**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 December 31, 2006





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:  167,504,375 SHARES OF COMMON
      STOCK, $.04 PAR VALUE PER SHARE, WERE OUTSTANDING AS OF JANUARY 18, 2007.










**TABLE
      OF CONTENTS**




**ITEM
                NUMBER**
            
            **PAGE**




**PART
                I**ITEM
                1.
            FINANCIAL
                STATEMENTSBalance Sheet
              -
              December 31, 2006 (unaudited)
            3Statements
              of
              Operations (unaudited) - Three & Six Month Periods Ended December 31,
              2006 and 2005
            4Statements
              of Cash
              Flows (unaudited) - Six Month Periods Ended December 31, 2006 and
              2005
            5NOTES
                TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
            6ITEM
                2.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
                CONDITION
            20ITEM
                3.
            CONTROLS
                AND PROCEDURES
            26**PART
                II**ITEM
                1.
            LEGAL
                PROCEEDINGS
            26ITEM
                2.
            CHANGE
                IN SECURITIES
            26ITEM
                3.
            DEFAULTS
                UPON SENIOR SECURITIES
            26ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            26ITEM
                5.
            OTHER
                INFORMATION
            26ITEM
                6.
            EXHIBITS
                AND REPORTS ON FORM 8-K
            27SIGNATURES
            28







**PROVIDENTIAL
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEET**


**DECEMBER
      31, 2006**


**(UNAUDITED)**





**ASSETS****Current
                assets:**Cash
                and cash equivalents
            
            $
            64,437Accounts
                receivable
            
            
            1,802Marketable
                securities
            
            
            2,691,954Loans
                receivable from related parties
            
            
            178,565Other
                current assets
            
            
            15,000**Total
                current assets**
            
            
            2,951,758**Property
                and equipment, net of accumulated depreciation of
                $196,408**
            
            
            2,437**Total
                assets**
            
            $
            2,954,195**LIABILITIES
                AND STOCKHOLDERS' DEFICIT****Current
                liabilities:**Accounts
                payable and accrued expenses
            
            $
            2,330,671Short-term
                notes payable
            
            
            1,243,991Due
                to officer
            
            
            242,115Due
                to preferred stockholders
            
            
            215,000Other
                current liabilities
            
            
            149,692**Total
                current liabilities**
            
            
            4,181,469**Stockholders'
                deficit:**Preferred
                stock (Series I, class A), $5.00 par value, 10,000,000
                sharesauthorized;
                90,000 shares issued and outstanding (Note 3)
            
            
            -Common
                stock, $.04 par value; 300,000,000 shares authorized;167,504,375
                issued and outstanding
            
            
            6,700,175Treasury
                stock,2,319,940shares, $0.04 par value common stock
            
            
            (92,798
            )Additional
                paid-in-capital
            
            
            13,036,533Subscriptions
                receivable
            
            
            (337,500
            )Prepaid
                consulting
            
            
            (16,667
            )Other
                comprehensive income
            
            
            (2,741,456
            )Accumulated
                deficit
            
            
            (17,775,561
            )**Total
                stockholders' deficit**
            
            
            (1,227,274
            )**Total
                liabilities and stockholders' deficit**
            
            $
            2,954,195





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




3





**PROVIDENTIAL
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(UNAUDITED)**


For
                  the Three Months
              
              For
                  the Six MonthsEnded
                  December 31,
              
              Ended
                  December 31,2006
              
              2005
              
              2006
              
              2005**Net
                  revenues**Consulting
                  and advisory fee income
              
              $
              83,500
              
              $
              347,500
              
              $
              120,500
              
              $
              380,353Sales
              
              
              **-**
              
              
              -
              
              
              **-**
              
              
              7,952Net
                  revenues
              
              
              83,500
              
              
              347,500
              
              
              120,500
              
              
              388,305**Cost
                  of sales**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Gross
                  profit**
              
              
              83,500
              
              
              347,500
              
              
              120,500
              
              
              388,305**Operating
                  expenses:**Depreciation
                  and amortization
              
              
              694
              
              
              827
              
              
              1,535
              
              
              1,588Bad
                  debt expense
              
              
              -
              
              
              -
              
              
              10,000
              
              
              105,346Salaries
                  and wages
              
              
              71,339
              
              
              52,500
              
              
              146,551
              
              
              105,374Professional
                  services, including non-cash compensation
              
              
              126,460
              
              
              102,113
              
              
              292,520
              
              
              213,489Directors
                  fees
              
              
              -
              
              
              -
              
              
              -
              
              
              40,000Legal
                  settlement
              
              
              40,000
              
              
              -
              
              
              40,000
              
              
              -Impairment
                  of assets
              
              
              -
              
              
              -
              
              
              20,000
              
              
              -General
                  and adminstrative
              
              
              71,508
              
              
              78,472
              
              
              137,884
              
              
              141,324Total
                  operating expenses
              
              
              310,001
              
              
              233,912
              
              
              648,490
              
              
              607,121**Income
                  (loss) from operations**
              
              
              (226,501
              )
              
              113,588
              
              
              (527,990
              )
              
              (218,816
              )**Other
                  income and (expense)**Interest
                  expense
              
              
              (106,228
              )
              
              (90,397
              )
              
              (197,395
              )
              
              (180,548
              )Gain
                  (loss) on sale of marketable securities
              
              
              (491
              )
              
              (6,593
              )
              
              381,348
              
              
              21,908Investment
                  deposit forfeited
              
              
              -
              
              
              -
              
              
              (42,500
              )
              
              -Loss
                  on legal settlment
              
              
              -
              
              
              (28,675
              )
              
              -
              
              
              (28,675
              )Fair
                  market value of warrants issued
              
              
              -
              
              
              -
              
              
              (4,902
              )
              
              -Other
                  income (expense)
              
              
              54
              
              
              (1,088
              )
              
              87
              
              
              (1,659
              )**Net
                  other income (expense)**
              
              
              (106,665
              )
              
              (126,753
              )
              
              136,639
              
              
              (188,974
              )**Net
                  loss**
              
              
              (333,166
              )
              
              (13,164
              )
              
              (391,352
              )
              
              (407,788
              )**Other
                  comprehensive gain/(loss):**Reclassification
              
              
              491
              
              
              6,593
              
              
              (381,348
              )
              
              (21,098
              )Unrealized
                  loss on marketable securities
              
