SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

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

EXCHANGE ACT OF 1934

For the quarterly period ended DECEMBER 31, 2008

OR

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

EXCHANGE ACT OF 1934

For the transition period from _________ to _________



Commission file number 2-78335-NY



Providential Holdings, Inc.

(Name of Issuer in its charter)

|                                         |                                     
|---------------------------------------- | ------------------------------------
|                                         |                                     
|Nevada                                   | 90-0114535                          
|(State 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



(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such 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 þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o Accelerated filer þ Non-accelerated filer þ Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   No þ

The number of shares outstanding of the registrant's Common Stock, $0.04 par value, was 193,830,961 as of December 31, 2008.

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Providential Holdings, Inc.



For the Period Ended December 31, 2008

TABLE OF CONTENTS



|                                                                                                      
|------------------------------------------------------------------------------------------------------
|PART I - FINANCIAL INFORMATION                                                                        
|                                                                                                      
|Item 1- Consolidated Financial Statements - Unaudited                                                 
|                                                                                                      
|Consolidated Balance Sheets As of December 31, 2008 and June 30, 2008                                 
|                                                                                                      
|Consolidated Statements of Operations for Three Months and Six Months Ended December 31, 2008 and 2007
|                                                                                                      
|Consolidated Statements of Cash Flows for Six Months Ended December 31, 2008 and 2007                 
|                                                                                                      
|Notes to Consolidated Financial Statements                                                            
|                                                                                                      
|Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations          
|                                                                                                      
|Item 3- Quantitative and Qualitative Disclosures about Market Risk                                    
|                                                                                                      
|Item 4- Controls and Procedures                                                                       
|                                                                                                      
|PART II - OTHER INFORMATION                                                                           
|                                                                                                      
|Item 1- Legal Proceedings                                                                             
|                                                                                                      
|Item 1A- Risk Factors                                                                                 
|                                                                                                      
|Item 2- Unregistered Sales of Equity Securities and Use of Proceeds                                   
|                                                                                                      
|Item 3- Defaults Upon Senior Securities                                                               
|                                                                                                      
|Item 4- Submission of Matters to a Vote of Security Holders                                           
|                                                                                                      
|Item 5- Other Information                                                                             
|                                                                                                      
|Item 6- Exhibits                                                                                      
|                                                                                                      
|SIGNATURES                                                                                            



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PART I - FINANCIAL INFORMATION



ITEM 1  CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                  |                                                                         |                                                           |                   |                  |                 | 
|------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | --------------------------------------------------------- | ----------------- | ---------------- | --------------- | 
|PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES                                                      |                                                                         |                                                          
|CONSOLIDATED BALANCE SHEETS                                                                       |                                                                         |                                                          
|                                                                                                  |                                                                         | (Unaudited)                                               |                   |                  |                
|                                                                                                  |                                                                         |                                                           | December 31, 2008 | June 30, 2008   
|                                                                                                  | ASSETS                                                                  |                                                          
|Current assets:                                                                                   |                                                                         |                                                           |                  
|                                                                                                  | Cash and cash equivalents                                               | $          1,966                                          |                   | $        117,166
|                                                                                                  | Accounts receivable                                                     | 55,500                                                    |                   | 3,044,520       
|                                                                                                  | Marketable securities                                                   | 2,820,366                                                 |                   | 4,435,938       
|                                                                                                  | Loans receivable from related parties                                   | 371,767                                                   |                   | 346,962         
|                                                                                                  | Other current assets                                                    | 147,214                                                   |                   | 197,131         
|                                                                                                  |                                                                         | Total current assets                                      | 3,396,813         |                  | 8,141,717      
|                                                                                                  |                                                                         |                                                           |                   |                  |                
|Fixed assets:                                                                                     |                                                                         |                                                           |                  
|Construction in progress                                                                          | 443,710                                                                 |                                                           | -                
|Property and equipment                                                                            | 240,263                                                                 |                                                           | 202,970          
|Accumulated depreciation                                                                          | (181,417)                                                               |                                                           | (176,853)        
|Total fixed assets                                                                                | 502,556                                                                 |                                                           | 26,117           
|                                                                                                  |                                                                         |                                                           |                   |                  |                
|Other assets:                                                                                     |                                                                         |                                                           |                  
|                                                                                                  | Deposits                                                                | 59,133                                                    |                   | 166,281         
|                                                                                                  |                                                                         | Total assets                                              | $3,958,502        |                  | $     8,334,115
|                                                                                                  |                                                                         |                                                           |                   |                  |                
|                                                                                                  | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                          |                                                          
|Current liabilities:                                                                              |                                                                         |                                                           |                  
|                                                                                                  | Accounts payable and accrued expenses                                   | $   2,280,449                                             |                   | $     1,605,728 
|                                                                                                  | Short-term notes payable                                                | 2,089,956                                                 |                   | 1,816,255       
|                                                                                                  | Due to officers                                                         | 843,915                                                   |                   | 561,982         
|                                                                                                  | Payable to related parties                                              | 241,358                                                   |                   |                 
|                                                                                                  | Due to preferred stockholders                                           | 215,000                                                   |                   | 215,000         
|                                                                                                  | Other current liabilities                                               | 89,691                                                    |                   | 89,691          
|                                                                                                  |                                                                         | Total current liabilities                                 | 5,760,369         |                  | 4,288,657      
|Minority interest                                                                                 | 467,652                                                                 |                                                           | -                
|Contingencies                                                                                     | -                                                                       |                                                           | -                
|                                                                                                  |                                                                         |                                                           |                   |                  |                
|Stockholders' equity (deficit):                                                                   |                                                                         |                                                           |                  
|                                                                                                  | Preferred stock (Series I, Class A), $5.00 par value, 10,000,000 shares |                                                           |                   |                 
|                                                                                                  |                                                                         | authorized; 90,000 shares issued and outstanding (Note 3) | -                 |                  | -              
|                                                                                                  | Common stock, $.04 par value; 300,000,000 shares authorized;            |                                                           |                   |                 
|                                                                                                  |                                                                         | 193,830,961 issued and outstanding                        | 7,753,238         |                  | 7,753,237      
|                                                                                                  | Shares to be issued                                                     | 57,000                                                    |                   | 57,000          
|                                                                                                  | Treasury stock 2,610,440 shares, $0.04 par value common stock           | (104,418)                                                 |                   | (97,618)        
|                                                                                                  | Additional paid-in-capital                                              | 10,830,486                                                |                   | 12,909,457      
|                                                                                                  | Subscriptions receivable                                                | -                                                         |                   | (25,500)        
|                                                                                                  | Prepaid consulting                                                      | -                                                         |                   | (37,500)        
|                                                                                                  | Other comprehensive income                                              | (5,047,008)                                               |                   | (1,522,997)     
|                                                                                                  | Accumulated deficit                                                     | (15,758,817)                                              |                   | (14,990,621)    
|                                                                                                  |                                                                         | Total stockholders' equity (deficit)                      | (2,269,519)       |                  | 4,045,458      
|                                                                                                  |                                                                         | Total liabilities and stockholders' equity                | $   3,958,502     |                  | $     8,334,115
|                                                                                                  |                                                                         |                                                           |                   |                  |                
|The accompanying notes form an integral part of these unaudited consolidated financial statements |                                                                         |                                                          



