UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM 10-K





x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934




For
the fiscal year ended June 30, 2008




or




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




Commission
file number: 333-127347




PROVISION
HOLDING, INC.


(Exact
name of registrant as specified in its charter)




State
      of Nevada
            
            20-0754724(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)9253
      Eton Avenue, Chatsworth, California
            
            91311(Address
      of principal executive officers)
            
            (Zip
      Code)




Registrant’s
telephone number, including area code (818) 775-1624




Securities
registered pursuant to Section 12(b) of the Act: None.




Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value
$0.001




(Title
of Class)




Indicate
by check mark if the registrant is a well known seasoned issuer, as defined in
Rule 405 of the Securities Act.   ̈  Yes    x  No




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.   ̈  Yes    x  No




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Sections 13 or 15(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.  x  Yes     ̈  No




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  x




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer   ̈
            
            
            Accelerated
      filerNon-accelerated
      filer   ̈
      Do not check if a smaller reporting company)
       ̈
            
            
            Smaller reporting company  x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.):    ̈  Yes    x  No




The
aggregate market value of the voting stock held by non-affiliates of the
Registrant as of October 13, 2008 was $4,975,494.




The
number of shares outstanding of the registrant’s common stock at $.01 par value
as of October 13, 2008 was 24,206,353.




Documents Incorporated by Reference:
None


1




TABLE OF CONTENTS






Page No.PART IItem
      1.
            
            Business
            
            3Item 1A.
            
            Risk
    Factors
            
            8Item
      2.
            
            Properties
            
            11Item
      3.
            
            Legal
      Proceedings
            
            11Item
      4.
            
            Submission of Matters to a Vote
      of Security Holders
            
            11PART IIItem
      5.
            
            Market for Registrant’s Common Equity, Related
      Stockholder Matters and Issuer Purchases of Equity Securities
            
            12Item
      6.
            
            Selected Financial
      Data
            
            12Item
      7.
            
            Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
            
            13Item 7A.
            
            Quantitative and QualitativeDisclosures about
      Market Risk
            
            13Item
      8.
            
            Financial Statements and
      Supplementary Data
            
            15Item
      9.
            
            Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure
            
            16Item 9A.
            
            Controls and
      Procedures
            
            16Item
      9B.
            
            Other
      Information
            
            17PART IIIItem 10.
            
            Directors, Executive Officers and
      Corporate Governance
            
            18Item
      11.
            
            Executive
      Compensation
            
            21Item
      12.
            
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
            
            23Item
      13.
            
            Certain Relationships and Related
      Transactions and Director Independence
            
            23Item
      14.
            
            Principal Accounting Fees and
      Services
            
            24PART IVItem
      15.
            
            Exhibits, Financial Statement
      Schedules
            
            25Signatures
            
            27







2


FORWARD LOOKING STATEMENTS




This
Annual Report on Form 10-K contains forward-looking statements regarding our
business, financial condition, results of operations and prospects. Words such
as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates” and similar expressions or variations of such words are intended to
identify forward-looking statements, but are not deemed to represent an
all-inclusive means of identifying forward-looking statements as denoted in this
Annual Report on Form 10-K. Additionally, statements concerning future matters
are forward-looking statements.




Although
forward-looking statements in this Annual Report on Form 10-K reflect the good
faith judgment of our management, such statements can only be based on facts and
factors currently known by us. Consequently, forward-looking statements are
inherently subject to risks and uncertainties and actual results and outcomes
may differ materially from the results and outcomes discussed in or anticipated
by the forward-looking statements. Factors that could cause or contribute to
such differences in results and outcomes include, without limitation, the
ability to complete systems within currently estimated time frames and budgets;
the ability to compete effectively in a rapidly evolving and price competitive
marketplace; changes in the nature of telecommunications regulation in the
United States and other countries; the ability to develop customers and market
expertise; changes in business strategy; the successful integration of newly
acquired businesses; the impact of technological change; and other risks
specifically addressed under the headings “Risks Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” You
are urged not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Annual Report on Form 10-K. We file reports
with the SEC. The SEC maintains a website (www.sec.gov) that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC, including us. You can also read and copy any
materials we file with the SEC at the SEC’s Public Reference Room at 100 F
Street, NE, Washington, DC 20549. You can obtain additional information about
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.