              
              (41,243
              )
              
              (1,762,430
              )
              
              (5,187,581
              )
              
              (126,376
              )**Comprehensive
                  loss**
              
              $
              (373,919
              )
              $
              (1,769,002
              )
              $
              (5,960,282
              )
              $
              (555,263
              )**Net
                  loss per share - basic and diluted:**Net
                  loss
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )Weighted
                  average numberof
                  shares outstanding - basic and diluted
              
              
              164,130,395
              
              
              156,586,333
              
              
              163,568,331
              
              
              155,219,666
  ***Basic
                  and diluted weighted average number of shares is the same since
                  the
                  Company does not have dilutive
                  securities**




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




4





**PROVIDENTIAL
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**


For
                  the six month periodsEnded
                  December 31,2006
              
              2005**Cash
                  flows from operating activities:**Net
                  loss from continuing operations
              
              $
              (351,352
              )
              $
              (407,789
              )Adjustments
                  to reconcile net loss to net cash used in operating activities:Depreciation
              
              
              1,536
              
              
              1,588Amortization
                  of prepaid consulting fees
              
              
              26,000
              
              
              17,667Gain
                  on marketable securities
              
              
              (381,348
              )
              
              (21,098
              )Shares
                  issued for salaries and consulting services
              
              
              -
              
              
              215,807Shares
                  issued for director fees
              
              
              -
              
              
              40,000Fair
                  market value of options granted
              
              
              4,902
              
              
              -Fair
                  market value of treasury shares
              
              
              7,758
              
              
              -Impairment
                  of assets
              
              
              20,000
              
              
              -Bad
                  debt expense
              
              
              10,000
              
              
              105,346Marketable
                  securities to be received for consulting service rendered
              
              
              -
              
              
              (300,000
              )**Changes
                  in operating assets and liabilities:**Increase
                  in other assets and prepaid expenses
              
              
              (54,437
              )
              
              (39,165
              )Increase
                  (decrease) in accounts payable
              
              
              12,850
              
              
              (1,255
              )Increase
                  in accrued expenses
              
              
              294,288
              
              
              127,510Increase
                  in other liabilities
              
              
              60,000
              
              
              15,000**Net
                  cash used in operating activities**
              
              
              (349,803
              )
              
              (246,389
              )**Cash
                  flows from investing activities:**Purchase
                  of fixed assets
              
              
              -
              
              
              (2,994
              )Purchase
                  of marketable securities
              
              
              -
              
              
              (18,043
              )Proceeds
                  from sale of marketable securities
              
              
              568,607
              
              
              383,201Purchase
                  of investment
              
              
              -
              
              
              (20,000
              )**Net
                  cash provided by investing activities**
              
              
              568,607
              
              
              342,164**Cash
                  flows from financing activities:**Proceeds
                  from the sale of stock
              
              
              89,800
              
              
              -Purchase
                  of treasury shares
              
              
              (16,781
              )
              
              (9,710
              )Borrowings
                  on notes payable
              
              
              -
              
              
              35,000Payments
                  on notes payable
              
              
              (190,113
              )
              
              (68,700
              )Borrowings
                  from officer
              
              
              3,600
              
              
              5,000Payments
                  on advances from officer
              
              
              (43,276
              )
              
              (55,173
              )**Net
                  cash used in financing activities**
              
              
              (156,770
              )
              
              (93,583
              )**Net
                  increase in cash and cash equivalents**
              
              
              62,034
              
              
              2,192Cash
                  and cash equivalents, beginning of period
              
              
              2,403
              
              
              1,881**Cash
                  and cash equivalents, end of period**
              
              $
              64,437
              
              $
              4,073SUPPLEMENTARY
                  DISCLOSURES OF CASH FLOW INFORMATION:Cash
                  paid during the period for:Interest
              
              $
              65,500
              
              $
              72,557Taxes
              
              $
              -
              
              $
              904





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





5




**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, 2006.  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 six months ended December 31, 2006 are not necessarily
      indicative of the results to be expected for the fiscal year ending June 30,
      2007.




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
      December 31, 2006, the marketable securities have been recorded at $2,691,954
      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 Capital, Inc., Providential Securities,
      Inc., PHI Digital Inc., (“PHI Digital”), Provimex, Inc., and Touchlink
      Communications, Inc., 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.




6




RECLASSIFICATIONS




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




RECENT
      ACCOUNTING PRONOUNCEMENTS




In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
      Derivative Instruments and Hedging Activities”, and SFAS No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006. SFAS No. 155 is not expected to have a material effect
      on the consolidated financial position or results of operations of the
      Company.




In
      March
      2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this
      Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing
      of Financial Assets and Extinguishments of Liabilities, with respect to the
      accounting for separately recognized servicing assets and servicing liabilities.
      This Statement:




1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.




2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if practicable.




3.
            Permits
                an entity to choose ‘Amortization method’ or ‘Fair value measurement
                method’ for each class of separately recognized servicing assets and
                servicing liabilities.




4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.




5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.




This
      Statement is effective as of the beginning of the Company’s first fiscal year
      that begins after September 15, 2006. Management believes that this statement
      will not have a significant impact on the consolidated financial
      statements.




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




7




In
      September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
      Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
      88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
      employer to recognize the over funded or under funded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a
      not-for-profit organization. This Statement also improves financial reporting
      by
      requiring an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position, with limited exceptions. An
      employer with publicly traded equity securities is required to initially
      recognize the funded status of a defined benefit postretirement plan and to
      provide the required disclosures as of the end of the fiscal year ending after
      December 15, 2006. An employer without publicly traded equity securities is
      required to recognize the funded status of a defined benefit postretirement
      plan
      and to provide the required disclosures as of the end of the fiscal year ending
      after June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements:





1. A
      brief
      description of the provisions of this Statement.


2. The
      date
      that adoption is required.


3. The
      date
      the employer plans to adopt the recognition provisions of this Statement, if
      earlier.





The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008. The management is currently
      evaluating the effect of this pronouncement on the consolidated financial
      statements.




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




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




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




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




**NOTE
      3 - LOANS RECEIVABLE FROM RELATED PARTIES**




Loans
      receivable from related parties consist of the following at December 31,
      2006:




8




Loan
                to Jeantex
            
            $
            132,705Loan
                to Cavico
            
            
            35,920Loan
                to Bio-warm
            
            
            3,860Loan
                to Irvine College
            
            
            1,080Loan
                - others
            
            
            5,000$
            178,565




Loans
      to
      Bio-warm, Irvine College and others are unsecured, interest free and due on
      demand.




