications, or
characteristics of those activities, shall constitute unfair competition and shall
be a breach of this Agreement and of the Consultant's fiduciary duties to the Company.
The Consultant shall not engage in any unfair competition with the Company at any
time, whether during or following the completion of the term of this Agreement.

 

4. Consultations. 
The Consultant shall consult with the Board and the officers of the
Company, at reasonable times, concerning any issue of importance regarding certain
opportunities available to the Company and other relevant matters relating to the
business of the Company. Specifically, subject to those restrictions specified in
Paragraph 8 it is anticipated that the Consultant shall (i) assist the officers
of the Company in connection with certain delegated matters regarding the funding
and capital requirements of the Company and (ii) introduce the Company to investment
bankers, broker dealers, institutional investors and qualified prospective merger
or acquisition candidates for purposes of allowing the Company to consider and,
if appropriate, consummate and close certain mergers and acquisitions and other
opportunities. The provisions of this Agreement notwithstanding, the services of
the Consultant to be provided pursuant to the provisions of this Agreement do not
include investor relation services or the direct or indirect promotion of the Company's
securities in any manner whatsoever.

 

5. Management Power of the Consultant.
The business affairs of the Company and the operation
of business of the Company shall be conducted by the officers and administrative
staff and employees of the Company. It is the intention of the Company not to confer
on the Consultant, and the Consultant shall not have, any power of direction, management,
supervision or control of the administrative staff or other employees of the Company,
or to otherwise be involved with the management of the business of the Company.

 

6. Authority to Contract. 
The Consultant shall have no power to, and the Consultant shall
not, obligate the Company in any manner whatsoever to any contract, agreement, undertaking,
commitment or other obligation.

 

7. Compensation. 
As consideration for the services to be provided by the Consultant
to the Company pursuant to the provisions of this Agreement, on the Closing Date
of the proposed merger between the Company and a fully-reporting publicly traded
company the Company shall issue or caused to be issued to the Consultant and/or
its assignee(s) a total of 2,250,000 (Two Million Two Hundred Fifty Thousand) shares
of the newly-combined company's ("NewCo") common stock or Fifteen Percent (15%)
thereof, whichever is higher, which shares shall be "restricted securities" pursuant
to the provisions of Rule 144. These shares will be for a one-time fee, due and
payable at the Closing of the proposed merger and only issued to the Consultant
if and when said merger is effectively closed. 
Consultant acknowledges that the receipt of
the Shares involves a high degree of risk and further acknowledges that it can bear
the economic risk of receiving the Shares, including the total loss of its investment.

 





              
Consultant understands that the issuance of the Shares is being made pursuant to
an exemption from registration under state law and with the Securities and Exchange
Commission afforded by Section 4(2) of the Securities Act of 1933 and/or Regulation
D adopted by the Commission relating to transactions by an issuer not involving
any public offering. Consequently, the Shares are "restricted securities" as that
term is defined under the federal securities laws and the materials submitted to
Consultant have not been subject to the review and comment by the Staff of the Commission,
the National Association of Securities Dealers, Inc. or any state securities regulators. 
Consultant understands that it must bear the economic risks of receiving the Shares
because the securities have not been registered under the Act, and therefore are
subject to restrictions on transfer such that the securities may not be sold or
otherwise transferred unless they are registered under the Act and any applicable
state securities law or an exemption from such registration is available.

 

8. Registration Status of Consultant.
The Consultant is not engaged in the business of effecting
transactions in securities for the accounts of others. The Consultant is not registered
with any agency as a broker-dealer, investment advisor or investment manager, and,
as a result, is precluded by law from providing to the Company services which would
be considered to be those of a broker-dealer, investment advisor or investment manager
in connection with the placement, offer or sale of securities. In that regard, the
Consultant shall not offer, offer to sell, offer for sale, sell, or induce or attempt
to induce the purchase or sale of securities of the Company. None of the services
to be provided by the Consultant pursuant to the provisions of this Agreement are
intended to be or shall be construed as offering or selling securities, or providing
investment, legal or tax advice.

 

9. Services of Consultant Not Exclusive.
Subject to the provisions of Section 3.7 of this Agreement,
the Consultant may represent, perform services for, and be employed by, any additional
persons as the Consultant, in the Consultant's sole discretion, determines to be
necessary or appropriate.