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|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |           |  |  |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------------------ | --------------------------- | ---------------------------- | --------------------------- | ---------------------- | ------------------------- | ---------------------- | -------------- | ----------------- | --------- |  |  |  |  |  |  |  |  | 
|PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES  
|CONSOLIDATED STATEMENTS OF OPERATIONS         
|(Unaudited)                                   
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|                                               |                                                        |                             |                              | For the Three Month Periods |                        | For the Six Month Periods
|                                               |                                                        |                             |                              | Ended December 31,          |                        | Ended December 31,       
|                                               |                                                        |                             |                              | 2008                        |                        | 2007                      |                        | 2008           |                   | 2007     
|Net revenues                                   |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Consulting and advisory fee income                     |                             | $                6,000       |                             | $           645,838    |                           | $      1,994,220       |                | $      674,338   
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|Operating expenses:                            |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Depreciation and amortization                          |                             | 1,700                        |                             | 308                    |                           | 3,938                  |                | 504              
|                                               | Salaries and wages                                     |                             | 109,544                      |                             | 97,252                 |                           | 230,744                |                | 176,314          
|                                               | Professional services, including non-cash compensation |                             | 177,295                      |                             | 137,943                |                           | 344,197                |                | 276,449          
|                                               | General and administrative                             |                             | 102,150                      |                             | 94,257                 |                           | 247,736                |                | 213,308          
|                                               |                                                        | Total operating expenses    |                              | 390,689                     |                        | 329,761                   |                        | 826,615        |                   | 666,576  
|Income (loss) from operations                  |                                                        | (384,689)                   |                              | 316,077                     |                        | 1,167,605                 |                        | 7,762         
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|Other income and (expenses)                    |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Interest expense                                       |                             | (134,046)                    |                             | (88,126)               |                           | (267,516)              |                | (117,221)        
|                                               | Loss on sale of marketable securities                  |                             | (1,927,880)                  |                             | -                      |                           | (1,815,963)            |                | -                
|                                               | Gain on debt settlement-net                            |                             | -                            |                             | -                      |                           | 133,757                |                | -                
|                                               | Other income                                           |                             | 20                           |                             | -                      |                           | 726                    |                | -                
|                                               |                                                        | Net other income (expenses) |                              | (2,061,905)                 |                        | (88,126)                  |                        | (1,948,975)    |                   | (117,221)
|Income (loss) before minority interest         |                                                        | (2,446,594)                 |                              | 227,950                     |                        | (781,370)                 |                        | (109,460)     
|                                               | Minority interest                                      |                             | 4,419                        |                             | -                      |                           | 13,174                 |                | -                
|Net income (loss)                              |                                                        | (2,442,175)                 |                              | 227,950                     |                        | (768,196)                 |                        | (109,460)     
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|Other comprehensive gain/(loss):               |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Reclassification on disposal of marketable securities  |                             | (200,383)                    |                             | -                      |                           | (360,701)              |                | -                
|                                               | Unrealized gain(loss) on marketable securities         |                             | (1,227,465)                  |                             | (1,609,173)            |                           | (3,163,309)            |                | 875,376          
|Comprehensive income (loss)                    |                                                        | $              (3,870,024)  |                              | $      (1,381,223)          |                        | $       (4,292,206)       |                        | $      765,916
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|Net income/(loss) per share:                   |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Basic                                                  |                             | $                     (0.01) |                             | $                 0.00 |                           | $            ( 0.00)   |                | $          (0.00)
|                                               | Diluted                                                |                             | $                     (0.01) |                             | $                 0.00 |                           | $               (0.00) |                | $          (0.00)
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          
|Weighted average number of shares outstanding: |                                                        |                             |                              |                             |                        |                           |                        |               
|                                               | Basic                                                  |                             | 191,250,017                  |                             | 172,030,961            |                           | 191,301,818            |                | 172,030,961      
|                                               | Diluted                                                |                             | 191,437,517                  |                             | 172,205,961            |                           | 191,489,318            |                | 172,205,961      
|                                               |                                                        |                             |                              |                             |                        |                           |                        |                |                   |          



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



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|                                                                                        |                                                                              |                                                              |                        |                   |                        |           |  |  | 
|--------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------- | ----------------- | ---------------------- | --------- |  |  | 
|PROVIDENTIAL HOLDINGS, INC. AND SUBSIDIARIES                                           
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                  
|FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2008 AND 2007                             
|(Unaudited)                                                                            
|                                                                                        |                                                                              |                                                              |                        | 2008              |                        | 2007     
|Cash flows from operating activities:                                                   |                                                                              |                                                              |                        |                  
|                                                                                        | Net loss from operations                                                     |                                                              | $     (768,196)        |                   | $       (109,460)     
|                                                                                        | Adjustments to reconcile net loss  to net cash used in operating activities: |                                                              |                       
|                                                                                        | Depreciation                                                                 |                                                              | 3,938                  |                   | 504                   
|                                                                                        | Amortization of prepaid consulting fees                                      |                                                              | 88,480                 |                   | -                     
|                                                                                        | Gain on debt settlement                                                      |                                                              | (133,757)              |                   | -                     
|                                                                                        | Loss on sale of marketable securities                                        |                                                              | 1,815,963              |                   | -                     
|                                                                                        | Minority interest                                                            |                                                              | (13,174 )              |                   | -                     
|                                                                                        | Shares issued for legal settlement                                           |                                                              | -                      |                   | 420,000               
|                                                                                        | Marketable securities  received for consulting service                       |                                                              | (2,080,200)            |                   | (639,838)             
|                                                                                        | Changes in operating assets and liabilities:                                 |                                                              |                        |                   |                       
|                                                                                        |                                                                              | Increase on accounts receivable                              |                        | (10,980)          |                        | -        
|                                                                                        |                                                                              | (Increase)decrease in other assets and prepaid expenses      |                        | 84,224            |                        | (125,099)
|                                                                                        |                                                                              | Increase (decrease) in accounts payable and accrued expenses | 602,104                |                   | (251,294)             
|                                                                                        |                                                                              | Increase in other liabilities                                |                        | -                 |                        | 53,000   
|                                                                                        | Net cash used in operating activities                                        |                                                              | (411,596)              |                   | (652,187)             
|Cash flows from investing activities:                                                   |                                                                              |                                                              |                        |                  
|                                                                                        | Purchase of property & equipment                                             |                                                              | (35,792)               |                   | (3,392)               
|                                                                                        | Construction in progress                                                     |                                                              | (443,710)              |                   | -                     
|                                                                                        | Purchase of marketable securities                                            |                                                              | (25,292)               |                   | (70,000)              
|                                                                                        | Proceeds from sale of marketable securities                                  |                                                              | 268,840                |                   | -                     
|                                                                                        | Net cash used in investing activities                                        |                                                              | (235,954)              |                   | (73,392)              
|Cash flows from financing activities:                                                   |                                                                              |                                                              |                        |                  
|                                                                                        | Proceeds from contribution of minority interest                              |                                                              | 40,000                 |                   | -                     
|                                                                                        | Purchase of treasury shares                                                  |                                                              | (4,233)                |                   | (42)                  
|                                                                                        | Proceeds on notes payable                                                    |                                                              | 340,800                |                   | 774,800               
|                                                                                        | Payments on notes payable                                                    |                                                              | (126,150)              |                   | -                     
|                                                                                        | Borrowings from officer                                                      |                                                              | 281,933                |                   | 130,521               
|                                                                                        | Payments on advances from officer                                            |                                                              | -                      |                   | (23,364)              
|                                                                                        | Net cash provided by  financing activities                                   |                                                              | 532,350                |                   | 881,914               
|Net increase(decrease) in cash and cash equivalents                                     |                                                                              | (115,200)                                                    |                        | 156,336          
|Cash and cash equivalents, beginning of period                                          |                                                                              | 117,166                                                      |                        | 7,751            
|Cash and cash equivalents, end of period                                                |                                                                              | $            1,966                                           |                        | $         164,087
|                                                                                        |                                                                              |                                                              |                        |                   |                        |          
|SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:                                     |                                                                              |                                                              |                       
|Cash paid during the period for:                                                        |                                                                              |                                                              |                        |                  
|                                                                                        | Interest                                                                     |                                                              | $          173,228     |                   | $           70,548    
|                                                                                        | Taxes                                                                        |                                                              | $                    - |                   | $                    -
|                                                                                        |                                                                              |                                                              |                        |                   |                        |          
|                                                                                        |                                                                              |                                                              |                        |                   |                        |          
|                                                                                        |                                                                              |                                                              |                        |                   |                        |          
|The accompanying notes form an integral part of these consolidated financial statements |                                                                             
|                                                                                        |                                                                              |                                                              |                       
|                                                                                       



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

PROVIDENTIAL HOLDINGS, INC., AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1 - NATURE OF BUSINESS



Providential Holdings, Inc., ("PHI") is engaged in a number of business activities, the most important of which are merger and acquisition advisory services, real estate development, and mining. 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 unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction with the audited financial statements for the year ended June 30, 2008.  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, 2008 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2009.