Loans
      to
      Jeantex and Cavico are unsecured, due on demand and bear 8.5% interest per
      annum. Total interest receivable for these loans as of December 31, 2006 is
      $5,766. No interest has been recorded by the Company for these two loans as
      of
      December 31, 2006.




**NOTE
      4 - MARKETABLE SECURITIES**




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




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




Unrealized
      holding gains and losses for marketable securities are excluded from earnings
      and reported as a separate component of stockholder’s equity.  Realized
      gains and losses for securities classified as available-for-sale are reported
      in
      earnings based upon the adjusted cost of the specific security sold.  On
      December 31, 2006, the investments have been recorded at $2,691,954 based upon
      the fair value of the marketable securities.




Marketable
      securities classified as available for sale consisted of the following as of
      December 31, 2006:




Market
            
            Accumulated
            
            Number
                ofInvestee
                Name
            
            Cost
                at
            
            Value
                at
            
            Unrealized
            
            Shares
                Held at(Symbol)
            
            Dec.
                31, 2006
            
            Dec.
                31, 2006
            
            Gain
                (Loss)
            
            Dec.
                31, 2006Tri
                Kal International (TRIKF)
            
            
            15
            
            
            -
            
            
            (15
            )
            
            15,165Bio-Warm
            
            
            70,776
            
            
            47,184
            
            
            (23,592
            )
            
            4,718,424Jeantex
                Group (JNTX)
            
            
            1,938,423
            
            
            444,075
            
            
            (1,494,349
            )
            
            9,868,317Cavico
                (CVCP)
            
            
            3,424,195
            
            
            2,200,695
            
            
            (1,223,500
            )
            
            3,800,856Totals
            
            $
            5,433,410
            
            $
            2,691,954
            
            $
            (2,741,456
            )




In
      September 2006, the Company received 2,000,000 shares of Cavico Corp. valued
      at
      $1,801,802.  The Company received these shares for advisory fees performed
      in May 2006 and the receivable for these shares was recorded in Other
      Receivables at June 30, 2006.  The cost basis of the shares, as recorded in
      Other Receivables at June 30, 2006, was based on the market value of the
      securities on the date the advisory services were completed.  During the
      three month period ended December 31, 2006, the shares were reclassified as
      marketable securities.  The Company has recorded marketable securities at
      its quoted market value on the Bulletin Board at December 31, 2006.  The
      actual realized value of these securities could be significantly different
      than
      recorded value.




9




During
      the six months ended December 31, 2006, 28,500 shares of Jeantex and 1,098,844
      shares of Cavico Corp. stock were sold, resulting in a realized gain on the
      sale
      of marketable securities of $381,348.




**NOTE
      5 - IMPAIRMENT OF ASSETS**




The
      Company evaluated its investment in Terra Firma Oil and Gas based upon the
      current situation of the investment project and recognized an impairment loss
      equal to the book value of these investments amounting $20,000 during the six
      months ended December 31, 2006. The evaluation was based upon market value
      of
      similar investment.




**NOTE
      6 - PROPERTY AND EQUIPMENT**




Property
      and equipment at December 31, 2006 consists of the following:


Equipment
              
              $
              81,619Furniture
                  and fixtures
              
              
              36,123Automobiles
              
              
              81,103Leasehold
                  improvements
              
              
              -Subtotal
              
              
              198,845Less
                  accumulated depreciation
              
              
              (196,408
              )Total
                  net fixed assets
              
              $
              2,437




Depreciation
      expense was $1,535 and $1,588 for the six months ended December 31, 2006 and
      2005, respectively.




Depreciation
      expense was $694 and $827 for the three months ended December 31, 2006 and
      2005,
      respectively.




**NOTE
      7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES**




The
      accounts payable and accrued expenses at December 31, 2006 consist of the
      following:




Accounts
                payable
            
            $
            783,110Accrued
                salaries and payroll taxes
            
            
            330,730Accrued
                consulting fees
            
            
            152,328Accrued
                interest
            
            
            602,280Accrued
                legal
            
            
            458,478Accrued
                expenses - other
            
            
            3,745$
            2,330,671




10




**NOTE
      8 - LOANS AND PROMISSORY NOTES**




PROMISSORY
      NOTES




As
      of
      December 31, 2006, the
      Company had promissory notes payable to International Mercantile Holding
      amounting to $196,111 with accrued interest of $21,260. The notes are past
      due
      as of June 30, 2006 and are reflected in the consolidated financial statements
      under short-term notes payable. The Company pledged 5,000,000 shares of treasury
      stock with the lender, which were 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 carry an interest
      rate equal to LIBOR plus 1%.




SHORT
      TERM NOTES PAYABLE




As
      of
      December 31, 2006, the Company has short term notes payable amounting $1,243,991
      plus accrued interest of $429,126.  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. During the six months ended
      December 31, 2006, the Company paid $190,113 of principal and $65,500 of related
      accrued interest.




DUE
      TO
      PREFERRED STOCKHOLDERS




As
      of
      December 31, 2006, 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 six months ended December 31,
      2006.




The
      interest payable to holders of preferred stock amounting to $173,155 at December
      31, 2006 has been included in accrued interest.




OTHER
      CURRENT LIABILITIES




During
      the year ended June 30, 2004, the Company received an overpayment of $89,692
      for
      the exercise of stock options receivable.  This amount has not been paid by
      the Company as of December 31, 2006, and has also been classified as other
      payable and is shown on the consolidated financial statement in “other current
      liabilities”.




Other
      current liabilities at December 31, 2006 also include $60,000 of client
      deposits.




**NOTE
      9 - 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 six month period, the officer loaned an additional $3,600 in cash
      to
      the Company and was paid $43,276.  As of December 31, 2006, the balance was
      $242,115.




**NOTE
      10 - LITIGATION**




**LEGAL
      PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2006:**




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




11




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.




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.




12




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.