 

10. Legal and Equitable Remedies.
Because of the uniqueness of the services to be performed
by the Consultant for the Company pursuant to the provisions of this Agreement,
and because the Consultant's reputation as a business and financial consultant may
be affected by the financial success or failure or the Company, in addition to the
other rights and remedies that the Consultant may have for a breach of this Agreement,
the Consultant shall have the right to enforce this Agreement, and all of its provisions,
by injunction, specific performance or other relief in a court of equity. If any
legal action is necessary to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which that party may
be entitled.

 

11. Relationship Created. 
The Consultant is not an employee of the Company for any purpose
whatsoever, but is an independent contractor. The Company is interested only in
the results obtained by the Consultant, who shall have the sole and exclusive control
of the manner and means of performing pursuant to this Agreement. The Company shall
not have the right to require the Consultant to collect accounts, investigate customer
or shareholder complaints, attend meetings, periodically report to the Company,
follow prescribed itineraries, keep records of business transacted, make adjustments,
conform to particular policies of the Company, or do anything else which would jeopardize
the relationship of independent contractor between the Company and the Consultant.
All expenses and disbursements, including, but not limited to, those for travel
and maintenance, entertainment, office, clerical and general administrative expenses,
that may be incurred by the Consultant in connection with this Agreement shall be
borne and paid wholly and completely by the Consultant, and the Company shall not
be in any way responsible or liable therefor.

 

12. Indemnification. 
Each party shall save the other party harmless from and against and
shall indemnify the other party for any liability, loss, costs, expenses, or damages
however caused by reason of any injury (whether to body, property, or personal or
business character or reputation) sustained by any person or to any person or to
property by reason of any act, neglect, default, or omission of such party or any
of such party's agents, employees, or other representatives, and, such party shall
pay any and all amounts to be paid or discharged in case of an action or any such
liability less costs, expenses, or damages. If either party is sued in any court
for damages by reason of any of the acts of the other party referred to in this
paragraph, such other party shall defend said action (or cause same to be defended)
at such other party's own expense and shall pay and discharge any judgment that
may be rendered in any such action; if such other party fails or neglects to so
defend in said action, the party sued may defend the same and any expenses, including
reasonable attorneys' fees, which such party may pay or incur in defending said
action and the amount of any judgment which such party may be required to pay as
a result of said action shall be promptly reimbursed upon demand.

 

13. Governmental Rules and Regulations.
The provisions of this Agreement and the relationship
contemplated by the provisions of this Agreement are subject to any and all present
and future orders, rules and regulations of any duly constituted authority having
jurisdiction of that relationship.

 

14. Notices. 
All notices, requests, demands or other communications pursuant to
this Agreement shall be in writing or by telex or facsimile transmission and shall
be deemed to have been duly given (i) on the date of service, if delivered in person
or by telex or facsimile transmission (with the telex or facsimile confirmation
of transmission receipt serving as confirmation of service when sent and provided
telexed or telecopied notices are also mailed by first class, certified or registered
mail, postage prepaid); or (ii) 48 hours after mailing by first class, registered
or certified mail, postage prepaid, and properly addressed as follows:

 

If to the Company:                                               
Lexor International, Inc.

1621 Cole Street

Baltimore, MD 21223

Phone (410) 233-0336

Facsimile (410) 233-0813

E-mail: lexorinc@aol.com

 

 

If to the Consultant:                                              
Providential Capital

8700 Warner Avenue, Suite 200

Fountain Valley, CA 92708

Telephone: (714) 596-0244

Facsimile: (714) 596-0302

E-mail: henry@procap.us

 

or at such other address as the party affected
may designate in a written notice to such other party in compliance with this paragraph.

 

15. Entire Agreement. 
This Agreement is the final written expression and the complete and
exclusive statement of all the agreements, conditions, promises, representations,
warranties and covenants between the parties with respect to the subject matter
of this Agreement, and this Agreement supersedes all prior or contemporaneous agreements,
negotiations, representations, warranties, covenants, understandings and discussions
by and between and among the parties, their respective representatives, and any
other person, with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to amend
this Agreement and is signed by each of the parties.

