SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-QSB





(Mark One)



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

SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2005



OR





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

SECURITIES EXCHANGE ACT 1934





For the transition period from __________ to ___________





Commission file number 2-78335-NY





Providential Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)



|Nevada                                                             | 90-0114535                            
|------------------------------------------------------------------ | --------------------------------------
|(State
		or Other Jurisdiction of
		Incorporation or Organization) | (I.R.S. Employer
		Identification No.)





17011 Beach Blvd., Suite 1230, Huntington Beach, California 92647

(Address of Principal Executive Offices)    (Zip Code)





(714) 843-5450

Issuer's Telephone Number, Including Area Code





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





Indicate by check (X) whether the issuer (1) has filed all reports required  to be filed by Section 13 or 15(d) of  the

Securities Exchange Act of 1934 during the preceding 12 months (or shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



YES  (X)             NO  ( )



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  155,269,129 SHARES OF COMMON STOCK, $.04 PAR VALUE PER SHARE, WERE OUTSTANDING AS OF DECEMBER 1, 2005.



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PROVIDENTIAL HOLDINGS INC, AND SUBSIDIARIES

INDEX TO FORM 10-QSB

SEPTEMBER 30, 2005





Page

PART I



Item 1.

Financial Statements



Balance Sheet - September 30, 2005 (unaudited)

1



Statements of Operations (unaudited) - Three Months Ended

September 30, 2005 and 2004

2



Statements of Cash Flows (unaudited) - Three Months Ended

September 30, 2005 and 2004

3



Notes to Financial Statements (unaudited)

5



Item 2.

Managements Discussion and Analysis of

Financial Condition and Results of Operations

18



Item 3.   Controls and Procedures

20







PART II



Item 1.

Legal Proceedings

21



Item 2.

Changes in Securities

21



Item 3.

Defaults Upon Senior Securities

21



Item 4.

Submission of Matters to a Vote of Security Holders

21



Item 5.

Other Information

21



Item 6.

Exhibits and Reports on Form 8-K

21



Signatures

23



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PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2005

(UNAUDITED)





|                                                                    |                                                                         |                                                           |           
|------------------------------------------------------------------- | ----------------------------------------------------------------------- | --------------------------------------------------------- | ----------
|                                                                    | ASSETS                                                                  |                                                          
|Current assets:                                                    
|                                                                    | Cash and cash equivalents                                               | $   6,361                                                
|                                                                    | Marketable securities                                                   | 6,247,815                                                
|                                                                    | Other current assets                                                    | 55,405                                                   
|                                                                    |                                                                         | Total current assets                                      | 6,309,581 
|                                                                    |                                                                         |                                                           |           
|Property and equipment, net of accumulated depreciation of $192,364 | 4,865                                                                  
|                                                                    |                                                                         |                                                           |           
|                                                                    |                                                                         | Total assets                                              | $6,314,446
|                                                                    |                                                                         |                                                           |           
|                                                                    | LIABILITIES AND STOCKHOLDERS' EQUITY                                    |                                                          
|Current liabilities:                                               
|                                                                    | Accounts payable and accrued expenses                                   | $1,517,913                                               
|                                                                    | Short-term notes payable                                                | 1,405,127                                                
|                                                                    | Due to officer                                                          | 270,290                                                  
|                                                                    | Due to preferred stockholders                                           | 215,000                                                  
|                                                                    | Other current liabilities                                               | 145,746                                                  
|                                                                    |                                                                         | Total current liabilities                                 | 3,554,076 
|                                                                    |                                                                         |                                                           |           
|Stockholders' equity:                                              
|                                                                    | Preferred stock (Series I, class A), $5.00 par value, 10,000,000 shares
|                                                                    |                                                                         | authorized; 90,000 shares issued and outstanding (Note 2) | -         
|                                                                    | Common stock, $.04 par value; 300,000,000 shares authorized;           
|                                                                    |                                                                         | 155,269,129 issued and outstanding                        | 6,210,765 
|                                                                    | Treasury stock, 1,000,000 shares, $0.04 par value common stock          | (40,000)                                                 
|                                                                    | Additional paid-in-capital                                              | 12,841,992                                               
|                                                                    | Subscriptions receivable                                                | (337,500)                                                
|                                                                    | Shares to be issued                                                     | 428,333                                                  
|                                                                    | Prepaid consulting                                                      | (36,667)                                                 
|                                                                    | Other comprehensive income                                              | 2,463,791                                                
|                                                                    | Accumulated deficit                                                     | (18,770,343)                                             
|                                                                    |                                                                         | Total stockholders' equity                                | 2,760,370 
|                                                                    |                                                                         | Total liabilities and stockholders' equity                | $6,314,446



The accompanying notes form an integral part of these unaudited consolidated financial statements