LUBERSKI,
      INC. VS. PROVIDENTIAL HOLDINGS, INC. AND HENRY D. FAHMAN




On
      November 22, 2005, Luberski, Inc., a California corporation, (“Plaintiff”) filed
      a claim against the Company and Henry D. Fahman, its president, (“Defendants”)
      for damages up to $160,000 in connection with a loan in the amount of $100,000
      made by Plaintiff to the Company on August 23, 2004. On 1/11/2006, the Plaintiff
      entered a default against the Defendants and on 2/06/2006, a judgment in the
      amount of $154,298, including interest, attorney fees and costs, was entered
      against the Defendants. The full amount of the judgment is reflected in the
      consolidated financial statements at June 30, 2006.




TIMOTHY
      E. LUBERSKI VS. PROVIDENTIAL HOLDINGS, INC. AND HENRY D. FAHMAN





On
      November 22, 2005, Timothy E. Luberski (“Plaintiff”) filed a claim against the
      Company and Henry D. Fahman, its president, (“Defendants”) for damages up to
      $12,600 in connection with Plaintiff’s purchase of 100,000 shares of the
      Company’s restricted common stock on March 19, 2004. At the time of the
      purchase, Henry D. Fahman signed a personal guarantee to make up the difference
      if the Company’s stock price would not reach $0.17 per share one year after the
      date of purchase. On 1/11/2006, the Plaintiff entered a default against the
      Defendants and on 2/06/2006, a judgment in the amount of $12,748, including
      filing fees, was entered against the Defendants. The full amount of the judgment
      has been accrued in Accrued Expenses in the consolidated financial statements
      for the period ended June 30, 2006.





NICK
      L. JIORAS AND MELODEE L. JIORAS VS. PROVIDENTIAL HOLDINGS, INC. AND HENRY D.
      FAHMAN





On
      November 22, 2005, Nick L. Jioras and Melodee L. Jioras **** (“Plaintiffs”)
      filed a claim against the Company and Henry D. Fahman, its president,
      (“Defendants”) for damages up to $15,400 in connection with Plaintiffs’ purchase
      of 100,000 shares of the Company’s restricted common stock on March 19, 2004. At
      the time of the purchase, Henry D. Fahman signed a personal guarantee to make
      up
      the difference if the Company’s stock price would not reach $0.17 per share one
      year after the date of purchase. On 1/11/2006, the Plaintiffs entered a default
      against the Defendants and on 2/06/2006, a judgment in the amount of $15,795,
      including filing fees, was entered against the Defendants. The full amount
      of
      the judgment has been accrued in Accrued Expenses in the consolidated financial
      statements for the period ended June 30, 2006.





KEY
      EQUIPEMNT FINANCE, INC., VS. 49-6215601204 PROVIDENTIAL SECURITIES, INC.; HENRY
      D. FAHMAN; TINA T. PHAN, CASE NO 06WL00289





On
      January 18, 2006 Key equipment Finance filed a suit in the Superior Court of
      the
      State of California, County of Orange - West District claiming breach of the
      terms of lease agreement by failure to make the monthly installment due although
      demand therefore was made. The remaining balance due and owing to plaintiff
      under the lease is $14,439.49 plus interest from the date of default. The
      plaintiff also claiming for breach of guaranty, common counts, unjust enrichment
      and cost of law suit and any other relief the Court may deem just and proper.
      As
      of June 30, 2006 the Company has accrued $14,439.49.





ARBITRATION
      CASES:





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




13




**NOTE
      11 - BASIC AND DILUTED NET LOSS PER SHARE**




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




**NOTE
      12 - STOCKHOLDER'S EQUITY**




TREASURY
      STOCK




During
      the six months ended December 31, 2006, the Company purchased 1,049,940 Treasury
      Shares for $16,781.  The balance as of December 31, 2006 was 2,319,940
      shares valued at $92,798.




COMMON
      STOCK




During
      the six months ended December 31, 2006, the Company issued 2,500,000 shares
      of
      common stock valued at $375,000 against Shares to be Issued and sold 3,592,000
      shares valued at $89,800 to an officer of the company. The balance as of
      December 31, 2006 was 167,504,375 shares valued at $6,700,175.




PREPAID
      CONSULTING




During
      the six months ended December 31, 2006, the Company has amortized $26,000 as
      an
      operating expense.  The balance of the prepaid consulting fees at December
      31, 2006 is $16,667.




**NOTE
      13 - STOCK-BASED COMPENSATION PLAN**




STOCK
      OPTIONS




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




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 December 31, 2006, 12,478,512 shares
      have been issued for salaries, consulting and professional services in lieu
      of
      cash under this plan.




As
      of
      December 31, 2005, the Company has an additional 3,000,000 in stock options
      outstanding which were granted during the previous year ended June 30, 2005.




14




There
      were no options granted or vested during the six months ended December 31,
      2006.




Prior
      to
      July 1, 2006, the Company measured stock compensation expense using the
      intrinsic value method of accounting in accordance with Accounting Principles
      Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and
      related interpretations (APB No. 25).




The
      company adopted SFAS No. 123-R effective July 1, 2006 using the modified
      prospective method. Under this transition method, stock compensation expense
      recognized in the six months ended December 31, 2006 includes compensation
      expense for all stock-based compensation awards vested during the six months
      ended December 31, 2006, based on the grant-date fair value estimated in
      accordance with the provisions of SFAS No. 123-R. As there were no options
      granted or vested since the implementation of SFAS 123-R, no expense has been
      recorded during the six months ended December 31, 2006.




No
      pro
      forma disclosure was presented since the Company did not have any options issued
      or vested during the six months ended December 31, 2005.




Impact
      of
      adoption of SFAS No. 123-R in the six months ended December 31,
      2006




There
      was
      no stock compensation expense measured in accordance with SFAS No. 123-R since
      there were no options granted or vested during the six months ended December
      31,
      2006.




Methods
      of estimating fair value




Under
      both SFAS No. 123-R and under the fair value method of accounting under
      SFAS No. 123 (i.e., SFAS No. 123 Pro Forma), the fair value of stock
      options is determined using the Black-Scholes model.




Under
      SFAS No. 123-R, the company's expected volatility assumption is based on the
      historical volatility of the Company's stock. The expected life assumption
      is
      primarily based on historical exercise patterns and employee post-vesting
      termination behavior. The risk-free interest rate for the expected term of
      the
      option is based on the U.S. Treasury yield curve in effect at the time of grant.




SFAS
      No. 123-R requires forfeitures to be estimated at the time of grant and
      revised in subsequent periods, if necessary, if actual forfeitures differ from
      those estimates.