 

16. Number and Gender. 
Whenever the singular number is used in this Agreement, and when
required by the context, the same shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders, and vice versa;
and the word "person" shall include Company, firm, trust, estate, joint venture,
governmental agency, sole proprietorship, political subdivision, company, congregation,
organization, fraternal order, club, league, society, municipality, association,
joint stock company, partnership or other form of entity.

 

17. Execution in Counterparts.
This Agreement may be prepared in multiple copies and
forwarded to each of the parties for execution. All of the signatures of the parties
may be affixed to one copy or to separate copies of this Agreement and when all
such copies are received and signed by all the parties, those copies shall constitute
one agreement which is not otherwise separable or divisible.

 

18. Choice of Law and Consent to
Jurisdiction. All questions concerning the validity, interpretation
or performance of any of the terms, conditions and provisions of this Agreement
or of any of the rights or obligations of the parties, shall be governed by, and
resolved in accordance with, the laws of the State of California.

 

19. Assignability. 
Neither party shall sell, assign, transfer, convey or encumber this
Agreement or any right or interest in this Agreement or pursuant to this Agreement,
or suffer or permit any such sale, assignment, transfer or encumbrance to occur
by operation of law without the prior written consent of the other party, except
as stipulated in Section 7.  In the event of any sale, assignment, transfer
or encumbrance consented to by such other party, the transferee or such transferee's
legal representative shall agree with such other party in writing to assume personally,
perform and be obligated by, the covenants, obligations, warranties, representations,
terms, conditions and provisions specified in this Agreement.

 

20. Severability. 
In the event any part of this Agreement or the subject matter of
this Agreement, for any reason, is determined by a court of competent jurisdiction
to be invalid, such determination shall not affect the validity of any remaining
portion or subject matter of this Agreement, which remaining portion or subject
matter shall remain in full force and effect as if this Agreement had been executed
with the invalid portion or subject matter thereof eliminated. It is hereby declared
the intention of the parties that they would have executed the remaining portion
or subject matter of this Agreement without including any such part, parts, portion
or subject matter which, for any reasons, may be hereafter determined to be invalid.

 

21. Force Majeure.  
If any party is rendered unable, completely or partially, by
the occurrence of an event of "force majeure" (hereinafter defined) to perform such
party's obligations created by the provisions of this letter of intent, such party
shall give to the other party prompt written notice of the event of "force majeure"
with reasonably complete particulars concerning such event; thereupon, the obligations
of the party giving such notice, so far as those obligations are affected by the
event of "force majeure," shall be suspended during, but no longer than, the continuance
of the event of "force majeure." The party affected by such event of "force majeure"
shall use all reasonable diligence to resolve, eliminate and terminate the event
of "force majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove specified,
shall not require the settlement of strikes, lockouts or other labor difficulties
by the party involved, contrary to such party's wishes, and the resolution of any
and all such difficulties shall be handled entirely within the discretion of the
party concerned. The term "force majeure" as used in this letter of intent shall
be defined as and mean any act of God, strike, civil disturbance, lockout or other
industrial disturbance, act of the public enemy, war, blockage, public riot, earthquake,
tornado, hurricane, lightning, fire, public demonstration, storm, flood, explosion,
governmental action, governmental delay, restraint or inaction, unavailability of
equipment, and

any other cause or event, whether of the type
enumerated specifically in this section or

otherwise, which is not reasonably within
the control of the party claiming such suspension.

 

22. Consent to Agreement. 
By executing this Agreement, each party, for himself, represents
such party has read or caused to be read this Agreement in all particulars, and
consents to the rights, conditions, duties and responsibilities imposed upon such
party as specified in this Agreement.

 

IN WITNESS WHEREOF the parties have executed
this Business Consultant and

Financial Consultant Agreement in duplicate
and in multiple counterparts, each of which shall have the force and effect of an
original, on the date specified in the preamble of this Agreement.

 

 

 

COMPANY:                                                                                  
CONSULTANT:

 

Dated: 09/26/03                                                              
Dated:09/26/03

Lexor, Inc.                                                                                   
Providential Capital,                            

a Maryland corporation,                                                   
DBA of Providential Holdings, Inc.,

                                                                                                          
a Nevada corporation

By:/s/ Christopher L. Long                                                  
By:/s/ Henry D. Fahman

Its President:          
Christopher L. Long                                             
Its President:  Henry D. Fahman



 



 



 



 



Exhibit No. 10.40 Amended Closing Memorandum
with ATC Technology Corp. (filed herewith).