USE OF 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 quoted on either the Pink Sheets or the OTC Bulletin Board.   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, 2008, the marketable securities have been recorded at $2,820,366 based upon the fair value of the marketable securities.  (Note 4)



PRINCIPLES OF CONSOLIDATION



The consolidated financial statements include the accounts of Providential Holdings, Inc., and its subsidiaries, Providential Securities, Inc., Providential Capital, PHI Digital Inc., (PHI Digital), Provimex, Providential Energy Corporation (formerly Providential Oil & Gas, Inc.) Touchlink, PHI Mining Group, Inc. (formerly DDC Industries, Inc.), PhiLand Corporation and Providential Vietnam collectively referred to as the "Company". All significant inter-company transactions have been eliminated in consolidation.  Providential Securities, Inc, PHI Digital, Provimex, Providential Energy Corporation, and Touchlink are inactive.



RECLASSIFICATIONS



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



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RECENT ACCOUNTING PRONOUNCEMENTS



In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations. The objective of this statement will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition date fair value with limited exceptions. Statement 141 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 141R to have a material impact on the consolidated financial statements.



In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51". The objective of this statement is to establish new accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a material impact on the consolidated financial statements.



In March 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133,which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. The Company does not expect the adoption of SFAS No. 161 to have a material impact on the consolidated financial statements.



In May 2008, FASB issued SFASB No.162, The Hierarchy of Generally Accepted Accounting Principles. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements.

In May 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60. The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The Company does not believe this pronouncement will impact its financial statements.



In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. Under the FSP, unvested share-based payment awards that contain rights to receive nonforfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. This FSP is effective for us beginning July 1, 2009 and the Company does not expect that FSP EITF No. 03-6-1 would have a material impact on the 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, 2008 and June 30, 2008:



|                                      |               |              
|------------------------------------- | ------------- | -------------
|                                      | Dec. 31, 2008 | June 30, 2008
|Loan to Jeantex Group, Inc.           | $178,202      | $162,402     
|Loan to Bio-Warm Corp./DDC Industries | -             | 32,560       
|Loan to Cavico                        | 1,020         | -            
|Loan to Provimex HTV                  | 82,945        | 67,000       
|Loan to Pho Express                   | 109,600       | 85,000       
|                                      | $371,767      | $346,962     



Loans to Bio-Warm/ DDC Industries and to Cavico are unsecured, interest free and due on demand. The  loan to DDC Industries was reclassified to intercompany account as DDC Industries became PHI Mining Group, Inc. and was consolidated.

Loans to Jeantex Group and Provimex HTV are unsecured and bear 8.5% interest per annum and due on demand.   $30,000 of loan to Pho Express bears 32.5% interest per annum and the remaining portion is interest free and due on demand. During the period ended December 31, 2008, the total interest income from these loans was recorded as the receiving of these interests is not assured.



NOTE 4 - MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE



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 quoted on either the, pink sheets or the OTC Bulletin Board.  As such, each investment is accounted for in accordance with the provisions of SFAS No. 115.



Marketable securities classified as available for sale consisted of the following as of December 31, 2008:



|                                |               |               |               |                |                 
|------------------------------- | ------------- | ------------- | ------------- | -------------- | ----------------
|                                |               |               |               |                | Traded on       
|                                | Acquisition   | Market        | Accum.        | Number of      | Pink Sheets     
|Investee Name                   | Cost at       | Value at      | Unrealized    | Shares Held at | (PK) or Bulletin
|(Symbol)                        | Dec. 31, 2008 | Dec. 31, 2008 | Gain (Loss)   | Dec. 31, 2008  | Board (OB)      
|Tri Kal International (TRIKF)   | 15            | -             | (15)          | 15,165         | -               
|Jeantex Group (JNTX) *          | 1,938,423     | 58,153        | (1,880,271)   | 9,692,117      | OB              
|Cavico Corp.(CVIC) *            | -             | 170,643       | 170,643       | 1,706,430      | OB              
|All Line, Inc. (ALIN)           | 846,595       | 169,302       | (677,293)     | 8,465,100      | PK              
|Vietnam United Steel (VUSC)     | 1,750,000     | 1,750,000     | -             | 3,500,000      | PK              
|Catthai Corporation(CTHI)       | 3,332,340     | 672,268       | (2,660,072)   | 7,271,300      | PK              
|Totals                          | $7,867,373    | $2,820,366    | $( 5,047,007) |                |                 
|* All these are related parties



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As of December 31, 2008, 400,000 shares of Jeantex Group, Inc. stock, 2,000,000 shares of Cavico Corp. stock, 3,000,000 shares of DDC Industries, Inc. stock and 1,000,000 shares of Catthai Corporation stock were pledged as collateral for short-term notes payable.



The changes in net unrealized holding gain/loss on securities available for sale have been included as a separate component of stockholders' equity.  For the periods ended December 31, 2008 and 2007, an unrealized loss of $5,047,007 and an unrealized gain of $5,121,226 were recorded, respectively.



During the period ended December 31, 2008, the Company sold all 6,645,584 shares of Eastbridge Investment stock for $202,337,  the Company purchased 1,000 shares of DDCI Industries, Inc. at $260 and sold the same shares for $120,  the Company sold 328,570 shares of Cavico Corp. for $60,853.  In addition, the Company received 7,270,000 shares of Catthai Corporation for services of which 6,000,000 shares were recorded as revenue in the year ended June 30, 2008.  The Company purchased 1,200 shares of Catthai Corporation at $2,371 during the period ended December 31, 2008. The Company received 3,500,000 shares of Vietnam United Steel Corporation for services.



In March 2007, Bio-Warm entered into a purchase agreement to acquire 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company (DDMMCT) and changed its name to DDC Industries, Inc. The Company received 7,527,506 shares for advisory services, which was equivalent to 20% of all issued and outstanding shares of DDC Industries, Inc. The merger agreement with DDMMCT was rescinded on November 18, 2008 in entirety and shareholders of DDMMCT agreed to return 28,610,025 shares of 30,110,025 issued shares. On December 1, 2008, DDC Industries Inc. changed its name to PHI Mining Group. On December 1, 2008, Indochina Mining Corporation, a subsidiary of the Company, entered into stock purchase agreement with PHI Mining Group to exchange all of its capital stock with the same number of newly issued shares of PHI Mining Group. As a result, the Company owned about 83% of PHI Mining Group, Inc as at December 31, 2008. Prior to the merger between PHI Mining Group and Indochina, Company hold 20% interest in DDCI Industries which was increased to 76% as a result of recession  as mentioned above and subsequent acquisition of Companys subsidiary Indochina by PMG Mining Group (DDCI Industries) resulted in the increase in Companys interest to 83%. This transaction was recorded as related party transaction which resulted in the capitalization of PHI Mining Group into the Company.



The Company recorded a realized loss on the sale of marketable securities of $1,815,963 including realized loss of $2,074,647 on securities of DDCI which became a subsidiary of the Company  for the six month period ended December 31, 2008 and $-0-   for the six month period ended December 31, 2007.



NOTE 5  - PROPERTY AND EQUIPMENT



Property and equipment at December 31, 2008 and June 30, 2008 consists of the following:



|                              |               |  |              
|----------------------------- | ------------- |  | -------------
|                              | Dec. 31, 2008 |  | June 30, 2008
|Equipment                     | $    87,957   |  | $    85,855  
|Furniture and Fixtures        | 59,115        |  | 59,115       
|Automobiles                   | 93,191        |  | 58,000       
|Subtotal                      | 240,263       |  | 202,970      
|Less Accumulated Depreciation | (181,417)     |  | (176,853)    
|Net property and equipment    | 58,846        |  | 26,117       







Depreciation expenses were $3,938 and $504 for the periods ended Dec



NOTE 6  - CONSTRUCTION IN PROGRESS



Construction in progress represents the costs incurred by PHILand Corporation, a subsidiary of the Company for real estate development. The costs include design costs of $285,233, grading costs of $67,730, land clearing costs of $55,687, relocation costs of $30,085 and survey and other costs of $4,975.