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PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                 |                                                        |                          |              |                                                   |         |     
|------------------------------------------------ | ------------------------------------------------------ | ------------------------ | ------------ | ------------------------------------------------- | ------- | ----
|                                                 |                                                        |                          |              | For the
	Three Month Periods
	Ended September 30,
|                                                 |                                                        |                          |              | 2005                                              |         | 2004
|Revenues                                        
|                                                 | Consulting and advisory fee income                     | $  32,853                |              | $  204,250                                       
|                                                 | Sales                                                  | 7,962                    |              | 8,201                                            
|                                                 | Net revenues                                           | 40,805                   |              | 212,451                                          
|Cost of sales                                    | -                                                      |                          | 1,483       
|Gross Profit                                     | 40,805                                                 |                          | 210,968     
|                                                 |                                                        |                          |              |                                                  
|                                                 | Depreciation and amortization                          | 760                      |              | 2,098                                            
|                                                 | Salaries and wages                                     | 52,874                   |              | 95,781                                           
|                                                 | Professional services, including non-cash compensation | 111,376                  |              | 228,261                                          
|                                                 | Director fees                                          | 40,000                   |              | -                                                
|                                                 | Impairment of assets                                   | -                        |              | 86,923                                           
|                                                 | General administrative                                 | 62,852                   |              | 124,892                                          
|                                                 |                                                        | Total operating expenses | 267,862      |                                                   | 537,956
|Loss from operations                             | (227,057)                                              |                          | (326,988)   
|Other income and (expenses)                      |                                                        |                          |             
|                                                 | Interest expense                                       | (90,151)                 |              | (160,271)                                        
|                                                 | Gain on sale of marketable securities                  | 27,692                   |              | -                                                
|                                                 | Gain on legal settlement                               | -                        |              | 17,148                                           
|                                                 | Bad debt expense                                       | (105,346)                |              | -                                                
|                                                 | Gain on conversion of notes                            | -                        |              | 20,393                                           
|                                                 | Other income                                           | 239                      |              | 217                                              
|                                                 | Net other expenses                                     | (167,566)                |              | (122,515)                                        
|Loss from continuing operations                  | (394,624)                                              |                          | (449,502)   
|Loss from discontinued
	operations               | -                                                      |                          | (72,222)    
|Net loss                                         | (394,624)                                              |                          | (521,724)   
|Other comprehensive gain/(loss):                 |                                                        |                          |             
|                                                 | Reclassification                                       | (27,692)                 |              | -                                                
|                                                 | Unrealized gain (loss) on marketable securities        | 2,491,483                |              | (1,040,560)                                      
|Comprehensive gain/(loss)                        | $ 2,069,168                                            |                          | $(1,562,284)
|                                                 |                                                        |                          |             
|Net income (loss) per share - basic and diluted: |                                                        |                          |             
|Continued operations                             | $      
	(0.00)                                        |                          | $     (0.00)
|Discontinued operations                          | $              
	-                                     |                          | $     (0.00)
|Net loss                                         | $       (0.00)                                         |                          | $     (0.00)
|                                                 |                                                        |                          |             
|Weighted
	average number of shares outstanding   |                                                        |                          |             
|Basic and Diluted                                | 153,853,531                                            |                          | 133,259,368 



The accompanying notes form an integral part of these unaudited consolidated financial statements







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PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)





| |  |  |  |  |  |  |  | 
| |  |  |  |  |  |  |  | 

|                                                      |                                                                             |                                               |          |                                     |           |     
|----------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------- | -------- | ----------------------------------- | --------- | ----
|                                                      |                                                                             |                                               |          | For the Periods Ended September 30,
|                                                      |                                                                             |                                               |          | 2005                                |           | 2004
|Cash flows from operating activities:                
|                                                      | Net loss from continuing operations                                         | $(394,624)                                    |          | $(449,502)                         
|                                                      | Adjustments to reconcile net loss to net cash used in operating activities:
|                                                      | Depreciation                                                                | 760                                           |          | 2,098                              
|                                                      | Amortization of prepaid consulting fees                                     | 12,167                                        |          | -                                  
|                                                      | Gain on legal settlement                                                    | -                                             |          | (17,147)                           
|                                                      | Gain on debt settlement - net                                               | -                                             |          | (20,393)                           
|                                                      | Gain on marketable securities                                               | (27,692)                                      |          |                                    
|                                                      | Shares issued for consulting services                                       | 133,307                                       |          | 234,294                            
|                                                      | Shares issued for director fees                                             | 40,000                                        |          | -                                  
|                                                      | Shares issued for accrued interest                                          | -                                             |          | 9,851                              
|                                                      | Impairment of assets                                                        | -                                             |          | 86,923                             
|                                                      | Bad debt expense                                                            | 105,346                                       |          | -                                  
|                                                      | Changes in operating assets and liabilities:                               
|                                                      |                                                                             | Increase in other assets and prepaid expenses | (36,285) |                                     | (247,168)
|                                                      |                                                                             | Increase (decrease) in accounts payable       | (18,787) |                                     | 31,605   
|                                                      |                                                                             | Increase in accrued expenses                  | 25,949   |                                     | 97,548   
|                                                      |                                                                             | Increase in other liabilities                 | 35,000   |                                     | -        
|                                                      | Net cash used in operating activities                                       | (124,859)                                     |          | (271,891)                          
|Cash flows from investing activities:                
|                                                      | Purchase of fixed assets                                                    | (1,378)                                       |          | -                                  
|                                                      | Purchase of marketable securities                                           | (557)                                         |          | (60,000)                           
|                                                      | Proceeds from sale of marketable securities                                 | 195,692                                       |          | -                                  
|                                                      | Net cash provided by (used in) investing activities                         | 193,757                                       |          | (60,000)                           
|Cash flows from financing activities:                
|                                                      | Proceeds from the exercise of stock options                                 | -                                             |          | 181,600                            
|                                                      | Borrowings on notes payable                                                 | 10,000                                        |          | 160,000                            
|                                                      | Payments on notes payable                                                   | (32,000)                                      |          | (85,083)                           
|                                                      | Borrowings from officer                                                     | 5,000                                         |          | 93,500                             
|                                                      | Payments on advances from officer                                           | (47,418)                                      |          | (41,500)                           
|                                                      | Net cash provided by (used in) financing activities                         | (64,418)                                      |          | 308,517                            
|Net increase (decrease) in cash
	and cash equivalents | 4,480                                                                       |                                               | (23,374)
|Cash and cash equivalents, beginning of period        | 1,881                                                                       |                                               | 29,791  
|Cash and cash equivalents, end of period              | $6,361                                                                      |                                               | $6,417  