We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
Annual Report on Form 10-K, except as required by law. Readers are urged to
carefully review and consider the various disclosures made throughout the
entirety of this Annual Report, which are designed to advise interested parties
of the risks and factors that may affect our business, financial condition,
results of operations and prospects.





PART
I




ITEM 1.
            DESCRIPTION OF
BUSINESS.





References
to “we”, “us”, “our” and similar words refer to ProVision. References to
“MailTec” refer to the Company and its business prior to the reverse
acquisition.





Business
History and Overview





We were
incorporated in Nevada under the name MailTec, Inc. on February 9,
2004.  Pursuant to an Agreement and Plan of Merger, dated February 14,
2008, which was amended and restated on February 27, 2008 (as amended and
restated, the “Agreement”), MailTec, Inc. with ProVision Merger Corp., a Nevada
corporation and wholly owned subsidiary of the Company (the “Subsidiary”) and
Provision Interactive Technologies, Inc., a California corporation
(“ProVision”), the Subsidiary merged into ProVision, and ProVision became a
wholly owned subsidiary of the Company. As consideration for the merger of the
Subsidiary into ProVision, the Company issued 20,879,350 shares of the Company’s
common stock to the shareholders, creditors, and certain warrant holders of
ProVision, representing approximately 86.5% of the Company’s aggregate issued
and outstanding common stock, and the outstanding shares and debt, and those
warrants whose holders received shares of the Company’s common stock, of
ProVision were transferred to the Company and cancelled.  Effective
February 28, 2008, pursuant to the Agreement, ProVision became a wholly owned
subsidiary of the Company. The acquisition of ProVision is treated as a reverse
acquisition, and the business of ProVision became the business of the Company.
At the time of the reverse acquisition, MailTec was not engaged in any active
business.





We are
located in Chatsworth and focused on the development and distribution of our
patented three-dimensional, holographic interactive video displays focused at
grabbing and holding consumer attention particularly and initially in the
advertising and product merchandising markets. The systems display a moving 3D
image size to forty inches in front of the display, projecting a digital video
image out into space detached from any screen, rendering truly independent
floating images featuring high definition and crisp visibility from far
distances. The nearest comparable to this technology can be seen in motion
pictures such as Star Wars and Minority Report, where objects and humans are
represented through full-motion holograms.





ProVision
is also developing and marketing several new point-of-purchase, and other
devices, tailored to specific industries that are currently in Pilot Programs
with major international companies or readying to begin shortly; including the
medical, entertainment, government and home markets.





In
addition to selling the hardware for our patented three-dimensional, holographic
interactive video displays, we are building our business into a digital media
company offering advertising on a network of our 3D holographic video
displays




3





Markets





ProVision’s
floating image display technologies have multiple potential market applications
across a broad spectrum of industries. In addition to hardware sales, we are
initially focusing our efforts on the $6 billion point-of-purchase and
advertising markets. Within the point-of-purchase market, Digital Signage
represents a $1.2 billion segment and is growing at a pace of 10 percent per
month (source: Digital Signage Today, March 2007).





The U.S.
media and entertainment industry is experiencing unprecedented changes.
Traditional media audiences are declining and becoming more fragmented.
According to statistics from various media research firms:





·
            Newspaper
      circulation continues to fall since 1987 and is down approximately 2.8%
      from 2004 (source: Associated Press, November 7, 2005)·
            The
      number of consumers listening to AM & FM radio has fallen by 4% from
      2004 (source: The NPD Group Survey, May
2005)





·
            The
      ratings for the average television show continue to decline as channels
      proliferate and the audience fragments (source: The Kelsey Group, January
      2006).