 

 

AMENDED CLOSING MEMORANDUM FOR THE STOCK
PURCHASE OF

ATC TECHNOLOGY CORPORATION BY PROVIDENTIAL
HOLDINGS, INC.

 

 

October 6, 2003

02:00 P.M. PDT

 

RECITALS

 

 

1.    On August 15, 2002 a
Due Diligence review was conducted at the premises of ATC Technology Corporation
("ATC") in Tempe, AZ by Henry Fahman, Tam Bui, and Tina Phan, authorized officers
and representatives of Providential Holdings, Inc. ("Providential").



 

2.            
On August 23, 2002m the Stock Purchase Agreement between ATC and

Providential was executed and delivered.

 

 

3.    Further due diligence
review was subsequently conducted by Henry Fahman with respect to ATC's financials,
securities matters, intellectual properties, and others.



 

4.           
A Closing Memorandum was signed by ATC and Providential on September

           
12, 2002. However, further financial and business information was required

            
by Providential in order to effectively consummate the transaction.

 

5.     On October 6, 2003,
all the conditions antecedent to the final closing were

fully satisfied by both parties, including
updated financial disclosures and delivery of consideration by ATC.

 

      IN WITNESS
WHEREOF, the Parties have executed this Amended Closing

      Memorandum
as of the date and time first above written.

 

      Dated:10/06/03                                                             
Dated:10/06/03

 

      By:/s/ Henry
D. Fahman                                                
By: /s/ Keith Wong

          
Henry D. Fahman                                                           
Keith Wong

          
Chairman & CEO                                                          
President and CEO

          
Providential Holdings, Inc.                                              
ATC Technology Corporation

          
A Nevada corporation                                                   
An Arizona corporation

 

Exhibit No. 21.1

 

 

SUBSIDIARIES OF REGISTRANT

 

    1.        
ATC Technology Corp.

              
An Arizona corporation and wholly-owned subsidiary of the Company

 

2.  ClearPass

      A DBA company
and wholly-owned subsidiary of the Company

 

    3.  Providential Capital

              
A DBA company and wholly-owned subsidiary of the Company

 

    4.  Provimex

              
A DBA company and wholly-owned subsidiary of the Company

 

5.

                       


Touchlink Communications, Inc.



A DBA company and wholly-owned subsidiary
of the Company

 

    6.  Providential Securities,
Inc.

              
A California corporation (discontinued).

 

    7.        
Providential Clearing, Inc.

              
A California corporation (discontinued).

 

    8.        
Providential Advisory Services, Inc.

              
A California corporation (discontinued)

 

    9.        
Manna Technologies

              
A Vietnam-based joint venture company

              
(discontinued)

   

    10.       
SlimTech

              
A Nevada corporation and majority-owned subsidiary of the Company

              
(discontinued)

Exhibit 99.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Hnery Fahman, Principal Executive Officer, Providential Holdings, Inc., certify
  that:

1. I have reviewed this report on Form 10-KSB of Providential Holdings, Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and have:

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

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

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

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

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

    b) any fraud, whether or not material, that involves management
  or other employees who have a significant role in the registrant's internal control
  over financial reporting.
  
  PROVIDENTIAL HOLDINGS, INC.

/s/ Henry Fahman
  Henry Fahman, Principal Executive Officer 
  Dated: October 14, 2003

Exhibit 99.1

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Gene Bennett, Principal Financial Officer, Providential Holdings, Inc.,
  certify that:

1. I have reviewed this report on Form 10-KSB of Providential Holdings, Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and have:

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

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

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

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

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

   
  b) any fraud, whether or not material, that involves management or other employees
  who have a significant role in the registrant's internal control over financial
  reporting.
  
  PROVIDENTIAL HOLDINGS, INC.