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PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

(UNAUDITED)





|                                                    |                                              |                                             |                                           |  |         
|--------------------------------------------------- | -------------------------------------------- | ------------------------------------------- | ----------------------------------------- |  | --------
|                                                    |                                              |                                             |                                           |  |         
|                                                    |                                              |                                             | For the Three Months
	Ended September 30,
|                                                    |                                              |                                            
|                                                    |                                              |                                             | 2005                                      |  | 2004    
|SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:
|                                                    | Cash paid during the period for:            
|                                                    |                                              | Interest                                    | $51,257                                   |  | $42,494 
|                                                    |                                              | Taxes                                       | $904                                      |  | $1,600  
|                                                    |                                              |                                             |                                           |  |         
|                                                    | Non-cash investing and financing activities:
|                                                    |                                              | Shares issued for payment of notes          | $-                                        |  | $191,343
|                                                    |                                              | Shares issued for interest and penalties    | $-                                        |  | $9,851  
|                                                    |                                              | Shares issued for acquisition of investment | $-                                        |  | $26,923 





The accompanying notes form an integral part of these unaudited consolidated financial statements



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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







NOTE 1 - NATURE OF BUSINESS



Providential Holdings, Inc., ("PHI") is engaged in a number of business activities, the most important of which is merger and acquisition advisory services. The Company acquires and consolidates special opportunities in selective industries to create additional value, acts as an incubator for emerging companies and technologies, and provides financial consultancy and M&A advisory services to U.S. and foreign companies.



INTERIM CONSOLIDATED FINANCIAL STATEMENTS



The accompanying Interim Condensed Consolidated Financial Statements are prepared in accordance with rules set forth in Retaliation SB of the Securities and Exchange Commission.  As said, these statements do not include all disclosures required under generally accepted principles and should be read in conjunction with the audited financial statements for the year ended June 30, 2005.  In the opinion of management, all adjustments consisting of normal reoccurring accruals have been made to the financial statements.  The results of operation for the three months ended September 30, 2005 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2006.



ACCOUNTING ESTIMATES



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.



MARKETABLE SECURITIES



The Company's securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.



Each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally quoted on the National Association of Securities Dealers OTC Bulletin Board (OTC:BB).  As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.



Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder's equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold.  On September 30, 2005, the marketable securities have been recorded at $6,247,815 based upon the fair value of the marketable securities. (Note 3)



PRINCIPLES OF CONSOLIDATION



The consolidated financial statements include the accounts of Providential Holdings, Inc., and its subsidiaries, Providential Securities, Inc., PHI Digital Inc., (PHI Digital), Provimex, and Touchlink, collectively referred to as the "Company". All significant inter-company transactions have been eliminated in consolidation.  Providential
Securities, PHI Digital, Provimex and Touchlink are inactive.





RECLASSIFICATIONS





8

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







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



RECENT ACCOUNTING PRONOUNCEMENTS



In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R").  FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees.  FAS No. 123R is effective beginning in the Company's first quarter of fiscal 2006.  The Company believes that the adoption of this standard will have no material impact on its financial statements.



In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." This statement applies to all voluntary changes in accounting principle and requires retrospective application to prior periods' financial statements of changes in accounting principle, unless this would be impracticable. This statement also makes a distinction between "retrospective application" of an accounting principle and the "restatement" of financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company is evaluating the effect the adoption of this interpretation will have on its financial position, cash flows and results of operations.



In June 2005, the EITF reached consensus on Issue No.  05-6, Determining the Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005.  EITF 05-6 is not expected to have a material effect on its consolidated financial position or results of operations.





NOTE 2 - NASD EXAMINATION AND DISCONTINUANCE OF PROVIDENTIAL SECURITIES, INC.



After the completion of a routine audit of Providential Securities, Inc. (Providential) in July and August 2000, the National Association of Securities dealers, Inc. alleged that Providential violated certain provisions of the NASDs Conduct Rules 2120, 2330, 2110 and 3010, and Rules 15c2-4, 10b-5, 10b-9 and 15c3-3 of the Securities and Exchange Commission.  Providential Securities, Inc. and Henry Fahman voluntarily submitted a Letter of Acceptance, Waiver and Consent (AWC), which was accepted by NASD Regulation, Inc. on October 27, 2000.



Providential Securities, Inc. was censured, fined $115,000 and required to offer rescission to those public customers who participated in the Providential Private Placement.  In addition, Henry Fahman was banned, in all capacities, from associating with any NASD member.



Based upon the above mentioned circumstances, Providential Securities, Inc. withdrew its membership from the NASD in October 2000 and ceased its securities brokerage operation.  The fine of $115,000 is included in accrued expenses in the accompanying consolidated financial statements.  The Company has offered all Preferred Stock holders rescission on their investment.  During the year ended June 30, 2004, $235,000 from the amount due to Preferred Stock Holders plus $105,600 in related interest payable totaling $340,600 was paid either in cash or with the issuance of common stock.  The balance of unredeemed preferred shares and the related interest has been included in current liabilities on the accompanying consolidated financial statements.





NOTE 3 - MARKETABLE SECURITIES



The Companys marketable securities are classified as available-for-sale and, as such, are carried at fair value.  All of the securities are comprised of shares of common stock of the investee.  Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.



Each investment in marketable securities represents less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally quoted on the National Association of Securities Dealers OTC Bulletin Board (OTC:BB).  As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.