WARRANTS





During
      the quarter ended September 30, 2006, the Company issued 250,000 stock warrants
      with a term of 5 years and a three year vesting period. The following
      assumptions were used in the Black-Scholes pricing model:




Risk-free
                interest rate
            
            
            4.64
            %Expected
                life
            
            
            5.00
                yearsExpected
                volatility
            
            
            198
            %Expected
                dividend yield
            
            
            0
            %





Following
      is a summary of the warrant activity for the quarter ended December 31, 2006:




Warrants
                outstanding
            
            Exercise
                Price
            
            Aggregate
                Intrinsic ValueOutstanding,
                June 30, 2006
            
            
            -
            
            
            -
            
            
            -Granted
            
            
            250,000Forfeited
            
            
            -Exercised
            
            
            -Outstanding,
                December 31, 2006
            
            
            250,000
            
            $
            0.015
            
            $
            2,750





15





Following
      is a summary of the status of warrants outstanding at December 31, 2006:





Exercise
                Price
            
            Total
              Warrants
              Outstanding
            
            Remaining
                Life
              (Years)
            
            Total
              Exercise
                Price
            
            Warrants
              Exercisable
            
            Exercise
                Price$0.015
            
            
            250,000
            
            
            4.67
            
            $
            0.015
            
            
            250,000
            
            $
            0.015








**NOTE
      14 - CONTRACTS AND COMMITMENTS**





BUSINESS
      CONSUTLING 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 June 30, 2005, Motiv had
      paid
      the Company $20,000 as a deposit against this agreement, which was reflected
      as
      unearned income in Other Current Liabilities. During the year ended June 30,
      2006, the Company rendered consulting service in connection with the business
      consulting agreement and reclassified the unearned income into consulting
      revenue in the financial statements.





JOINT
      VENTURE AGREEMENT WITH NEXIS CAPITAL MANAGEMENT CORPORATION, LTD.





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




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




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





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





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




16




AGREEMENT
      WITH HORACE HORUMBA





On
      July
      1, 2006, the Company entered into a consulting service agreement with Horace
      Horumba, an individual, to be effective immediately. According to the agreement,
      Horace Horumba will provide consulting service to the Company with respect
      to
      the oil and gas business and import and export contracts between Russia and
      China, and will assist the Company to set up a division of Providential
      Holdings, Inc. in Europe. The term of the agreement will be four months after
      which the agreement may be extended by mutual consent of both parties. The
      Company has agreed to pay the consultant a total of $30,000 from time to time
      during the term of this agreement.





Subsequently,
      on October 15, 2006, the Company entered into an Employment Agreement with
      Horace Horumba (“Employee”), an individual, to be effective immediately.
      According to the agreement, the Company has agreed to hire the Employee as
      General Director of Providential Europe, a division of the Company to be
      established in Germany to focus on developing strategic alliances in and
      transacting oil and gas business between Russia, China and other countries.
      The
      term of the agreement shall be three years. The Company has agreed to pay
      Employee a monthly remuneration of $5,000 and share seventy percent of all
      net
      profits with Employee from the Providential Europe Division operations.





AGREEMENT
      WITH BALRAJ SANDHU





On
      July
      17, 2006, the Company entered into a consulting service agreement with Balraj
      Sandhu, an individual, to be effective immediately. According to the agreement,
      Balraj Sandhu will provide consulting service to the Company with respect to
      identifying, evaluating, introducing, recommending, and operating various
      for-profit post secondary and trade schools that may be approved and adopted
      by
      the Company for its educational business. The term of the agreement will be
      six
      (6) months. The Company has agreed to pay the consultant a total of $21,500
      from
      time to time during the term of this agreement.




AGREEMENT
      WITH HAWK ASSOCIATES, INC.




On
      August
      11, 2006, the Company entered into an investor relations consulting agreement
      with Hawk Associates, Inc., a Florida corporation, to be effective September
      1,
      2006. According to the agreement, Hawk Associates will provide investor
      relations consulting services to the Company for a period of six months, after
      which the agreement will automatically renew monthly each month until notice
      is
      provided by one of the parties to the other. The Company agrees to pay Hawk
      Associates $4,500 per month for the investor relations consulting services
      and
      Hawk Associates will be issued warrants to purchase 250,000 common shares of
      the
      Company based on the closing price of $0.015 per share as of September 1, 2006.
      These warrants will be valid until August 30, 2011.





AGREEMENT
      WITH BIO-WARM CORPORATION





On
      September 25, 2006, the Company entered into an agreement with Bio-Warm
      Corporation (“Bio-Warm”), a Nevada corporation, whereby the Company agreed to
      provide management and consulting services to Bio-Warm. Through December 31,
      2006, the company has not received any compensation from Bio-Warm under this
      agreement.




AGREEMENT
      WITH DAI DUNG METALLIC MANUFACTURE CONSTRUCTION & TRADE CO.




On
      November 30, 2006 the Company entered into a Business and Financial Consulting
      Agreement with DAI DUNG Metallic Manufacture Construction - Trade Co., Ltd.,
      a
      company duly organized and existing under the laws of Socialist Republic of
      Vietnam, with its principal offices at B23/474C Tran Dai Nghia St., Tan Nhat
      Village, Binh Chanh District, Ho Chi Minh City, Vietnam, to provide consulting
      services in the identification, location, and facilitating a merger with a
      publicly-traded company in the US. If a merger is successful, the Company is
      to
      receive common stock in the newly combined company equal up to 20% of the then
      issued and outstanding common shares of the new company. As of the date of
      this
      report, a successful merger has not been completed.




17




OFFICE
      SPACE LEASE




In
      August
      2004, the Company moved to a new office with a lease at $3,907 per month for
      four years. The future commitments under operating leases are as follows for
      the
      twelve months ending December 31, 2007 are $25,121.




The
      rent
      expense was $126,070 and $26,675 for the six months ended December 31, 2006
      and
      2005, respectively; and was $12,583 and $13,146 for the three months ended
      December 31, 2006 and 2005, respectively.




**NOTE
      15- GOING CONCERN UNCERTAINTY**




As
      shown
      in the accompanying consolidated financial statements, the Company incurred
      a
      net loss of $391,352 for the six months ended December 31, 2006.  As of
      December 31, 2006, the Company had accumulated deficit of $17,775,561. 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
      is in process of taking action to strengthen the Company's working capital
      position and generate sufficient cash to meet its operating needs through
      December 31, 2007 and beyond. The Company also anticipates generating more
      revenue through its proposed mergers and acquisitions. No assurances can be
      made
      that management will be successful in achieving its plan.  The president
      and chairman of the Company has committed to funding the Company’s operations
      for the next 12 months.