/s/ Gene Bennett
  Gene Bennett, Principal Financial Officer

Dated:
  October 14, 2003



 

 

   

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 Annual Report of Providential
Holdings, Inc. on Form 10-KSB for the year ending June 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Henry Fahman,
President and Director 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/Director

October 14, 2003

 

 

 

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 Annual Report of Providential
Holdings, Inc. on Form 10-KSB for the year ending June 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Gene Bennett,
Chief Financial Officerr 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

CFO

October 14, 2003

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

| ASSETS |   |   |
| --- | --- | --- |
| CURRENT ASSETS |   |
|   | Cash and cash
      equivalents |  $ 96,747 |
|  | Marketable securities | 1,102,335 |
|   | Other current
      assets |                     
      3,300 |
|   |   | Total Current
      Assets |                     
      1,202,382 |
|   |   |   |   |
| PROPERTY & EQUIPMENT,
      net of accumulated depreciation of $164,481 | 23,627 |
|   |   |   |                  
      $1,226,009   |
|   |   |   |   |
| LIABILITIES
      AND SHAREHOLDERS' DEFICIT |   |
| CURRENT LIABILITIES |   |
|   | Accounts payable
      and accrued expenses |  $ 4,062,761 |
|   | Convertible
      promissory notes |                
      1,100,000 |
|   | Short-term notes
      payable |                
      1,541,498 |
|   | Current portion
      of notes payable |                   
      137,089 |
|   | Due to officer |                   
      146,916 |
|  | Due to preferred stockholders | 450,000 |
|   | Other current
      liabilities |                   
      165,055 |
|   |   | Total Current
      Liabilities |                
      7,603,319 |
|   |   |   |   |
| NOTES PAYABLE |                    
      198,332 |
|   |   | Total liabilities |                
      7,801,651 |
|   |   |   |   |
| 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, 61,253,119 shares issued and
      outstanding |                
      2,570,125 |
|   | Treasury stock,
      14,805,200 shares, $.04 par value common stock |                  
      (772,312) |
|  | Prepaid consulting fees | (591,190) |
|  | Stock subscription receivable | (244,660) |
|   | Additional paid-in
      capital |                
      5,393,054 |
|  | Shares to be cancelled | (120,000) |
|   | Accumulated
      other comprehensive loss |                  
      (408,004) |
|   | Accumulated
      deficit |             
      (12,402,655) |
|   |   | Total shareholders'
      deficit |               
      (6,575,642) |
|   |   |   |  $ 1,226,009 |

|   |   |   | The Years Ended
      June 30, |
| --- | --- | --- | --- |
|   |   |   | 2003 |   | 2002 |
| REVENUES |   |   |   |
|   | Consulting and
      advisory fee income |  $ 1,386,635 |   |  $ 602,000 |
|   | Furniture sales | 61,800 |   | - |
|   |   | Net Revenues | 1,448,435 |   |           
      602,000 |
| Cost of sales - furniture | 56,628 |   | - |
| Gross Profit | 1,391,807 |   | 602,000 |
| OPERATING EXPENSES |   |   |   |
|   | Salaries and
      wages |                          
      - |   |               
      7,280 |
|   | Professional
      services, including non-cash compensation |                          
      1,221,054 |   |               
      626,878 |
|   | General and administrative | 663,863 |   | 432,207 |
|   |   | Total Operating
      Expenses |          
      1,884,917 |   | 1,066,365 |
| LOSS FROM OPERATIONS | (493,110) |   | (464,365) |
| OTHER INCOME
      (EXPENSE) |   |   |   |
|   | Interest expense |  (691,120) |   | (922,209) |
|   | Loss on sale
      of marketable securities |              
      (432,775) |   |              
      (9,155) |
|   | Impairment of
      assets |    
      (180,500) |   | (381,560) |
|   | Gain on sale
      of fixed assets |                      
      - |   |                 
      3,768 |
|   | Gain on legal
      settlement |                  
      81,850 |   |             
      140,000 |
|   | Gain on conversion of notes | 467,212 |   | 383,455 |
|   | Other income
      (expense) |                 
      (2,256) |   | 11,323 |
|   |   | Net Other Income
      (Expense) | (757,589) |   | (774,378) |
| LOSS FROM CONTINUING
      OPERATIONS BEFORE INCOME TAX | (1,250,699) |   | (1,238,743) |
| PROVISION FOR
      INCOME TAX |                       
      800 |   | 800 |
| LOSS FROM CONTINUING
      OPERATIONS | (1,251,499) |   | (1,239,543) |
| GAIN ON DISPOSAL
      OF A SUBSIDIARY |                
      248,560 |   | - |
| NET LOSS | (1,002,939) |   | (1,239,543) |
| DIVIDEND REQUIREMENT
      OF PREFERRED STOCK | (54,000) |   | (54,000) |
| NET LOSS APPLICABLE
      TO COMMON SHAREHOLDERS | (1,056,939) |   | (1,293,543) |