9

---



PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Unrealized holding gains and losses for marketable securities are excluded from earnings and reported as a separate component of stockholders equity.  Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold.  On September 30, 2005, the investments have been recorded at $6,247,815 based upon the fair value of the marketable securities.



Marketable securities classified as available for sale consisted of the following as of September 30, 2005:





|                              |                |                |             |               
|----------------------------- | -------------- | -------------- | ----------- | --------------
|                              |                |                |             |               
|                              |                | Market         | Accum.      | Number of     
|Investee Name                 | Cost at        | Value at       | Unrealized  | Shares Held at
|(Symbol)                      | Sept. 30, 2005 | Sept. 30, 2005 | Gain (Loss) | Sept. 30, 2005
|Jockey Club (JKCL)            | $15            | $-             | $(15)       | 1,500         
|Tri Kal International (TRIKF) | 15             | -              | (15)        | 15,165        
|Nasdaq (NADQ)                 | 3,300          | 7,605          | 4,305       | 300           
|Bio-Warm                      | 188,737        | 127,397        | (61,339)    | 4,718,424     
|Net Tel (NTTL)                | 304,500        | 362,500        | 58,000      | 1,450,000     
|Jeantex Group (JNTX)          | 3,287,457      | 5,750,313      | 2,462,856   | 9,200,500     
|                              |                |                |             |               
|Totals                        | $3,784,024     | $6,247,815     | $2,463,791  |               





In August 2005, the Company received 7,300,000 shares of Jeantex valued at $3,285,000.  The Company received these shares for advisory fees performed in June 2005 and the receivable for these shares was recorded in Other Receivables at June 30, 2005.  The cost basis of the shares, as recorded in Other Receivables at June 30, 2005, was based on the market value of the securities on the date the advisory services were completed. 
During the three month period ended September 30, 2005, the shares were
reclassified as marketable securities.  The Company has recorded marketable
securities at its quoted market value on the Bulletin Board at September 30,
2005.  The actual realized value of these securities could be significantly
different than recorded value.



During the quarter ended September 30, 2005, 800,000 shares of Nettel stock were sold, resulting in a realized gain on the sale of marketable securities of $27,692.





NOTE 4 - IMPAIRMENT OF ASSETS



The Company evaluated its investment in US West Industries and E-Check Recovery and recognized an impairment loss equal to the book value of these investments amounting $86,923 during the three months ended September 30, 2004. The evaluation was based upon market value of similar investment.





NOTE 5 - PROPERTY AND EQUIPMENT



Property and equipment at September 30, 2005 consists of the following:





|                              |          
|----------------------------- | ---------
|Equipment                     | $80,003  
|Furniture and fixtures        | 36,123   
|Automobiles                   | 81,103   
|Leasehold improvements        | -        
|Subtotal                      | 197,229  
|Less accumulated depreciation | (192,364)
|Total net fixed assets        | $4,865   





Depreciation expense was $760 and $2,098 for the three month ended September 30, 2005 and 2004, respectively.



10

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES



The accounts payable and accrued expenses at September 30, 2005 consist of the following:



|                                   |           
|---------------------------------- | ----------
|Accounts payable                   | $703,473  
|Accrued salaries and payroll taxes | 87,806    
|Accrued interest                   | 335,230   
|Accrued legal                      | 389,803   
|Accrued expenses - other           | 1600      
|                                   | $1,517,912





NOTE 7 - LOANS AND PROMISSORY NOTES



PROMISSORY NOTES:



As of September 30, 2005, the Company had notes payable to International Mercantile Holding amounting to $196,111. The notes are on January 31, 2006 and are reflected in the financial statements under current liabilities.  The Company pledged 5,000,000 shares of treasury stock with the lender, which were later sold by the note holders   The Company did not receive any proceeds from the sale of the shares nor was an agreement entered into for the settlement of the loan between the Company and the lender.  Accordingly, the value of these shares is reflected in the financial statements as stock subscriptions receivable and the notes are still included in the financial statements as a liability of the Company.   The Notes carries an interest rate equal to LIBOR plus 1%.





SHORT TERM NOTES PAYABLE:



As of September 30, 2005, the Company has short term notes payable amounting $1,405,127 plus accrued interest of $194,325.  The notes amounting to $764,016 are past due and $312,500 of the notes are payable on demand.  These notes bear interest rates ranging from 6% to 20% per annum.  Included in this amount is the payable to the former owners of ATC of $72,323. During the quarter ended September 30, 2005, the Company paid $32,000 of principle and $51,257 of related accrued interest.



DUE TO PREFERRED STOCKHOLDERS:



As of September 30, 2005, the Company has classified $215,000 of preferred stock subscribed as a current liability payable to holders of preferred stock due to non compliance of preferred shares subscription agreement.  There were no payments or conversions made during the quarter ended September 30, 2005.



The interest payable to holders of preferred stock amounting to $140,905 at September 30, 2005 has been included in accrued interest.



OTHER CURRENT LIABILITIES



During the year ended June 30, 2005, the Company received as a deposit on a business consulting agreement in the amount of $20,000. As the transaction contemplated in connection with the agreement has not been  completed at September 30, 2005, the amount has been classified as unearned revenues and is shown in the consolidated financial statement in other current liabilities.



Additionally, during the year ended June 30, 2004, the Company received an overpayment of $89,691 for the exercise of stock options receivable.  This amount has not been paid by the Company as of September 30, 2005, and



11

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







has also been classified as other payable and is shown on the consolidated financial statement in other current liabilities.