**NOTE
      16 - SEGMENT INFORMATION**




The
      Company operated in only one segment during the six months ended December 31,
      2006.




During
      the six months ended December 31, 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 six months ended December 31,
      2005:




18




2005Revenues
                from unaffiliated customers:Consulting
                and advisory services
            
            $
            380,353Sales
            
            
            7,952Consolidated
            
            $
            388,305Operating
                income (loss):Consulting
                and advisory services
            
            $
            (266,767
            )Sales
            
            
            7,962Consolidated
            
            $
            (218,815
            )Identifiable
                assets:Consulting
                and advisory services
            
            $
            4,703,156Sales
            
            
            217Consolidated
            
            $
            4,703,373Depreciation
                and amortization:Consulting
                and advisory services
            
            $
            1,588Sales
            
            
            -Consolidated
            
            $
            1,588Capital
                expenditures:Consulting
                and advisory services
            
            $
            2,994Sales
            
            
            -Consolidated
            
            $
            2,994




**NOTE
      17 - RELATED PARTY TRANSACTIONS**




During
      the six months ended December 31, 2006 and 2005, the Company issued shares
      to
      various related parties in payment for services and salaries.   These
      payments were as follows:




For
                the six months
            
            
            For
                the six monthsEnded
                December 31, 2006
            
            
            Ended
                December 31, 2005Related
                Party
            
            
            #
                Shares
            
            
            Market
                Value
            
            
            #
                Shares
            
            
            Market
                ValueHenry
                Fahman - Director
            
            
            -
            
            
            -
            
            
            2,494,233
            
            $
            83,936Tina
                Phan - Director
            
            
            -
            
            
            -
            
            
            1,194,129
            
            
            39,432Timothy
                Pham - Director’s family
            
            
            -
            
            
            -
            
            
            860,078
            
            
            29,403Thorman
                Hwin - Director
            
            
            -
            
            
            -
            
            
            333,333
            
            
            10,000Robert
                Stevenson - Director
            
            
            -
            
            
            -
            
            
            333,333
            
            
            10,000Total
            
            
            None
            
            $
            0
            
            
            5,215,106
            
            $
            172,771




In
      addition, during the six months ended December 31, 2006, the Company accrued
      $45,000 salaries to related parties.




The
      Company has loan receivable of $178,565 from related parties through common
      director. The loans are unsecured and bear interest rate of 8.5%. The loans
      receivable were recorded as other current assets in the consolidated financial
      statements (See note 3)




19




**NOTE
      18 - SUBSEQUENT EVENT**




SETTLEMENT
      WITH LUBERSKI, INC.




On
      November 22, 2005, Luberski, Inc., a California corporation, (“Plaintiff”) filed
      a claim against the Company and Henry D. Fahman, its president, (“Defendants”)
      for damages up to $160,000 in connection with a loan in the amount of $100,000
      made by Plaintiff to the Company on August 23, 2004. On 1/11/2006, the Plaintiff
      entered a default against the Defendants and on 2/06/2006, a judgment in the
      amount of $154,298, including interest, attorney fees and costs, was entered
      against the Defendants. The full amount of the judgment is reflected in the
      consolidated financial statements at June 30, 2006. On 06/09/2006, Plaintiff
      transferred and subsequently sold 1,000,000 shares of common stock of
      Providential Holdings, which belonged to Henry Fahman and were given to
      Luberski, Inc. as collateral for the loan. On 10/11/2006, the Company paid
      $80,000 to Luberski, Inc. and on 02/01/2007 the Company paid $40,000 as the
      final payment to settle the full amount.




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




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




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




The
      following is a discussion and analysis of our results of operations for the
      three-month periods ended December 31, 2005 and 2006, our financial condition
      at
      December 31, 2006 and factors that we believe could affect our future financial
      condition and results of operations. Historical results may not be indicative
      of
      future performance.





This
      discussion and analysis should be read in conjunction with our consolidated
      financial statements and the notes thereto included elsewhere in this Form
      10-Q.
      Our consolidated financial statements are prepared in accordance with Generally
      Accepted Accounting Principles in the United States (“GAAP”). All references to
      dollar amounts in this section are in United States dollars.





**FORWARD-LOOKING
      STATEMENTS**





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





20




**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 the Company’s Diva subsidiaries in June 2000 and the
      discontinuance of the  securities brokerage operations in October 2000, we
      have restructured and updated our primary scope of business to focus on
 mergers and acquisitions, merger and acquisition advisory services, and
      investments in various businesses with potential for high growth.  The
      Company continues to emphasize on M&A activities and advisory services
      involving small and mid-sized companies in the US and the Pacific Rim, to
      develop the joint ventures in the cement, hydropower and mining businesses
      with
      Cavico Vietnam, to pursue oil and gas transactions through its European
      division, and to engage in alternative energy such as bio-diesel and fuel
      cells.




**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 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 next twelve
      months.




21




**PROVIDENTIAL
      ENERGY CORPORATION (FORMERLY PROVIDENTIAL OIL & GAS,
      INC.)**




On
      December 31, 2003, the Company formed Providential Oil & Gas, Inc., a Nevada
      corporation and wholly-owned subsidiary, to pursue independent oil and gas
      business. On November 24, 2005, 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.  A $20,000 investment by the
      Company on this project was written off as of the date of this report. On June
      14, 2006, Providential Oil & Gas, Inc. changed its name to Providential
      Energy Corporation to expand its scope of business to potentially include
      alternative energy such as fuel cells and bio-diesel.




**PROVIMEX,
      INC.**




Provimex
      is a wholly-owned division of the Company originally formed on April 10, 2001
      under the name "Providential Imex", to focus on trade commerce with Vietnam.
      This division changed its name to Provimex on July 5, 2001.  Provimex began
      to generate revenues from its import and export activities in August 2002. 
For the fiscal years ended June 30, 2005 and June 30, 2006, this division
      recorded $28,144 and $3,932 in sales, respectively.  This subsidiary was
      later incorporated as a Nevada corporation on September 23, 2004. The Company
      has declared a 15% stock dividend of Provimex, Inc. to shareholders of record
      as
      of September 15, 2004. Provimex will continue to pursue additional business
      opportunities, including acquisition of potential targets as well as strategic
      alliances and joint venture agreements with other established companies in
      order
      to advance its operations in the next twelve months.