Extensive
audience migration across and within media categories is driving major shifts in
advertising spending, benefiting captive, auditable media vehicles. Traditional
media vehicles like radio, TV, newspapers and magazines continue to lose
audience share and advertising dollars to new media vehicles, which include the
point-of-purchase or wherever there might be a captive audience. The current
media and traditional displays (TV, LCD and Plasma screens) are stale and
ubiquitous resulting in significant ineffectiveness. Information from Jupiter
Media and POPAI (Point of Purchase Advertising Institute) report:





·
            70%
      of consumer purchases are made at the point of purchase·
            Point
      of purchase is the 4th largest advertising medium trailing only network
      TV, spot TV and newspapers





·
            Point
      of purchase is expected to grow 20% in the next 5 years·
            Annual
      point of purchase spending exceeds $17 billion in the
  U.S.





These are
the major reasons why advertisers are seeking out alternative media that can
deliver their messages to audiences while they are out of the home. We believe
we are well positioned to capitalize on the advertiser’s demand. ProVision’s
HoloVisionTM display offers advertisers and customers an opportunity to reach a
highly sought-after, captive audience outside the home, in familiar settings
like grocery stores, malls, convenience stores, gas stations, banks and other
retail locations. We reach the consumer and business professional at the
critical time - when they are away from their homes and businesses and when they
are making their buying decisions.





Business
Development





Launching
our first products into grocery stores, we have developed a new patent pending
application. Known as the “3DEO Rewards Center” or “3DEO”, this ProVision device
projects 3D video advertisements and allows consumers to print coupons as well
as receive non-cash awards. The 3DEO device provides food companies and other
advertisers with a new way of promoting their products at the point of purchase,
where consumers are making seventy percent of their buying
decisions.





We plan
to build, own, and operate networks of 3DEO Rewards Centers.  In March
2008 we signed three-year agreements with several independent Hispanic grocery
store chains to install 3DEO Reward Centers in 47 locations in southern
California.


In June
2008, we announced our signed three-year agreement with Fred Meyer Stores, a
division of The Kroger, Co., to install Fred Meyer 3DEO Centers in 127 locations
in the Pacific Northwest. Installation of the centers will begin this month in
Portland, OR, in high traffic, high visibility locations close to the main
entrance of the store.  We have received advertising placements from
some of the largest manufacturers in the country, including Unilever, Proctor
& Gamble, Johnson & Johnson, BIC and Kimberly Clark. The manufacturers’
will advertise through digital coupons that customers will receive from
Provision’s 3DEO Media Centers located in Fred Meyer stores.





In
September 2008, we signed an agreement with the Long Island Gasoline Retailers
Association (“LIGRA”) to install its patented 3D holographic displays in up to
800 member stores throughout New York. Provision’s displays will be located
inside the independent convenience
stores of major franchise gasoline retailers including Shell, ExxonMobil, Citgo,
Sunoco, BP, Amoco and Gulf.




4




In April
2008, we announced that we sold an HL40D system to one of the nation’s
leading quick service restaurant chains, which will begin testing applications
for the 3D holographic unit immediately.  The quick service restaurant
chain will be exploring everything from digital signage to interactive kiosk
order stations, drive through uses, and the effects from various “marketing
zones” within and around the store property.  Provision announced in
May that is working with one of the world’s largest coffee franchises to test a
variety of in-store digital signage applications utilizing Provision’s HL40D
displays. Once successful, Provision will install up to 109 systems in the quick
service chain’s greater New York City area stores.




Testing
will include projecting full color, high definition 3D videos one meter in front
of the display screen, through the front store window and onto the sidewalk. The
system will also be tested as an indoor merchandiser and advertising screen to
promote up-selling, launch new products and leverage advertising space in high
traffic areas.