NOTE 8 - DUE TO OFFICERS



Due to officer, represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, unsecured and due on demand. During the current quarter, the officer loaned an additional $5,000 in cash to the Company and was paid $47,418.  As of September 30, 2005, the balance was $270,290.





NOTE 9 - LITIGATION



LEGAL PROCEEDING SETTLED AND UNPAID AS OF SEPTEMBER 30, 2005:



QUANG VAN CAO AND NHAN THI NGUYEN CAO VS. PROVIDENTIAL SECURITIES, INC. ET AL.



This case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company's legal counsel negotiated with the Claimant's counsel and unilaterally reached a settlement that had not been approved by the Company. While the Company was in the process of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations, the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus $4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment for $79,000. The settlement amount has been accrued in the accompanying consolidated financial statements.



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



In September 1997 Providential Securities, Inc. entered into a written Lease Agreement to lease certain items of equipment from Green Tree Vendor Services, in return for which Providential Securities, Inc. agreed to pay thirty-six monthly installments, each in the amount of $1,552. On or about September 12, 2000, and subsequently, Providential Securities, Inc. was unable to make the monthly payments to Claimant due to the lack of revenues following the interruption and subsequent closure of its securities brokerage operations. (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.



PENDING LITIGATION:



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



This case is pre-arbitration. The Company hired Mark Tow, Esq. to prepare an SB-2 Registration Statement and prepaid him $25,000 in retainer. Because Mark Tow was unable to complete the work according to schedule, the Company hired another law firm to replace Mark Tow. This new firm completed the SB-2 Registration Statement and filed with the SEC on September 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.



NGON VU VS. PROVIDENTIAL SECURITIES, INC.



12

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





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



VERIO VS. PROVIDENTIAL SECURITIES, INC.



On or about April 1, 2003, Verio, Inc. filed a judgment against Providential Securities, Inc., a wholly-owned subsidiary of the Company which was discontinued in October 2000, for a total of $9,141.  This sum consists of $6,800 for services allegedly rendered by Verio, Inc. to Providential Securities, Inc. in 2000 and $2,341 for legal costs.  Both amounts have been accrued in the accompanying consolidated financial statements.



DOW JONES & COMPANY, INC. VS. PROVIDENTIAL SECURITIES, INC. AND PROVIDENTIAL HOLDINGS, INC.



On March 19, 2002 Dow Jones & Company filed a complaint with the Superior Court of California, County of Orange, West Justice Center (Case No. 02WL1633), against Providential Securities, Inc., the discontinued operations of the Company, and Providential Holdings, Inc. for $9,973 plus prejudgment interest at the rate of ten (10%) per annum from November 1, 2000, reasonable attorneys fees and other and further relief. This claim is in connection with services allegedly rendered by the Plaintiff to Providential Securities, Inc. prior to November 2000. The Company intends to settle this case. The sought amount of $9,973 (excluding interest) has been accrued in Accrued Expenses in the accompanying consolidated financial statements.



ARBITRATION CASES:



The Company had  four arbitration cases from day-traders against Providential Securities, Inc., a discontinued stock brokerage operation of the Company.  The total amount of damages for these cases, which were closed as of June 30, 2001, were $54,505.  This amount has been accrued in the accompanying consolidated financial statements.





NOTE 10 - BASIC AND DILUTED NET LOSS PER SHARE



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





NOTE 11 - STOCKHOLDER'S EQUITY



TREASURY STOCK:



There was no activity in the Treasury Shares during the three months ended September 30, 2005.  The balance as of September 30, 2005 was 1,000,000 shares valued at $40,000.



COMMON STOCK:



During the three months ended September 30, 2005, the Company issued 3,332,656 shares of common stock for salaries and services valued at $133,306.



SHARES TO BE ISSUED:





13

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







During the three months ended September 30, 2005, the Company recorded directors fee amounting to $40,000 as shares to be issued.



PREPAID CONSULTING:



During the three months ended September 30, 2005, the Company has amortized $12,167 as an operating expense.  The balance of the prepaid consulting fees at September 30, 2005 is $36,667.





NOTE 12 - STOCK-BASED COMPENSATION PLAN



STOCK OPTIONS:



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



As of September 30, 2005, the Company has an additional 3,000,000 in stock options outstanding which were granted during the previous year ended June 30, 2005.



There were no options granted during the three months ended September 30, 2005.



STOCK-BASED COMPENSATION:



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



On February 7, 2005, the Company adopted a stock-based compensation plan and set aside 14,000,000 shares of common stock for selected eligible participants of the Company and subsidiaries, and certain independent contractors providing certain services to the Company.  As of September 30, 2005, 12,118,785 shares have been issued for salaries, consulting and professional services in lieu of cash under this plan.





NOTE 13 - CONTRACTS AND COMMITMENTS



BUSINESS CONSULTING AGREEMENT WITH MOTIV SPORTS, INC.



On January 14, 2005 the Company entered into a business consulting agreement with Motiv Sports, Inc. (Motiv), a California corporation, to provide services in the identification, location, and facilitating a merger with a fully-reporting publicly-traded company.  If a merger is successful, the Company is to receive common stock in the newly combined company equal up to 27% of the then issued and outstanding common shares of the new company. As of the date of this report, a successful merger has not been completed.   As of
September 30, 2005, Motiv has paid the Company $20,000 as a deposit against this agreement, which is reflected as unearned income in Other Current Liabilities.



BUSINESS CONSULTING AGREEMENT WITH ZEROMICRON, INC.





14

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







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



BEGINNING OPERATION OF PROVIDENTIAL OIL & GAS, INC.