NOTE 7  - ACCOUNTS PAYABLE AND ACCRUED EXPENSES



The accounts payable and accrued expenses at December 31, 2008 and June 30, 2008 consist of the following:



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|                                    |               |              
|----------------------------------- | ------------- | -------------
|                                    | Dec. 31, 2008 | June 30, 2008
|Accounts payable & Accrued Expenses | $    946,251  | $     379,175
|Accrued salaries and payroll taxes  | 248,485       | 166,557      
|Accrued interest                    | 567,039       | 551,323      
|Accrued legal                       | 339,804       | 339,804      
|Accrued consulting fees             | 178,870       | 168,870      
|                                    | $   2,280,449 | $  1,605,728 



During the period ended December 31, 2008, the Company was forgiven for the accrued interest of $131,808 on certain short term notes. This amount of was recorded as a gain on settlement of debts in the consolidated financial statements.



NOTE 8 
DUE TO OFFICER



Due to officer, represents advances made by officers of the Company and its subsidiaries, which are non-interest bearing, except for $100,000 as described below, unsecured and due on demand. As of December 31, 2008 and June 30, 2008, the balances were $843,915 and $561,982, respectively.



As of December 31, 2008, the Company has a short term note payable amounting $100,000 with interest bearing $3,000 per month payable to the Chief Technology Officer (CTO).



NOTE 9 - LOANS AND PROMISSORY NOTES



SHORT TERM NOTES PAYABLE:



As of December 31, 2008 and June 30, 2008, the Company has short term notes payable amounting $2,089,956 and $1,816,255, with accrued interest of $284,734 and $340,753, respectively.  These notes bear interest rates ranging from 6% to 36% per annum.  $644,000 of these short term notes are past due and $402,956 are due on demand. During the periods ended December 31, 2008 and 2007, the Company paid $128,099 and $60,000 of principal and $160,177 and $61,548 of interest on short term notes, respectively. During the period ended December 31, 2008, the Company was forgiven for the accrued interest of $131,808 on certain short term notes.



Some of the notes payable are secured by assets of the Company as summarized below:

|             |           
|------------ | ----------
|Note balance | Secured by

|         |                                                
|-------- | -----------------------------------------------
|$115,000 | 400,000 Jeantex shares,
500,000  Catthai shares
|$550,000 | 2,000,000 Cavico shares
500,000 Catthai shares 
|$150,000 | 1,500,000 DDCI shares                          
|$100,000 | 1,500,000 DDCI shares                          



DUE TO PREFERRED STOCKHOLDERS:



The Company 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.  This amount was past due as of December 31, 2008.



The interest payable to holders of preferred stock of $219,755 and $206,855 has been included in accrued interest included in account payable and accrued expenses on the balance sheets as of December 31, 2008 and June 30, 2008, respectively.



OTHER CURRENT LIABILITIES



During the year ended June 30, 2004, the Company received an overpayment of $89,691 for the exercise of stock options.  This amount has not been paid by the Company as of December 31, 2008, and was shown as other current liabilities on the consolidated financial statements.



NOTE 10 - LITIGATION



LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2008:



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



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



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



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



PENDING LITIGATION:





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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.



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.



KEY EQUIPMENT 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 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. The sought amount of $14,439 has been accrued in the accompanying consolidated financial statements.



NASD CASE:



After the completion of a routine audit of Providential Securities, Inc. in July and August 2000, the National Association of Securities Dealers, Inc. alleged that Providential violated certain provisions of the NASD's Conduct Rules. As a result, Providential Securities, Inc. withdrew its membership from the NASD in October 2000 and ceased its securities brokerage operation. $127,305, including $115,000 fine charged by NASD, is included in accrued expenses in the accompanying consolidated financial statements. (Note 3)



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.



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.  Basic and diluted weighted average number of shares for the period ended December 31, 2008 were the same since the inclusion of Common stock equivalents is anti-dilutive.



NOTE 12 - STOCKHOLDER'S EQUITY



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Treasury Stock:



During the period ended December 31, 2008 and 2007, the Company purchased 170,000 and 500 Treasury Shares for $4,233 and $42, respectively.  The balance as of December 31, 2008 was 2,610,440 shares valued at $104,418.



Common Stock:



Shares to be Issued:



On June 6, 2006, Luberski Inc. transferred and subsequently sold 1,000,000 shares of common stock of Providential Holdings, which belonged to the officer of the Company and were given to Luberski, Inc. as collateral for the loan. As of June 30, 2007, the Company agreed to pay back 1,000,000 shares valued at $57,000 to the officer and recorded the transaction as shares to be issued.



Prepaid Consulting:



During the year ended June 30, 2008, the Company issued 1,500,000 shares of common stock to a consultant valued at $75,000 based on a consulting agreement for service over one year.  The Company amortized $37,500 during the period ended December 31, 2008 and $37,500 in the fiscal year ended June 30, 2008.



Subscriptions Receivable:



The subscription receivable balance of $25,500 at June 30, 2008 from a consultant for shares issued during the year ended 2005 was written off in the period ended December 31, 2008.



NOTE 13 - STOCK BASED COMPENSATION PLAN



Stock-Based Compensation:



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, 2008, 12,478,512 shares have been issued for salaries, consulting and professional services in lieu of cash under this plan.

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.



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 years | 
|Expected volatility     | 198%       | 
|Expected dividend yield | 0%         | 



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Following is a summary of the warrant activity for the year ended December 31, 2008:



|                           |                      |                |                          
|-------------------------- | -------------------- | -------------- | -------------------------
|                           | Warrants outstanding | Exercise Price | Aggregate Intrinsic Value
|Outstanding, June 30, 2008 | 250,000              | $0.015         | $11,250                  

|                               |         |   |       
|------------------------------ | ------- | - | ------
|Granted                        | -       | - | -     
|Forfeited                      | -       | - | -     
|Exercised                      | -       | - | -     
|Outstanding, December 31, 2008 | 250,000 |   | $1,250



Following is a summary of the status of warrants outstanding at December 31, 2008:



|               |  |                            |  |                        |  |                      |  |                      |  |               
|-------------- |  | -------------------------- |  | ---------------------- |  | -------------------- |  | -------------------- |  | --------------
|Exercise Price |  | Total
Warrants
Outstanding |  | Remaining Life
(Years) |  | Total
Exercise Price |  | Warrants
Exercisable |  | Exercise Price
|$0.015         |  | 250,000                    |  | 2.92                   |  | $0.015               |  | 250,000              |  | $0.015        





NOTE 14- GAIN ON SETTLEMENT OF DEBT



During the period ended December 31, 2008 and 2007, the Company recorded a gain of $133,757 and $-0- on the settlement of debt, respectively.  (Note 6)



NOTE 15 - RELATED PARTY TRANSACTIONS



The Company accrued $105,000 salaries for Henry Fahman and Tina Phan during the periods ended December 31, 2008 and 2007.



During the periods ended December 31, 2008 and 2007, the Company had $12,000 revenue from a related company with a common officer.



In March 2007, Bio-Warm entered into a purchase agreement to acquire 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company (DDMMCT) and changed its name to DDC Industries, Inc. The Company received 7,527,506 shares for advisory services, which was equivalent to 20% of all issued and outstanding shares of DDC Industries, Inc. The merger agreement with DDMMCT was rescinded on November 18, 2008 in entirety and shareholders of DDMMCT agreed to return 28,610,025 shares of 30,110,025 issued shares. On December 1, 2008, DDC Industries Inc. changed its name to PHI Mining Group. On December 1, 2008, Indochina Mining Corporation, a subsidiary of the Company, entered into stock purchase agreement with PHI Mining Group to exchange all of its capital stock with the same number of newly issued shares of PHI Mining Group. As a result, the Company owned about 83% of PHI Mining Group, Inc as at December 31, 2008. Prior to the merger between PHI Mining Group and Indochina, Company hold 20% interest in DDCI Industries which was increased to 76% as a result of recession  as mentioned above and subsequent acquisition of Companys subsidiary Indochina by PMG Mining Group (DDCI Industries) resulted in the increase in Companys interest to 83%. This transaction was recorded as related party transaction which resulted in the capitalization of PHI Mining Group into the Company.