**JOINT
      VENTURES WITH CAVICO VIETNAM JOINT STOCK COMPANY**




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




**Cement
      business** .
      Cavico
      and Providential have executed the documents required by the laws of Socialist
      Republic of Vietnam to form a joint-venture company, namely Cavico PHI Cement
      Joint Stock Company (“CPCC”), to jointly fund, build, own, and operate a cement
      plant in Ha Nam province. It is anticipated that Cavico and its affiliates
      will
      contribute a maximum of 70% of the equity investment towards CPCC and retain
      a
      maximum of 70% of ownership in CPCC and Providential will contribute a minimum
      of 30% of the equity investment towards CPCC and retain a minimum of 30% of
      ownership in CPCC, respectively. As of the date of this report, CPCC has
      received the permission from the Provincial People’s Committee of Ha Nam to
      develop a cement plant in Thanh Nghi village, Thanh Liem district, Ha Nam
      province, Vietnam. The Company intends to begin contributing capital towards
      this joint venture in the near future.




**Hydropower
      business** .
       Cavico and Providential will cooperate to form a joint-venture company,
      namely Cavico PHI Hydropower Joint Stock Company (“CPHC”) or any other name
      acceptable to both parties, to jointly fund, build, own, and operate any
      possible hydropower projects allowed by the government of Vietnam, such as
      Dak
      My 2, Song Bung 4, and/or other hydropower plants in Vietnam and/or elsewhere.
      It is anticipated that Cavico and its affiliates will contribute a maximum
      of
      70% of the equity investment towards CPHC and retain a maximum of 70% of
      ownership in CPHC and Providential will contribute a minimum of 30% of the
      equity investment towards CPHC and retain a minimum of 30% of ownership in
      CPHC,
      respectively. Both companies expect to begin submitting the required paperwork
      with the appropriate Vietnamese authorities for the investment license in the
      near future.




**Mining
      business** .
      Cavico
      and Providential will cooperate to form a joint-venture company, namely Cavico
      PHI Mining Corporation (“CPMC”) or any other name acceptable to both parties, to
      jointly fund, build, own, and operate one or more mines in Vietnam and
      Australia. It is anticipated that Cavico and its
      affiliates will contribute a maximum of 70% of the equity investment towards
      CPMC and retain a maximum of 70% of ownership in CPMC and Providential will
      contribute a minimum of 30% of the equity investment towards CPMC and retain
      a
      minimum of 30% of ownership in CPMC, respectively. As of the date of this
      report, the joint venture partners have not begun the paperwork for the mining
      business investment license.




22




**Other
      business opportunities** .
      Cavico
      and Providential will cooperate in other business opportunities as deems
      appropriate. The required funding contributions and future benefits pertaining
      to each of these businesses will be mutually determined by both parties at
      the
      appropriate time.




Cavico
      and Providential have also agreed to enter into separate agreements detailing
      the terms and conditions agreeable to both parties pertaining to each of the
      projects mentioned above. As of the date of this report, no funding has been
      provided towards the joint venture projects.




**TOUCHLINK
      COMMUNICATIONS, INC.**




A
      wholly-owned DBA of Providential Holdings, Inc, Touchlink Communications was
      formed on July 7, 2003 to provide point-of-sale (POS) terminals and prepaid
      calling cards to retailers, convenient stores and non-profit organizations
      across the US. Touchlink Communications signed an agreement with KAGRO (Korean
      American Grocer Association) to provide pre-paid services to its member stores
      in the US and Canada.  This subsidiary was later incorporated as a Nevada
      corporation in February 2004 under the name of Touchlink Communications, Inc.
      to
      provide long distance services to residential and business customers in the
      United States.  The Company has declared a 15% stock dividend of Touchlink
      Communications, Inc. to shareholders of record as of September 15, 2004.
      Touchlink intends to expand its business through joint venture or strategic
      agreements with partner companies and acquisitions of targets with potential
      for
      high growth  in the telecommunications and information technology
      industries.




**PROVIDENTIAL
      EUROPE**




The
      Company has established a European Branch in Germany to focus on oil and gas
      transactions in Europe, Russia and China.  However, there is no guarantee
      that this initiative will be successful in the near future.




**PROVIDENTIAL
      ASIA**




The
      Company is in the process of forming a wholly-owned subsidiary in Vietnam to
      focus on mergers and acquisitions in Asia, including transactions for its own
      account and merger and acquisition advisory services for client companies in
      this region. However, there is no guarantee that this operation will be
      successful in the near future.




**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.





23




Valuation
      of Long-Lived and Intangible Assets





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





Income
      Taxes





We
      recognize deferred tax assets and liabilities based on the differences between
      the financial statement carrying amounts and the tax bases of assets and
      liabilities.  We regularly review our deferred tax assets for
      recoverability and establish a valuation allowance based upon historical losses,
      projected future taxable income and the expected timing of the reversals of
      existing temporary differences.  As of March 31, 2006, we estimated the
      allowance on net deferred tax assets to be one hundred percent of the net
      deferred tax assets.





**RESULTS
      OF OPERATIONS**





**Three
      months ended December 31, 2006 compared to the three months ended December
      31,
      2005**





**Total
      Revenues:**





Total
      revenues were $83,500 and $347,500 for the three months ended December 31, 2006,
      and 2005, respectively.   The Company had entered into a new consulting
      service agreement during the quarter ended December 31, 2006 but did not
      recognize any revenues from this agreement for the period because the
      transactions that were contemplated in the consulting agreement were not totally
      completed at the end of quarter.





**Operating
      Costs and Expenses:**




Total
      operating expenses were $310,001 and $233,912 for the three months ended
      December 31, 2006, and 2005, respectively.  The increase is primarily due
      to the increases in professional services, and a slight increase in salaries
      and
      wages, which was offset by a slight decrease in general and administrative
      expenses. Professional services were $126,460 and $102,113 for the comparable
      periods, including services paid with common stock. During the current three
      months the Company recorded salaries of $71,339 as compared to $52,500 of
      salaries in the three months last year.