On April 4, 2005, the Company announced the launching of Providential Oil & Gas, Inc., a Nevada corporation and wholly-owned subsidiary of the Company.  Providential Oil & Gas has investigated a number of lease properties in the US and abroad . On November 24, 2005, Providential Oil & Gas has signed an agreement with Terra-Firma Gas & Oil, Inc., a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty four gas wells in Crockett County, West Texas. (See Note 17 Subsequent Events)



JOINT VENTURE AGREEMENT WITH NEXIS CAPITAL MANAGEMENT CORPORATION, LTD.



On May 10, 2005, the Company entered into a Joint Venture Agreement with Nexis Capital Management Corporation, Ltd., to assist Chinese companies in their pursuit of capital from sources in the United States.



Both parties agree to share equally in all gross fee revenues based upon a mutually agreeable compensation schedule. As of the date of this report, the Company has reviewed a number of proposals from China that are introduced by Nexis Capital Management Corp. but have not consummated any transaction.



BUSINESS CONSULTING AGREEMENT WITH SANATEX, INC.



On August 4, 2005, the Company entered into a business consulting agreement with Sanatex, Inc., a California corporation (Sanatex), to assist Sanatex with respect to its becoming a publicly-traded company and its funding requirements.  According to the agreement, the Company will receive
40% of equity ownership in the new public company upon Sanatex's becoming public
or on the Closing Date of the proposed merger between Sanatex and a
fully-reporting publicly traded company.  The Company has not provided any
consulting services to Sanatex through September 30, 2005.



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



On August 22, 2005, the Company entered into a Business Partnering Agreement with Fareast Connect, Inc., a California corporation (Fareast), whereby the Company will invest 51% of the initial operating budget into Touchlink Communications, Inc., a majority-owned subsidiary of the Company, and Fareast will invest 49% of the operating budget in exchange for 49% equity ownership of Touchlink Communications.  As of the date of this report, Fareast has not made any investment into Touchlink Communications.



TERM SHEET FOR $5 MILLION FUNDING WITH INSTITUTIONAL INVESTOR



On August 26, 2005, the Company signed a term sheet with an institutional investor for a $5million standby equity distribution. The investor will commit to purchase up to $5 million of common stock of the Company at a price equal to 98% of the market price over the course of twenty four months after an effective registration of the Companys common stock.  The Company and the investor have not entered into formal agreements setting forth their respective rights and obligations in connection with this funding arrangement.



OFFICE SPACE LEASE



The Company leased its office space at $4,263 per month during the year ended June 30, 2004.  This lease expired on March 31, 2004 and the Company paid the rent on a month to month basis.  In August 2004, the Company moved to a new office with a lease at $3,907 per month.



Future commitments under operating leases are as follows for the twelve months ending September 30:



2006                                                                  46,884

2007                                                          
    39,070



15

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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS









Total minimum lease payment                             $   85,954



The rent expense was $13,529 and $17,140 for the quarter ended September 30, 2005 and 2004, respectively.





NOTE 14- GOING CONCERN UNCERTAINTY



As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $394,624 for the three months ended September 30, 2005.  As of September 30, 2005, the Company had accumulated deficit of $18,770,343. This factor, as well as the uncertain conditions that the Company faces in its day-to-day operations, create an uncertainty as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.



Management has taken
action to strengthen the Company's working capital position and generate
sufficient cash to meet its operating needs through September 30, 2006 and beyond. The Company also anticipates generating more revenue through its proposed mergers and acquisitions. No assurances can be made that management will be successful in achieving its plan.  The president and chairman of the Company has committed to funding the Companys operations for the next 12 months.





NOTE 15 - SEGMENT INFORMATION



During the three months ended September 30, 2005, the Company generated revenues from consulting and advisory services and from sales of imported pottery and bamboo furniture. The following table presents a summary of operating information and balance sheet information for the three months ended September 30, 2005 and September 30, 2004, respectively:





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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS









|                                      |                                  |              |            |            |           
|------------------------------------- | -------------------------------- | ------------ | ---------- | ---------- | ----------
|                                      |                                  |              |            |            |           
|                                      |                                  |              | 2005       |            | 2004      
|Revenues from unaffiliated customers:
|                                      | Consulting and advisory services | $32,853      |            | $204,250  
|                                      | Sales                            | 7,952        |            | 8,201     
|                                      |                                  | Consolidated | $40,805    |            | $212,451  
|                                      |                                  |              |            |            |           
|Operating income (loss):             
|                                      | Consulting and advisory services | $(235,009)   |            | $(333,706)
|                                      | Sales                            | 7,952        |            | 6,718     
|                                      |                                  | Consolidated | $(227,057) |            | $(326,988)
|                                      |                                  |              |            |            |           
|Identifiable assets:                 
|                                      | Consulting and advisory services | $6,310,277   |            | $816,171  
|                                      | Sales                            | 4,169        |            | -         
|                                      |                                  | Consolidated | $6,314,446 |            | $816,171  
|                                      |                                  |              |            |            |           
|Depreciation and amortization:       
|                                      | Consulting and advisory services | $760         |            | $2,098    
|                                      | Sales                            | -            |            | -         
|                                      |                                  | Consolidated | $760       |            | $2,098    
|                                      |                                  |              |            |            |           
|Capital expenditures:                
|                                      | Consulting and advisory services | $1,378       |            | $-        
|                                      | Sales                            | -            |            | -         
|                                      |                                  | Consolidated | $1,378     |            | $-        