NOTE 16- CONTRACTS AND COMMITMENTS



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 until notice is provided by one of the parties to the other. The Company agreed to pay Hawk Associates $4,500 per month for the investor relations consulting services and 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 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 (Dai Dung)., 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.  The merger between Dai Dung and Bio-Warm Corp. was consummated on March 30, 2007. The Company recorded $2,521,715 as part of marketable securities based on the fair market value of shares at the date of the merger.



On November 18, 2008, this agreement was rescinded retroactively to the original agreement date and 28,610,025 shares of 30,110,025 shares of issued to the shareholders of Dai Dung were returned. As a result, the Company became a majority shareholder of the newly formed company, DDC Industries, Inc. The name of the corporation was changed from DDC Industries, Inc. to PHI Mining Group, Inc.  effective December 1, 2008.



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BUSINESS AND FINANCIAL CONSUTLING AGREEMENT WITH CATTHAI PLASTIC COMPANY



On June 25, 2007, the Company entered into a business consulting agreement with Catthai Plastic Company (CATHACO, LTD), a Vietnamese company located in Ho Chi Minh City, Vietnam. The services include (1) taking CATHACO public in the US via reverse merger, a business combination or IPO  (2) arranging intermediate funding after it become a fully-reporting publicly traded company on the OTCBB or a higher exchange in the US (3) subsequent listings of the new companys  shares on the Berlin and Frankfurt Stock Exchanges if necessary (4)further long-term funding and capital requirements as needed.  The Company recorded $3,000,000 as part of accounts receivable based on the fair market value of 6,000,000 shares at the date of the merger consummated on June 30, 2008. During the period ended December 31, 2008, the Company received this 6,000,000 shares and 1,270,000 additional shares for transaction related to stock purchased from Strategia for merger.



BUSINESS COOPERATION AGREEMENT WITH PHO EXPRESS



On September 19, 2007, Provimex, Inc., a subsidiary of the Company entered into business cooperation agreement with an owner of Pho Express to establish a new Vietnamese style noodle soup restaurant, Pho Express International, LLC. Pho Express agreed to contribute all assets and liabilities in exchange for 40% of equity ownership and Provimex agreed to pay $165,000 in exchange for 60% of equity ownership of Pho Express International, LLC. The Company paid $96,100 toward this investment and loaned $13,500 to Pho Express as of December 31, 2008.



BUSINESS AND FINANCIAL CONSULTING AGREEMENT WITH MAST VENTURES, LLC



Effective April 1, 2008, the Company entered into a business and financial consulting agreement with Mast Ventures, LLC  to raise capital for a wholly owned subsidiary, PhiLand Corporation for 5 years. The service includes assistance identifying potential investors, developing an approach in seeking such current financing and investor relations. The Company agreed to pay 5% of the total funds raised by the consultant.



STOCK PURCHASE AGREEMENT



On December 1, 2008, Indochina Mining Corporation, a subsidiary of the Company entered into a stock purchase agreement with PHI Mining Group, Inc. (formerly DDC Industries, Inc.) to exchange all of shares of Indochina Mining Corporation for the same number of newly issued shares of PHI Mining Group, Inc. After this agreement, the Company owns approximately

83% of PHI Mining Group, Inc.



Following is the summary of transaction.



In March 2007, Bio-Warm entered into a purchase agreement to acquire 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company (DDMMCT) and changed its name to DDC Industries, Inc. The Company received 7,527,506 shares for advisory services, which was equivalent to 20% of all issued and outstanding shares of DDC Industries, Inc. The merger agreement with DDMMCT was rescinded on November 18, 2008 in entirety and shareholders of DDMMCT agreed to return 28,610,025 shares of 30,110,025 issued shares. On December 1, 2008, DDC Industries Inc. changed its name to PHI Mining Group. On December 1, 2008, Indochina Mining Corporation, a subsidiary of the Company, entered into stock purchase agreement with PHI Mining Group to exchange all of its capital stock with the same number of newly issued shares of PHI Mining Group. As a result, the Company owned about 83% of PHI Mining Group, Inc as at December 31, 2008. Prior to the merger between PHI Mining Group and Indochina, Company hold 20% interest in DDCI Industries which was increased to 76% as a result of recession  as mentioned above and subsequent acquisition of Companys subsidiary Indochina by PMG Mining Group (DDCI Industries) resulted in the increase in Companys interest to 83%. This transaction was recorded as related party transaction which resulted in the capitalization of PHI Mining Group into the Company.



OFFICE SPACE LEASE



The Company signed on a 5 year lease agreement for the corporate office effective May 1, 2008. The monthly rental is $6,690.70 and will be increased by 3.5% per annum commencing in the thirteenth month of the initial lease term and continuing annually thereafter.



---





The leases for offices in Vietnam are for 12 months starting January 2008 and July 2008.  The monthly rental is ranging from approximately $625 to $4,100 per month.



Future commitments under operating leases are as follows for the twelve months ending December 31:



2009

$127,243

2010

85,037

2011

88,014

2012

91,094

2013

30,711

Total minimum lease payments      $ 422,099



The rent expense was $82,232 and $26,988 for the periods ended December 31, 2008 and 2007, respectively.



NOTE 17 - GOING CONCERN UNCERTAINTY



As shown in the accompanying consolidated financial statements, the Company has accumulated deficit of $17,912,481 and negative cash flow from operations amounting $376,597 for the period ended December 31, 2008. These factors as well as the uncertain conditions that the Company faces in its day-to-day operations with respect to cash flows create an uncertainty as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Management has taken action to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2009 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.



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



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



INTRODUCTION



Providential Holdings, Inc., ("PHI") through its wholly-owned and majority-owned subsidiaries engages in a number of diverse business activities including merger and acquisition advisory services, consulting, real estate development, mining,  independent energy, import and export,  fund management, and telecommunications and maintains minority interests in various companies operating in the areas of infrastructure, construction, natural resources, finance, manufacturing, services and retail.  The Company provides financial consultancy and M&A advisory services to U.S. and foreign companies and invests in selective businesses that may create long-term shareholder value.  No assurances can be made that management will be successful in achieving its plan.



BACKGROUND



Providential Holdings, Inc. ("PHI" or "Providential") was organized under the laws of the State of Nevada on June 8, 1982 under the name of JR Consulting, Inc. The Company changed its name to Providential Securities, Inc., a Nevada corporation, on January 12, 2000, and subsequently changed its name to Providential Holdings, Inc. on February 9, 2000. From its inception through September 7, 1995, the Company generated nominal revenues and did not actively engage in business. Prior to the corporate combination agreement with Providential Securities, Inc., JR Consulting had an operating subsidiary, Diva Entertainment, Inc ("Diva"), which operated two modeling agencies, one in New York and one in California.



Providential Securities, Inc., a California Corporation ("Providential Securities") was incorporated in the State of California on October 8, 1992. It operated a securities brokerage service in California, New York and Oregon. The principal markets for Providential Securities' services were individual investors who were located throughout the United States. Providential Securities bought and sold securities for its customers through a number of different markets, utilizing a brokerage clearinghouse to transact the trades. Due to the results of an NASD examination, Providential Securities withdrew its membership and ceased its securities brokerage business in October 2000.



BUSINESS STRATEGY



Providential Holdings' strategy is to:



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



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



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



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



BUSINESS RESTRUCTURING



Following the discontinuance of its securities brokerage operations in October 2000, the Company restructured its primary scope of business to engage in merger and acquisition advisory services, with particular emphasis on: (1) Consulting and Financial services (2) Real estate development, (3) Independent Energy and Resources, and (4) Special Situations.  During the Fiscal Year ended June 30, 2008, the Company increased its focus on assisting Vietnamese companies to go public in the U.S. stock market and investing in Vietnam. Events and developments relating to these areas are described in more detail below.



SUBSIDIARIES:



PROVIMEX, INC.



Provimex is a wholly-owned subsidiary 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 through the fiscal year ended June 30, 2005.  From July 2005 through the period ended December 31, 2008, this division did not generate any sales. 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.