We also
have continued hardware sales of our patented three-dimensional, holographic
interactive video displays.  In July 2008, we began shipments to
Studio One Media, Inc. of up to 1,000 3D holographic units pursuant to a
Strategic Alliance and Purchase Agreement. The contract will generate up to $7
million dollars in revenue for Provision over the next 18
months.  Further, we received several purchase orders for Provision’s
3D holographic display systems worth more than $100,000 from companies in
Europe. Another purchase order from Brazil opens the door to potential sales of
up to $2 million of the 3D holographic display systems by year’s end. Provision
also announced today it has signed a new distribution agreement with a New
Delhi-based company to market its products in Asia.





Competition





The
competition for ProVision’s patented (issued, approved and pending) and
proprietary floating image technology includes alternative 3D projection systems
currently in the marketplace.




Fresnel-Based
Technology





Competing
companies using Fresnel optics in their display systems include Visucom. Such
displays are only capable of projecting very narrow viewing angles and “soft”
less focused images. This company’s core fresnel-based technology is different
in principle and effect than that utilized by ProVision.





●
            Visucom:German-based Visucom is an
      advertising company that produces display systems using traditional
      Fresnel technology. Visucom offers a 3D image display called “MotionPro”
      which could be considered competitive to ProVision’s HoloTM
      line.




Reflective-Based
Technology





●
            Optical Products Development Corporation
      (“OPD”) is a company that produces optics and display systems primarily
      for aerospace, commercial aviation, and other industries requiring
      high-precision optics. While they also create 3D display systems for
      communications and advertising, very few of their products have been seen
      on the market. In addition, their marketing officer recently revealed that
      they have no product installations in the U.S. However, OPD has recently
      licensed their technology to Sammy, a Japanese electronics
      manufacturer.







●
            OPD’s
      only product that offers a 3D image display, which would be considered
      competitive to ProVision, is called “Volumatrix 3D”. In contrast to
      Volumatrix, ProVision floating image displays can project images up to
      400% further into space, provide 20% wider viewing angels, 80% greater
      contrast, and higher superior brightness and resolution that is clearly
      visible. Additionally, the use of videotapes by OPD presents obvious
      limitations in terms of updating and interfacing
  content.




Autostereoscopic-Based
Technology




ProVision’s
floating image display systems project full-motion 3D digital streaming
media 9”- 40” into space detached from the
display unit into free space and should not be confused with autostereoscopic
systems. Autostereoscopic 3D systems produced by various firms layer two or more
LCD screens while utilizing filters and collumnators to provide the illusion of depth
perception. Such systems are only capable of displaying digital content attached
to layered screens with all images being contained within the actual display
unit.




5




·
            Phillips is the leading company producing
      autostereoscopic displays for the retail market. Due to the inherent
      nature of this technology the end result of their product line results in
      the following characteristics: eye strain, nausea, low resolution, low
      brightness and poor quality imagery. Their major advantage might be
      characterized by their “flat screens” and slightly wider viewing
      angles.





·
            Sharp sells 3D autostereoscopic laptop
      computers. They launched this product 3 years
  ago.




·
            Deep Light is a two-year old start up
      company developing autostereoscopic
displays.





·
            See Realis a 3-year old R&D company
      located in Germany. They introduced a prototype autostereoscopic display
      at Infocomm in 2005.
              
              ·Newsight
      is a company that sells 3D autostereoscopic displays similar to Phillips,
      however, they have not been too successful, somewhat or the same reasons
      as Phillips, as stated above.  Newsight has been a company that
      has been ‘born again’ under various names during its history including
      X3D, Opticality, 4D Vision, as they’ve continued to seek capital
      investment for R&D and market launch.  Their limitations are
      the same as Phillips.




Other
Displays





·
            IO2 Technology (“IO2”) is a San Francisco
      technology-based development company exploring future display technologies
      for corporate customers, which includes one-of-a-kind displays for the
      defense industry. They in their second generation of “embryonic
      development”. Their “Heliodisplay” product displays their imagery in
      mid-air. Heliodisplay ejects “modified air” from the system and is then
      illuminated to create the floating image. There is a market concern that
      something is added to the air which will change the room’s environment,
      air quality or other condition unknown to the
  user.