NOTE 16 - RELATED PARTY TRANSACTIONS



During the three months ended September 30, 2005 and 2004, the Company issued shares to various related parties in payment for services and salaries.   These payments were as follows:





|              |           |                          |         |              |         |                          |         |             
|------------- | --------- | ------------------------ | ------- | ------------ | ------- | ------------------------ | ------- | ------------
|              |           | For the three months     |         |              |         | For the three months     |         |             
|              |           | Ended September 30, 2005 |         |              |         | Ended September 30, 2004 |         |             
|Related Party |           | # Shares                 |         | Market Value |         | # Shares                 |         | Market Value
|Henry Fahman  | 910,900   |                          | 36,436  |              | 166,600 |                          | $26,573
|Tina Phan     | 360,796   |                          | 14,432  |              | 66,600  |                          | 10,623 
|Timothy Pham  | 360,078   |                          | 14,403  |              | 66,600  |                          | 10,623 
|Norm Klein    | -         |                          | -       |              | 206,667 |                          | 32,963 
|Keith Wong    | -         |                          | -       |              | -       |                          | -      
|Thorman Hwin  | -         |                          | -       |              | -       |                          | -      
|              |           |                          |         |              |         |                          |         |             
|Total         | 1,631,774 |                          | $65,271 |              | 506,467 |                          | $80,782





In addition, during the three months ended September 30, 2005, the Company accrued $22,500 salaries to related parties.





NOTE 17 - SUBSEQUENT EVENTS



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



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PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





On November 25, 2005 the Companys wholly-owned subsidiary Providential Oil & Gas, Inc. signed an agreement with Terra-Firma Gas & Oil, Inc., a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty-four gas wells on Hudspeth Ranch, Crockett County, West Texas. Providential Oil & Gas, Inc. will be responsible for providing the capital funding for the drilling of these gas wells and Terra-Firma will be responsible for managing the project.  According to the agreement, Providential Oil & Gas will receive a seventy-five percent share in the net working interest from the first two wells until $1,063,800 capital funding is repaid. After the principal is fully repaid to Providential Oil & Gas, it will receive a fifty percent share in the net working interest for the life of the two wells.  For subsequent well packages, Terra-Firma Gas & Oil, Inc. and Providential Oil & Gas, Inc. will determine and agree upon a mutually acceptable arrangement for the sharing of responsibilities and net working interest in these new wells. 
No financing has been provided on this project to date.





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



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



This discussion contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Such forward looking statements involve risks and uncertainties and actual results could differ from those described herein and future results may be subject to numerous factors, many of which are beyond the control of the Company.



OVERVIEW



Providential Holdings, Inc. ("PHI") was organized under the laws of the State of Nevada on June 8, 1982 under the name of JR Consulting, Inc.; subsequently on February 9, 2000 it changed its name to Providential Holdings, Inc. From its inception through September 7, 1995, the Company generated nominal revenues and did not actively engage in business. Prior to the corporate combination agreement with Providential Securities, Inc. PHI had an operating subsidiary, Diva Entertainment, Inc ("Diva").  Diva operated two modeling agencies, one in New York and one in California.



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



REORGANIZATION



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



BUSINESS RESTRUCTURING



After the divestiture of its Diva subsidiaries in June 2000 and the discontinuance of its securities brokerage operations in October 2000, the Company has primarily focused on mergers and acquisitions activities, with an emphasis on the following areas: (1) Technologies, (2) Financial services, (3) International markets, and (4)  Special Situations.



PROVIDENTIAL CAPITAL, INC.



In May 2003, the Company formed a wholly-owned subsidiary under the name of Providential Capital, a DBA company, to provide merger and acquisition advisory services for the micro-small cap arenas and manage the Company's proprietary merger and acquisition activities.  Providential Capital has mainly focused its attention on



19

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the underserved segment of smaller companies in the U.S. and abroad. This subsidiary was later incorporated as a Nevada corporation on September 23, 2004.



Providential Capital has successfully managed merger plans for several private and publicly-traded companies.  This subsidiary currently works with a number of target companies in the US, China, Korea, and Vietnam and expects to generate additional business in the Pacific Rim in the near future.



PROVIMEX, INC.



Provimex is a wholly-owned division of the Company originally formed on April 10, 2001 under the name "Providential Imex", to focus on trade commerce with Vietnam. This division changed its name to Provimex on July 5, 2001.  Provimex only began to generate revenues from its import and export activities since August 2002. .For the fiscal years ended June 30, 2004 and June 30, 2005, this division recorded $132,856 and $28,144 in sales, respectively.  This subsidiary was later incorporated as a Nevada corporation on September 23, 2004. Web site: www.provimex.us. The Company has declared a 15% stock dividend of Provimex, Inc. to shareholders of record as of September 15, 2004.





PROVIMEX-HTV JOINT VENTURE COMPANY, LTD.



On October 18, 2004 the People's Committee of Ho Chi Minh City, Vietnam approved the joint venture application by the Company and HTV, Ltd., a Vietnam-based company, to form a Joint Venture company under the name of "Provimex-HTV Joint Venture Company, Ltd."  This joint venture company will primarily focus on providing equipment and liquid gas to high rise buildings and premium residential housings in Vietnam. The Company will own 80% equity in the joint venture company.





PROVIDENTIAL OIL & GAS, INC.



On April 4, 2005, the Company announced the launching of Providential Oil & Gas, Inc., a Nevada corporation and wholly-owned subsidiary of the Company.  Providential Oil & Gas has investigated a number of lease properties in the US and abroad. On November 25, 2005, Providential Oil & Gas has signed an agreement with Terra-Firma Gas & Oil, Inc., a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty four gas wells in Crockett County, West Texas. (See Note 17 Subsequent Events)





CRITICAL ACCOUNTING POLICIES



The Companys financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (GAAP).  GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of long-lived and intangible assets, and the realizability of deferred tax assets.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.