In September 2007, Provimex entered into a Business Cooperation Agreement with Timmy Nguyen, sole owner of Pho Express, a Vietnamese-style noodle soup (pho) restaurant in Pomona, California to set up Pho Express International, LLC, a California Limited Liability Company, in order to launch a pho restaurant chain. According to the agreement, Provimex will contribute $165,000 for sixty percent (60%) ownership of Pho Express International, LLC. The Company made investment deposits totaling $96,100 and loaned Pho Express a total of $13,500 as of December 31, 2008.



PROVIDENTIAL CAPITAL, INC.



In May 2003, the Company formed a wholly-owned subsidiary under the name of Providential Capital to provide financial products and 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. Providential Capital began providing merger and acquisition advisory services to its clients since the fourth quarter of the fiscal year ended June 30, 2003.  Providential Capital has successfully managed merger plans for several publicly-traded companies and is currently focusing on a number of target companies in the US and Vietnam and expects to generate additional business in the Pacific Rim in the next twelve months.



VIETNAM MEDIA GROUP, INC. ( FORMERLY 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.   This subsidiary did not have any activities during the periods ended December 31,  2007. Effective October 31, 2008, Touchlink Communications, Inc. changed its name to Vietnam Media Group, Inc. to engage in multimedia business serving Vietnamese communities outside of Vietnam. On November 17, 2008, Vietnam Media Group entered into a Stock Purchase Agreement with All Line, Inc., a Nevada corporation, whereby All Line, Inc. would acquire ten percent of all the Vietnam Media Groups issued and outstanding common stock in exchange for $500,000 and ten million shares of All Line, Inc.s common stock. The expiration date of this stock purchase agreement, which was set at January 19, 2009, was



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extended to March 18, 2009. As of the date of this report, the referenced stock purchase agreement between All Line, Inc. and Vietnam Media Group, Inc. has not been closed.



PHI DIGITAL CORP



On November 1, 2003, the Company formed PHI Video Corp., which was later renamed PHI Digital Corp., a Nevada corporation, to provide the sale of consumer electronics, including flat-screen television sets and monitors, as part of its distributorship agreement with XOCECO. The distributorship agreement with XOXECO was terminated in June 2004 and PHI Digital Corp. has been renamed "TULON INDUSTRIES, INC." to change its scope of business.  This subsidiary did not have any activities during the periods ended December 31, 2008 or 2007.



PROVIDENTIAL ENERGY CORPORATION



On May 9, 2005, the Company formed Providential Oil & Gas, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, to begin investigating a number of lease properties in the US and abroad. On November 25, 2005, Providential Oil & Gas signed an agreement with Terra-Firma Gas & Oil, LLC, a Nevada corporation with headquarters in Midland, Texas, to co-develop up to twenty four gas wells in Crockett County, West Texas.  As of the date of this report, this subsidiary has not begun drilling any of the gas wells in conjunction with Terra-Firma Gas & Oil under the agreement. Effective June 1, 2006, Providential Oil & Gas amended its Articles of Incorporation and changed its corporate name to Providential Energy Corporation with an intention to broaden its scope of business to include alternative energy. During the Fiscal Year ended June 30, 2007 Providential Energy Corporation entered into a Business Cooperation Agreement with Unitex Energy, LLC, a Texas Limited Liability Company, to establish PhiTex Energy Group, Inc., a Nevada corporation,  in order to acquire and develop oil and gas properties. Providential Energy Corporation currently owns 87.75% stock of PhiTex Energy Group. In September 2007, Providential Energy Corp entered into an agreement to form a joint-venture company, WRCP PEC Mining Corporation (CPMC), with WRC Partners (WRCP), in order to acquire up to 2,700 acres of mineral, oil and gas rights near Bakersfield, California for development. According to the agreement, Providential Holdings, Inc. will be responsible for taking CPMC public and will manage the public company related activities required to be in full compliance with regulatory and market demands and Providential Energy Corporation will own up to a maximum of 40% of the equity interest in CPMC. Providential Energy Corporation did not have any activities during the periods ended December 31, 2008 or 2007.



PHILAND CORPORATION



PhiLand Corporation is a Nevada corporation which was wholly-owned subsidiary of Providential Holdings, Inc., and was set up in July 2007 to manage the real estate development project in South Hoi An, Quang Nam Province, Vietnam.  In July 2007, Providential Holdings Inc. entered into a principle agreement with the Peoples Committee of Quang Nam Province, which allows the Company to lease approximately 8,000 acres of land in South Hoi An, Quang Nam Province, Vietnam to develop an integrated tourism zone under a 70-year lease term.  The total cost of the land lease is $250,250,000. As of the date of this report, the Company has not made any payment towards the lease. On December 14, 2007, PhiLand Corporation was granted Investment License No.333043000025 by the Authority of Chu Lai Open Economic Zone, Quang Nam Province, Vietnam and formed PhiLand Vietnam, Ltd., a wholly-owned subsidiary of PhiLand Corporation, to manage Pointe 91, its first development project of a 118-acre residential community and resort in Bien Rang, Nui Thanh District, Quang Nam Province, Vietnam. PhiLand Corporation has engaged Urban Arena to coordinate and provide survey, site plan and architectural designs for Pointe91, CB Richard Ellis Vietnam, Ltd. to provide marketing and selling of the residential units, and Mayer Brown JSM for legal representation in connection with our real estate development activities. During the period ended December 31, 2008, 3,500,000 shares of PhiLand Corporation  were issued to employees and consultants of the Company and 105,715 shares which were owned by the Company were sold to individuals for $40,000. The total of 3,605,715 shares held by minority shareholders makes up approximately 15% of outstanding shares.



INDOCHINA MINING CORPORATION



IndoChina Mining Corporation, a Nevada corporation and wholly-owned subsidiary of Providential Holdings, Inc., was incorporated on March 20, 2008 for exploitation and processing of diatomite mines. On April 14, 2008, IndoChina Mining Corporation (IMC), entered into a Cooperation agreement with Phu Yen Minerals Joint Stock Company (PYMICO). Under this agreement, PYMICO and IMC will cooperate to contribute capital for establishment of a joint venture specializing in exploitation and processing of diatomite in Phu Yen providence and IMC will participate in PYMICO through purchasing a maximum of 30% shares of PYMICO when the latter issues additional shares in 2008.



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On December 1, 2008, Indochina Mining Corporation entered into stock purchase agreement with PHI Mining Group (formerly DDC Industries, Inc.) to exchange all of its capital stock with the same number of newly issued shares of PHI Mining Group. As a result, the Company owns approximately 83% of PHI Mining Group.



PROVIDENTIAL VIETNAM



Providential Vietnam is a Vietnamese corporation and wholly-owned subsidiary of Providential Holdings, Inc. which started operation in May 2008 to provide M&A advisory services, management consulting, corporate restructuring, asset management, fund management, and investment banking, services in  Independent oil and gas, alternative energy, and mining, commercial and residential real estate, hotels and integrated hospitality and Investments in selective opportunities with potential for high growth.

PHI MINING GROUP, INC. (FORMERLY, DDC INDUSTRIES, INC.)

In March 2007, the Company received 900,000 shares, valued at $675,000, of Bio-Warm, which subsequently acquired 100% of Vietnam-based Dai Dung Metallic Manufacture Construction and Trade Company (DDMMCT) and changed its name to DDC Industries, Inc. The Company received these shares for advisory services completed earlier in that month.  In June 2007, the Company received 3,763,753 shares of DDC Industries for services performed in the merger of Bio-Warm Corp. and DDMMCT which was closed on March 30, 2007 and received the remaining 3,763,753 shares during the year ended June 30, 2008 per the agreement, which in total, is equivalent to 20% of all issued and outstanding shares of DDC Industries, Inc. The merger agreement with DDMMCT was rescinded on November 18, 2008 in entirety and shareholders of DDMMCT agreed to return 28,610,025 shares of 30,110,025 issued shares. On December 1, 2008, DDC Industries Inc. changed its name to PHI Mining Group. As a result of stock purchase agreement with Indochina Mining Corporation as described earlier, the Company owns about 83% of PHI Mining Group, Inc.. The common stock of DDC Industries, Inc. is currently trading on the Pink Sheets under the symbol PHIG. PHI Mining Group did not have any activities in the period ended December 31, 2008.