|   | OTHER COMPREHENSIVE
      (LOSS)/GAIN |   |   |   |
| --- | --- | --- | --- | --- |
|   |      
      Unrealized loss on investments available for sale | (262,995) |   |               
      (366,820) |
| COMPREHENSIVE
      LOSS | $(1,319,934) |   |          
      $(1,660,363) |
|   |   |   |   |
| NET LOSS PER SHARE - BASIC AND DILUTED |  |  |  |
|  | Continued operations | $(0.03) |  | $(0.05) |
|  | Discontinued operations | $0.01 |  | $- |
|        Net loss | $(0.02) |  | $(0.05) |
|  
      
      
      
      
      
      
      
      
      Weighted average
      number of shares outstanding - basic and diluted | 42,858,502 |   |      
      28,648,000 |
|  |  |  |  |

|   | Common Stock | Treasury Stock | Additional Paid-In Capital | Stock Subscription Receivable | Prepaid Consulting Fees | Shares to be cancelled | Other Comp Income/(loss) | Accumulated Deficit | Total Stockholders' Deficit |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|   | Shares | Amount | Shares | Amount |
| Balance at June 30, 2001 | 39,122,869 | $1,564,915 | (11,800,000) | $(472,000) | $3,317,651 | $      
    - | $                 
    - | $               
    - | $(150,189) | $(10,052,173) | $(5,791,796) |
|   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for services | 3,710,000 | 148,400 | - | - | 1,655,200 | - | (1,451,249) | - | - | - | 352,351 |
| Shares issued for note conversion | 170,288 | 6,812 | - | - | 18,428 | - | - | - | - | - | 25,240 |
| Issuance of common stock in
    exchange |   |   |   |   |   |   |   |   |   |   |   |
|      for
    acquisition | 3,000,000 | 120,000 | (3,000,000) | (300,000) | 176,700 | - | - | - | - | - | (3,300) |
| Shares received from officer | - | - | (375,000) | (28,875) | - | - | - | - | - | - | (28,875) |
| Dividends declared on preferred
    stock | - | - | - | - | - | - | - | - | - | (54,000) | (54,000) |
| Unrealized loss on marketable
    securities | - | - | - | - | - | - | - | - | (366,820) | - | (366,820) |
| Net loss for the year | - | - | - | - | - | - | - | - | - | (1,239,543) | (1,239,543) |
|   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2002 | 46,003,157 | 1,840,127 | (15,175,000) | (800,875) | 5,167,979 | - | (1,451,249) | - | (517,009) | (11,345,716) | (7,106,743) |
|   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of treasury stock | - | - | 380,900 | 29,229 | - | - | - | - | - | - | 29,229 |
| Shares issued under repricing
    warrants | 8,726,425 | 349,057 | - | - | (349,057) | - | - | - | - | - | - |
| Shares received from officer | - | - | (11,100) | (666) | - | - | - | - | - | - | (666) |
| Shares issued for note conversion | 363,537 | 14,541 | - | - | 385,532 | - | - | - | - | - | 400,073 |
| Shares issued for services | 1,160,000 | 46,400 | - | - | 8,600 | - | - | - | - | - | 55,000 |
| Stock options exercised | 8,000,000 | 320,000 | - | - | 180,000 | (244,660) | - | - | - | - | 255,340 |
| Amortization of prepaid
    consulting fees | - | - | - | - | - | - | 860,059 | - | - | - | 860,059 |
| Unrealized loss on marketable
    securities | - | - | - | - | - | - | - | - | 109,005 | - | 109,005 |
| Cancellation of shares | - | - | - | - | - | - | - | (120,000) | - | - | (120,000) |
| Net loss for the year | - | - | - | - | - | - | - | - | - | (1,056,939) | (1,056,939) |
|   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2003 | 64,253,119 | $2,570,125 | (14,805,200) | $(772,312) | $5,393,054 | $(244,660) | $(591,190) | $(120,000) | $(408,004) | $(12,402,655) | $(6,575,642) |
|   |   |   |   |   |   |   |   |   |   |   |   |