**Other
      Income and Expenses:**





Interest
      expense was $106,228 and $90,397 for the three months ended December 31, 2006,
      and 2005, respectively.  During the three months ended December 31, 2006,
      the Company recorded a loss on the sale of marketable securities of $491,
      compared to a loss on the sale of marketable securities of $6,593 during the
      three months ended December 31, 2005. Also included in the three month period
      ended December 31, 2005 was a loss on legal settlement of $28,675 which was
      not
      present in the current quarter. Other income for the three months ended December
      31, 2006 was $54 as compared to other expense of $1,088 for the same period
      last
      year.





**Net
      Loss:**





Net
      loss
      for the three months ended December 31, 2006 was $333,166, compared to a net
      loss of $13,164 for the same period in 2005, which is equivalent to ($0.00)
      per
      share for both of the respective periods, based on the weighted average number
      of basic and diluted shares outstanding.  The increase in net loss is
      primarily due a $264,000 decrease in consulting income for the three months
      ended December 31, 2006. Total operating and other expenses were comparable
      for
      the both periods.





24




**Six
      months ended December 31, 2006 compared to the six months ended December 31,
      2005**





**Total
      Revenues:**





Total
      revenues were $120,500 and $388,305 for the six months ended December 31, 2006,
      and 2005, respectively.  Revenues for the current period consist entirely
      of advisory and consulting fees while those for the same period ended December
      31, 2005 consist of advisory and consulting fees in the amount of $380,353
      and
      of sales in the amount $7,962, respectively. The Company had entered into two
      new consulting service agreements during the six months ended December 31,
      2006
      but did not recognize any revenues from these agreements for the period because
      the transactions that were contemplated in the consulting agreements were not
      totally completed at the end of the period.





**Operating
      Costs and Expenses:**




Total
      operating expenses were $648,490 and $607,121 for the six months ended December
      31, 2006, and 2005, respectively .
       The increase is primarily due to the increases in professional services,
      including non-cash compensation, impairment of assets, and salaries and wages
      for the period ended December 31, 2006; offset by the decreases in bad debt
      expense and general and administrative expenses. Professional services were
      $292,520 and $213,489 for the comparable periods,
      including services paid with common stock. During the six months the Company
      recorded salaries of $146,551 as compared to $105,374 of salaries in the six
      months last year.





**Other
      Income and Expenses:**





Interest
      expense was $197,395 and $180,548 for the six months ended December 31, 2006,
      and 2005, respectively.  During the six months ended December 31, 2006, the
      Company recorded a gain on the sale of marketable securities of $381,348,
      compared to a gain on the sale of marketable securities of $21,908 during the
      six months ended December 31, 2005. Also included in the six month period ended
      December 31, 2006 were the forfeiture of an investment deposit of $42,500 and
      the expense of $4,902 for the fair market value of 250,000 warrants issued
      to an
      outside consultant, which were not present in the same period in 2005. Also
      included in the six month period ended December 31, 2005 was a loss on legal
      settlement of $28,675 which was not present in the current quarter. Other income
      for the six months ended December 31, 2006 was $87 as compared to other expense
      of $1,659 for the same period last year.





**Net
      Loss:**





Net
      loss
      for the six months ended December 31, 2006 was $391,352, compared to a net
      loss
      of $407,788 for the same period in 2005, which is equivalent to ($0.00) per
      share for both of the respective periods, based on the weighted average number
      of basic and diluted shares outstanding.  The difference is primarily due
      to a $381,348 gain on the sale of marketable securities, offset by $259,853
      decrease in consulting revenue, $42,500 forfeiture of the investment deposit,
      $4,902 due to adjustment for fair market value of the warrants issued, $79,031
      increase in professional services, and $20,000 impairment of assets which was
      not present during the corresponding period in 2005.





**LIQUIDITY
      AND CAPITAL RESOURCES**





The
      Company had consolidated cash and cash equivalents of $64,437 and $4,073 as
      of
      December 31, 2006 and 2005, respectively.





The
      Company's operating activities used $ 349,803 and
      $246,389 in the six months ended December 31, 2006 and 2005, respectively. The
      difference is mainly attributable to the increase in activities of the
      Company.





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Cash
      generated by investing activities was $ 568,607  as
      compared to $342,164 for the six months ended December 31, 2006 and 2005,
      respectively.  The difference is mainly attributable to the increase in the
      proceeds from sale of marketable securities, offset by the purchase of 1,034,940
      shares of the company’s common stock from the open market during the current
      period.




Cash
      used
      by financing activities was $156,770 as compared to $93,583 for the six months
      ended December 31, 2006 and 2005, respectively. The
      increase is primarily due the increase in the payments on notes payable, offset
      by the decreases in payments on loans and in additional borrowings from officer.




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





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





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





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




**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.




26





**ITEM
      6.   EXHIBITS AND REPORTS ON FORM 8-K**





(a) The
      following exhibits are filed as part of this report:




**Exhibit
              No.**
            **Description**
            
            **Location**21.1
            Subsidiaries
                of Registrant
            
            Incorporated
                by reference to Exhibit
                21.1 to the Registrant’s Annual
                Report on Form 10-KSB, filed
                on November 14, 2006.31.1
            Certification
                by Henry D. Fahman, Chief Executive Officer, pursuant
                to Section 302 of the Sarbanes-Oxley Act of 2002.
            
            Provided
                herewith.31.2
            Certification
                by Henry D. Fahman, Acting Principal Financial Officer,
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            
            Provided
                herewith.32.1
            Certification
                by Henry D. Fahman, Chief Executive Officer and
                Chief Financial Officer of the Registrant, pursuant to Section
                906 of the Sarbanes-Oxley Act of
                2002.
            
            Provided
                herewith.(b)
            Reports
                on Form 8-K17.4
            Resignation
                of Robert Stevenson as Director
            
            Incorporated
              by
              reference to theRegistrant's Current Reporton Form
              8-K, filed on July 18, 2006.10.43
            Principle
                Business Cooperation Agreement with Cavico Vietnam Joint Stock
                Corporation.
            
            Incorporated
              byreference to the Registrant’s Current Report on Form
              8-K, filed on October 2, 2006.




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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.




Dated:
              February 12, 2007
            PROVIDENTIAL
              HOLDINGS, INC.By:
            /s/
              Henry FahmanHenry
              FahmanPresident and Chairman & Acting
              Chief Financial Officer




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