MINORITY INTERESTS:



JEANTEX GROUP, INC.  (FORMERLY LEXOR HOLDINGS, INC.)



On May 13, 2005, Providential Capital, Inc., a wholly-owned subsidiary of the Company, entered into a business consulting agreement with Lexor Holdings, Inc. to provide merger and acquisition advisory services to Lexor Holdings, Inc. with regard to a proposed merger between Lexor Holdings, Inc. and SB Chemical Co., Ltd., a Republic of Korea corporation. According to this agreement, the Company would be entitled to an additional 14% equity interest in Lexor Holdings, Inc. following the consummation of a merger between Lexor Holdings, Inc. and SB Chemical Co, Ltd. or another established business entity.



On June 22, 2005, Lexor Holdings, Inc. entered into a Stock Purchase Agreement with Jeantex, Inc., a California corporation and Susan Shin, an individual who was the president and sole shareholder of Jeantex. Pursuant to the terms of the Agreement, Lexor acquired 100% of the issued and outstanding equity interests of Jeantex in exchange for 56,350,000 shares of Lexor restricted common stock.  The Stock Purchase Agreement was closed on June 29, 2005. Providential Holdings, Inc. received 7,300,000 shares of restricted common stock of Lexor for services rendered in connection with this transaction. Lexor Holdings, Inc. has changed its corporate name to Jeantex Group, Inc. following the merger with Jeantex, Inc.  Jeantex Groups common stock is trading on the OTCBB under the symbol JNTX.



ALL LINE, INC.



During the year ended June 30, 2007, the Company entered into a consulting agreement with Blueocean Investments, LLC, a California Limited Liability Company, to provide merger and acquisition advisory services in connection with Blueoceans recapitalization plan. The Company received 8,550,000 shares of common stock of Cinnabar Enterprises, Inc. for services rendered through the consulting agreement. Cinnabar Enterprises, Inc. later changed its name to All Line, Inc., which currently trades on the Pink Sheets under the symbol ALIN. All Line had 96,204,001 shares issued and outstanding as of Nov 25, 2008.





JOINT VENTURES:



PROVIMEX-HTV JOINT VENTURE COMPANY, LTD.



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On October 18, 2004, the People's Committee of Ho Chi Minh City, Vietnam approved the joint venture application by the Company and HTV, Ltd., a Vietnam-based company, to form a Joint Venture company under the name of "Provimex-HTV Joint Venture Company, Ltd."  This joint venture company primarily focused on providing equipment and liquid gas to high rise buildings and premium residential housings in Vietnam. The Company was to own 80% equity in the joint venture company.  The investment of $50,000 in Provimex-HTV Joint Venture Company, Ltd. has been written off as an impairment of assets as of June 30, 2005. The Company loaned $82,945 to Provimex-HTV Joint Venture Company with interest rate of 8.5% per year. This note is due upon demand.



CAVICO-PHI CEMENT 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.



In September 2006, Cavico and the Company formed a joint-venture company, namely Cavico PHI Cement Joint Stock Company (CPCC), to jointly fund, build, own, and operate a cement plant in Phu Ly, Ha Nam province. It is anticipated that the Company will contribute 10% of the equity investment towards CPCC. During the fiscal year ended June 30, 2007, the Company has contributed $30,000 towards the joint venture project. This investment was impaired as of June 30, 2007.



VIETNAM FINANCIAL INVESTMENT MEDIA CORPORATION



Vietnam Financial Investment Media Corporation (VFMC) is a Vietnam-based joint venture of Hawk Associates, Providential Holdings, Cavico Vietnam, Cavico Hitech and Bao Viet Securities.  During the fiscal year ended June 30, 2007, the Company invested $7,500 towards this joint venture and intends to own approximately 10% of VFMC. This investment was impaired as of June 30, 2007.



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, recoverability of deferred tax and the valuation of shares issued for services.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.



Valuation of Long-Lived and Intangible Assets



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



Income Taxes



We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities.  We regularly review our deferred tax assets for recoverability and establish a valuation



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allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences.  As of December 31, 2008, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.



RESULTS OF OPERATIONS



The following is a discussion and analysis of our results of operations for the three-month and six-month periods ended December 31, 2008 and 2007, our financial condition at December 31, 2008 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.



Three months ended December 31, 2008 compared to the three months ended December 31, 2007



Total Revenues:



Total revenues were $6,000 and $645,838 for the three months ended December 31, 2008, and 2007, respectively from management services and consulting services. During the three months ended December 31, 2007, we generated $639,838 revenues from consulting services for transactions consummated. No consulting revenue was generated in the three months ended December 31, 2008.



Operating Costs and Expenses:



Total operating expenses were $390,689 and $329,761 for the three months ended December 31, 2008, and 2007, respectively.

The increase is primarily due to the increase in professional services, salaries and wages and general and administrative expenses which were caused by operation in Vietnam office in the current period.  Professional services were $177,295 and $137,943 for the comparable periods. General and administrative expenses were $102,150 and $94,257 for the comparable periods.   During the current three months, the Company recorded salaries and wages of $109,544 as compared to $97,252 in the three months last fiscal year.



Other Income and Expenses:



Total other expense was $2,061,905 for the three months ended December 31, 2008 compared to $88,126 for the three months ended December 31, 2007. The increase in other expense was due primarily to $1,927,880 loss on sale of marketable securities in the current period which were not present in the same period of prior year.  $2,074,647 loss was realized for the securities of DDC Industries (PHI Mining) when this entity became a subsidiary of the Company.



Interest expense was $134,046 and $88,126 for the three months ended December 31, 2008, and 2007, respectively.



Net Income and Loss:



Net loss for the three months ended December 31, 2008 was $2,442,175 as compared to a net income of $227,950 for the same period in 2007, which is equivalent to $(0.01) and $0.00 per share, respectively, based on the weighted average number of basic and diluted shares outstanding.



The decrease in net income is primarily due a decrease in revenue of $639,838 and loss on sale of marketable securities of $1,927,880 for the three months ended December 31, 2008.  Total operating expenses were increased by $60,929 for the three months ended December 31, 2008 compared to the same period in 2007.



Six months ended December 31, 2008 compared to the six months ended December 31, 2007



Total Revenues:



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Total revenues were $1,994,220 and $674,338 for the six months ended December 31, 2008, and 2007, respectively.  We generated $1,982,220  revenues from consulting services and $12,000 for management fees for the six months ended December 31, 2008 compared to $639,838 for consulting fees and $34,500 for management fee in the six month ended December 31, 2007.



Operating Costs and Expenses:



Total operating expenses were $826,615 and $666,576 for the six months ended December 31, 2008, and 2007, respectively. The increase is primarily due to the increases in professional services and general and administrative expenses in the period ended December 31, 2008; offset by the decreases in bad debt expense, impairment of assets and legal settlement. Professional services were $344,197 and $276,449 for the comparable periods. During the six months the Company recorded salaries of $230,744 as compared to $176,314 of salaries in the six months last year. General and administrative expense was increased by $34,428 during the six months ended December 31, 2008 due to an increase in travel expenses.



Other Income and Expenses:



Interest expense was $267,516 and $117,221 for the six months ended December 31, 2008, and 2007, respectively.  During the six months ended December 31, 2008, the Company recorded a loss on the sale of marketable securities of $1,815,963, a gain on debt settlement of $133,757. There was no such gain in the same period last year. Other income for the six months ended December 31, 2008 was $746 as compared to $0 for the same period in 2007.



Net Loss:



Net loss for the six months ended December 31, 2008 was $768,196, compared to $109,460for the same period in 2007, which is equivalent to ($0.00) per share for both periods, based on the weighted average number of basic and diluted shares outstanding.  The difference is primarily due to $1,319,882 increase in revenue, offset by an increase in administrative and general expenses of $34,428, increase in salaries and wages of $54,430 and increase in professional service cost of $67,748. Increase in net loss was also contributed by an increase of $1,815,963 in loss on the sale of marketable securities offset by an increase of $133,757 in gain on debt settlement which were not present during the corresponding period in 2007.



LIQUIDITY AND CAPITAL RESOURCES



The Company had consolidated cash of $1,966 and $164,087 as of December 31, 2008 and 2007, respectively.