|   |   |   |   | 2003 | 2002 |
| --- | --- | --- | --- | --- | --- |
| CASH FLOWS FROM
      OPERATING ACTIVITIES |   |   |
|   | Net loss from
      continuing operations | $ (1,002,938) |   
      $ (1,239,543) |
|   | Adjustments to
      reconcile net loss from continued operations to |   |   |
|   |   net cash
      used in continued operating activities: |   |   |
|   |   | Gain on disposal
      of property |    
      - |         
      ( 3,768) |
|   |   | Legal settlement |            
      (81,850) |              
      (140,000) |
|   |   | Shares issued
      for service | 55,000 |             
      1,803,600 |
|   |   | Loss on sale
      of marketable securities | 432,775 |              
      9,155 |
|   |   | Depreciation | 28,831 |            
      30,317 |
|   |   | Amortization
      of deferred revenue | (11,552) |          
      (125,000) |
|   |   | Allowance for
      bad debt | 217,577 |            
      - |
|   |   | Loss on Investment | 180,500 | 381,560 |
|   |   | Beneficial conversion
      and registration penalty | 400,073 |           
      - |
|   |   | Amortization of prepaid consulting fees | 619,772 | - |
|   |   | Securities paid for consulting services | - | 103,000 |
|   |   | Securities received for consulting services | (1,436,884) | (486,820) |
|   |   | Gain on settlement of debts | (472,420) | (383,455) |
|   |   | Gain on disposal of subsidiary | (248,560) | - |
|   |   | Shares issued for interest on convertible note | 61,340 | - |
|   |   | CHANGES IN OPERATING
      ASSETS AND LIABILITIES |  |                       |
|   |   | (Increase) decrease
      in prepaid expenses and other assets |                        
      29,371 |           
      (1,761,168) |
|   |   | Increase (decrease)
      in accounts payable | 55,442 |            
      (506,868) |
|   |   | Increase (decrease)
      in accrued expenses | 292,856 |           
      1,548,700 |
|   |   | Minority interest | - |                 
      128,560 |
|   |   | Increase (decrease)
      in other liabilities | 113,448 |           
      (69,864) |
|   |   |   | NET CASH USED
      IN OPERATING ACTIVITIES | (767,219) | (711,594) |
|   |   |   |   |   |   |
| CASH FLOWS FROM
      INVESTING ACTIVITIES |   |   |
|   | Sale of fixed
      assets | - |                      
      4,268 |
|   | Proceeds received
      from sale of marketable securities | 24,243 |           
      19,024 |
|   |   |   | NET CASH PROVIDED
      BY INVESTING ACTIVITIES | 24,243 |          
      23,292 |
|   |   |   |   |   |   |
| CASH FLOWS FROM
      FINANCING ACTIVITIES |   |   |
|   | Proceeds from
      sale of common stock | 657,908 |           
      - |
|   | Proceeds from the
      exercise of stock options |          
      125,000 |       
      - |
|   | Borrowings on
      notes payable | 147,908 |            
      594,277 |
|   | Payments on notes
      payable |                     
      (70,225) |          
      (13,337) |
|   | Borrowings from officer | - | 97,855 |
|   | Payments on advances
      from officer |                     
      (25,581) |           
      - |
|   |   |   | NET CASH PROVIDED
      BY FINANCING ACTIVITIES | 835,010 |       
      678,795 |
| NET INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS |            
      92,034 |         
      (9,507) |
|   |   |   |   |   |   |
| CASH AND CASH
      EQUIVALENTS, beginning of period | 4,713 |           
      14,220 |
|   |   |   |   |   |   |
| CASH AND CASH
      EQUIVALENTS, end of period | $ 96,747 |  $ 4,713 |
|   |   |   |   |   |   |
| SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATION: |   |   |
|   | Cash paid during
      the period for: |   |   |
|   |   |   | Interest |     
      $ 35,585 |  $ 15,394 |
|   |   |   | Income taxes |     
      $          - |  $     
      800 |

| 2004 | $137,089 |
| --- | --- |
| 2005 |      
    -         |
| 2006 | $196,011 |
|   |   |

|   |   |
| --- | --- |