Valuation of Long-Lived and Intangible Assets





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The recoverability of long lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired.  As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset.  The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset.



Income Taxes



We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities.  We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences.  As of September 30, 2005, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.



RESULTS OF OPERATIONS



The following is the results of operations for the three months ended September 30, 2005 compared to the three months ended September 30, 2004.  The results from operations for our subsidiaries, ATC Technologies and Irvine College, have been reclassified for the three months ended September 30, 2004, as discontinued operations to render the financial statements comparable.



Revenues:



Total revenues were $40,805 and $212,451 for the three months ended September 30, 2005, and 2004, respectively.  Revenues for the current period consist of $32,853 in advisory and consulting fees, and $7,952 in sales.  The Company had not completed the transactions contemplated in the consulting agreements during the current period which resulted in the decrease in the advisory fees.  Sales for the current period are comparable to the first three months last year.



General and Administrative:



Total general and administrative expenses were $62,852 and $124,892 for the three months ended September 30, 2005, and 2004, respectively.  The decrease is primarily due to the decreased activity of the Company.  Professional services were $111,376 and $228,261 for the comparable periods.  Included in this amount for the current period is $82,438 for services paid with common stock compared to $108,321 for the three months ended September 30, 2004.  During the current three months the Company paid salaries of $52,874 all of which was paid with the issuance of common stock as compared to $95,781 of salaries paid with common stock in the first three months last year.





Other Expenses



Interest expense was $90,151 and $160,271 for the three months ended September 30, 2005, and 2004, respectively.  During the three months ended September 30, 2005, the Company recorded a gain on the sale of marketable securities of $27,692; as compared to the three months ended September 30, 2004 when the Company recorded a gain of conversion of notes of $20,393 and a gain on legal settlement of $17,148.



During the three
month period ended September 30, 2005, the Company recorded bad debt expense of
$105,346 to write off uncollectible receivable.  The Company had no bad
debt expense in the three month period ended September 30, 2004.



Net Income (Loss)



Net loss for the three months ended September 30, 2005 was $394,624, compared to a net loss of $521,724 for the same period in 2004, which is equivalent to ($0.00) per share in each period, based on the weighted average number of basic and diluted shares outstanding.  The difference is primarily attributed to decreased operations of the Company and a $72,222 loss from discontinued operations in the three months ended September 30, 2004, which is not present in the same three months in 2005.







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LIQUIDITY AND CAPITAL RESOURCES



The Company had consolidated cash and cash equivalents of $6,361 and $6,417 as of September 30, 2005 and 2004, respectively.



The Company's operating activities
used $124,859 and $271,891 in the three months ended September 30, 2005 and 2004, respectively.  The difference is mainly attributable to the decrease in activities of the Company.



Cash generated by investing activities was $193,757 as compared to $60,000 used for the three months ended September 30, 2005 and 2004.  During the current period the company sold marketable securities and in the prior period it and purchased an investment.



Cash used by financing activities was $64,418 as compared to $308,517 provided for the three months ended September 30, 2005 and 2004, respectively.  The decrease is primarily due a decrease in the proceeds from the exercise of stock options as well as a decrease in the borrowings on notes payable.



The Companys operations are currently financed through various loans.  Management has taken action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs.  In addition, the Company also anticipates generating more revenue through its proposed mergers and acquisitions.  No assurances can be made that management will be successful in achieving its plan or that additional capital will be available on a timely basis or at acceptable terms.





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



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



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



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PART II. OTHER INFORMATION





Item 1.   LEGAL PROCEEDINGS



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



Item 2.   CHANGES IN SECURITIES



Not applicable, except as may be noted elsewhere in this  report.



Item 3.   DEFAULTS UPON SENIOR SECURITIES



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



Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS



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



Item 5.   OTHER INFORMATION



Audit Committee



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



Item 6.   EXHIBITS AND REPORTS ON FORM 8-K



(a)

Exhibits

Exhibit 31.1           Certification of the Chief Executive Officer of Providential Holdings, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2           Certification of the Chief Financial Officer of Providential Holdings, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



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Exhibit 32.1            Certification of the Chief Executive Officer and Chief Financial Officer of Providential Holdings, Inc. pursuant to Section 906 of the Sarbanes Oxley Act of 2002





(b)       Reports on Form 8-K



None



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SIGNATURES



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





Date     December 1, 2005                                                                                  
PROVIDENTIAL HOLDINGS, INC.





By: /s/ Henry Fahman

Henry Fahman

President and Chairman &

Acting Chief Financial Officer



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Exhibit 31.1 CEO Certification



I, Henry Fahman, certify that:



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



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



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



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



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



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



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



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



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



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





Date: December 1, 2005



/s/ Henry Fahman

Henry Fahman

President and Chairman &

Acting Chief Financial Officer



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Exhibit 31.2 CFO Certification



I, Henry Fahman, certify that:



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



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



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



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



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



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



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



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



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



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



Date: December 1, 2005



/s/ Henry Fahman

Acting Chief Financial Officer



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Exhibit 32.1



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report on Form 10-QSB of Providential Holdings, Inc. and subsidiaries (the Company) for the quarter ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned Henry Fahman, Chief Executive Officer and Acting Chief Financial Officer of Providential Holdings, Inc. and subsidiaries, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



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



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



Dated: December 1, 2005



/s/Henry Fahman

Henry Fahman

Chief Executive Officer &

Acting Chief Executive Officer











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