The Company's operating activities used $411,596 and $652,187  in the six months ended December 31, 2008 and 2007, respectively.  The difference is mainly attributable to the increase in activities of the Company.



Cash used in investing activities was $235,954as compared to $73,392for the six months ended December 31, 2008 and 2007, respectively.  The difference is mainly attributable to the construction in progress of $443,710  which started in 2008 and purchase of marketable securities of $25,292 offset by proceed from sale of marketable securities of $268,840  in the period ended December 31, 2008, compared to purchase of marketable securities of $70,000 in the prior period.



Cash provided by financing activities was $532,350 for the six months ended December 31, 2008, as compared to $881,914 for the six months ended December 31, 2007. The decrease in cash provided by financing activities is mainly due a decrease of  $282,588 in cash received from notes and borrowings from officers and payments of note for $126,150 in the six months ended December 31, 2008.



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.



COMPANY'S PLAN OF OPERATION FOR NEXT 12 MONTHS



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.  For



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the next twelve months, the Company intends to emphasize on M&A advisory services for small and mid-sized companies in the US and the Pacific Rim, to focus on the development of the real estate program in central Vietnam,  including the Pointe 91 luxury hotel resort and premium residential community at Bien Rang and the free trade zone in Chu Lai, Nui Thanh District, Quang Nam Province, Vietnam through its majority owned subsidiary, PhiLand Corporation,  to develop the  mining business in Southeast Asia and other regions of the world through its majority owned subsidiary PHI Mining Group, Inc. , to engage in multimedia business serving overseas ethnic groups,  to pursue oil and gas transactions and alternative energy through Providential Energy Corporation and to engage in other special situations that may create value for the Companys shareholders.  There is no guaranty that the Company will be successful in any of its plans.



FINANCIAL PLANS



Management has taken action and is formulating additional plans to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2009 and beyond. Among the actions to be taken, the Company intends to raise additional capital from the US and international markets and is currently in the process of attaining additional financing. In addition, the Company also anticipates generating more revenue through its proposed mergers and acquisitions. No assurances can be made that management will be successful in achieving its plan.





ITEM  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about Providential Holdings Inc.s market risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.

Currency Fluctuations and Foreign Currency Risk

Some of our operations are conducted in Vietnam using Vietnamese Dong, which is the official currency of Vietnam.  The effect of the fluctuations of exchange rates is considered minimal to our business operations.

Interest Rate Risk

We do not have significant interest rate risk, as most of our debt obligations are primarily short-term in nature to individuals, with fixed interest rates.

Valuation of Securities Risk

Since majority of our income is paid with the marketable securities, the value of our assets may fluctuate significantly depending on the market value of the securities we hold.



ITEM 4 . CONTROLS AND PROCEDURES

Evaluation of Disclosure and Procedures

As of December 31, 2008 , the end of the period covered by this report, the Companys Chief Executive Officer and Chief Financial Officer reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e). As of the end of the period covered by this report, based on that evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that material information that  the Company must disclose in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, the Exchange Act, is recorded, processed, summarized, and reported on a timely basis, and that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Companys chief executive officer and chief financial officer as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls



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There was no change in our internal control over financial reporting that occurred during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.







PART II-OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS



Other than as set forth below, Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against Company has been threatened. The majority of the legal proceedings and arbitration cases are related to the discontinued operations of Providential Securities, Inc.



LEGAL PROCEEDING SETTLED AND UNPAID AS OF DECEMBER 31, 2008:



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



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



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



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



PENDING LITIGATION:



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.



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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.



KEY EQUIPMENT 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 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. The sought amount of $14,439 has been accrued in the accompanying consolidated financial statements..

NASD CASE:

After the completion of a routine audit of Providential Securities, Inc. in July and August 2000, the National Association of Securities Dealers, Inc. alleged that Providential violated certain provisions of the NASD's Conduct Rules. As a result, Providential Securities, Inc. withdrew its membership from the NASD in October 2000 and ceased its securities brokerage operation. $127,305, including $115,000 fine charged by NASD, is included in accrued expenses in the accompanying consolidated financial statements.



ARBITRATION CASES:



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



ITEM 1A.  RISK FACTORS



Investment in our securities is subject to various risks, including risks and uncertainties inherent in our business.  The following sets forth factors related to our business, operations, financial position or future financial performance or cash flows which could cause an investment in our securities to decline and result in a loss.



General Risks Related to Our Business



Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.



Our future success will depend in substantial part on the continued service of our senior management and founder. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future.



Our service strategy in merger and acquisition involves a number of risks and we have a limited history of successful acquisitions. Even when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive as management may have projected.



The Company is in the process of evaluating various opportunities and negotiating to acquire other companies and technologies. Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion of



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



Acquisitions involve a number of special risks, including:



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| |  |  | failure of the acquired business to achieve expected results;



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| |  |  | diversion of managements attention;



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| |  |  | failure to retain key personnel of the acquired business;



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| |  |  | additional financing, if necessary and available, could increase leverage, dilute equity, or both;



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| |  |  | the potential negative effect on our financial statements from the increase in goodwill and other intangibles; and



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| |  |  | the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.



These risks could have a material adverse effect on our business, results of operations and financial condition since the values of the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved in acquisition.  In addition, our ability to further expand our operations through acquisitions may be dependent on our ability to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both.  There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.



Our businesses are currently focused in Vietnam, and any adverse change to the economy or business environment in Vietnam could significantly affect our operations, which would lead to lower revenues and reduced profitability.

Our operations are currently concentrated in Vietnam. Because of this concentration in a specific geographic location, we are susceptible to fluctuations in our business caused by adverse economic or other conditions in this region, including stock market fluctuation. A stagnant or depressed economy in Vietnam generally, or in any of the other markets that we serve, could adversely affect our business, results of operations and financial condition.

Risks Related to our Securities



Insiders have substantial control over the company, and they could delay or prevent a change in our corporate control, even if our other stockholders wanted such a change to occur.

Our executive officers/directors and principal stockholders who hold 5% or more of the outstanding common stock owned as of December 31, 2008, in the aggregate, approximately 27% of our outstanding common stock. These stockholders will be able to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.

In addition, the stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares.



The price at which investors purchase shares of our common stock may not be indicative of the price that will prevail in the trading market. Investors may be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.



We do not meet the requirements for our stock to be quoted on NASDAQ, the American Stock Exchange or any other senior exchange, the tradability in our securities will be limited under the penny stock regulations.



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Under the rules of the Securities and Exchange Commission, if the price of our securities on the OTC Bulletin Board is below $5.00 per share, our securities are within the definition of a "penny stock." As a result, it is possible that our securities may be subject to the "penny stock" rules and regulations. Broker-dealers who sell penny stocks to certain types of investors are required to comply with the Commission's regulations concerning the transfer of penny stock.

These regulations require broker-dealers to:

*Make a suitability determination prior to selling penny stock to the purchaser;

*Receive the purchaser's written consent to the transaction; and

*Provide certain written disclosures to the purchaser.

These requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities.

Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly for us.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly-traded companies to obtain.

ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None, 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 SECURITY HOLDERS



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

ITEM 5  OTHER INFORMATION

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

ITEM 6.   EXHIBITS



The following exhibits are filed as part of this report:



Exhibit No.        Description



21.1

Subsidiaries of registrant



31.1

Certification by Henry D. Fahman, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2

Certification by Henry D. Fahman, Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of

2002.



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.



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SIGNATURES



Pursuant to the requirement of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.





PROVIDENTIAL HOLDINGS, INC.





Date: February 17, 2009

By: /s/ Henry D. Fahman

Henry D. Fahman, President







In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.





SIGNATURE                          TITLE                                                                 DATE





/s/ Henry D. Fahman

HENRY D. FAHMAN       President/Chairman/

Acting Chief Financial Officer

February 17, 2009





/s/ Thorman Hwinn

THORMAN HWINN                Director                                                                 February 17, 2009





/s/ Lawrence G. Olson               Director                                                                 February 17, 2009

LAWRENCE G. OLSON





/s/ Tina T. Phan

TINA T. PHAN                         Secretary/Treasurer/Director                                February 17, 2009



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