Employees




As of
September 30, 2008 we have 7 employees. None of our employees is represented by
a labor union. We have not experienced any work stoppages and we consider
relations with our employees to be good.  The company also uses
independent contractors to support administration, marketing, sales and field
support activities.





Research and
Development





Research
and Development Activities





At
present, Provision’s patents and patent applications are supplemented by
substantial intellectual property we are currently protecting as trade secrets
and proprietary know-how.  This includes matter related to all three
product lines.  We expect to file additional patent applications on a
regular basis in the future.





We
believe that Provision’s intellectual property and expertise constitutes an
important competitive resource, and we continue to evaluate the markets and
products that are most appropriate to exploit this expertise. In addition, we
maintain an active program of intellectual property protection, both to assure
that the proprietary technology developed by us is appropriately protected and,
where necessary, to assure that there is no infringement of Provision’s
proprietary technology by competitive technologies.





Research
and development expenses for the year ended June 30, 2008 decreased 21% to
$157,767 from $200,171 for the year ended June 30, 2007.  Our research
and development expense is primarily related to two key employees that provide
specialized services.








6


Intellectual
Property




The
following table summarizes the status of ProVision patents and patent
applications, copyrights, and trademarks, as of the date hereof, in each
instance, ProVision owns all right, title and interest, and no licenses,
security interests, or other encumbrances have been granted on such patents,
patent applications, copyrights, and trademarks. Our various pending patents
involve sets of rules to eliminate boundary transgressions and maximize the
clarity of a three dimensional aerial images. Additional patents are focused
around various product applications, designs, and systems.





Product
              Supported
            Patent/
              Registration
      No.
            Title
            Status
            Type


HoloVision
            D526,
      647
            3DEO
            Issued
            Design
      patentHoloVision
            D527,
      729
            3DEO
            Issued
            Design
      patentHoloVision
            13226/2004
            N/A
            Issued
            Design
      patentHoloVision
            D506,
      464
            Aerial
      Display System
            Issued
            Design
      patentHoloVision
            D505,
      948
            Aerial
      Display System
            Issued
            Design
      patentHoloVision
            D506,
      756
            Aerial
      Display System
            Issued
            Design
      patentHoloVision
            6,808,268
            Projection
      system for
              aerial
      display
            Issued
            Utility
      patentHoloVision
            3,118,432
            Promotions
      You
              Experience
            Issued
            TrademarkCorporate
            2,706,431
            PITI
            Issued
            TrademarkCorporate
            2,699,733
            PEI
            Issued
            TrademarkHoloVision
            2,699,732
            Holosoft
            Issued
            TrademarkHoloVision
            TXu1-198-776
            Coupon
      Software
            Issued
            CopyrightHoloVision
            VAu628-125
            Coupon
      GUI
            Issued
            CopyrightHoloVision
            TXu1-180-982
            HoloSoft
            Issued
            CopyrightHoloVision
            60/984,340
            HLXX
            Pending
      (provisional)
            Utility
      patentHoloVision
            PCT/US07/76554
            Plastic
      Mirror Methods
            Pending
            Utility
      patentHoloVision
            PCT/US07/76574
            Aerial
      Display Systems
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            PCT/US07/76572
            Apparatus
      with Aerial
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            PCT/US07/76568
            Apparatus
      for Image
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            PCT/US07/76566
            Aerial
      Image Display
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            PCT/US07/76361
            Projection
      System
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            11/843,109
            Plastic
      Mirror Methods
            Pending
            Utility
      patentHoloVision
            11/843,144
            Aerial
      Display Systems
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            11/843,139
            Apparatus
      with Aerial
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            11/843,134
            Apparatus
      for Image
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            11/843,125
            Aerial
      Image Display
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            11/843,115
            Projection
      System
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            N/A
            Apparatus
      for image
            Pending
            Utility
      patent (divisional)HoloVision
            200620136608.8
            Aerial
      Display Systems
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            200620136607.3
            Apparatus
      with Aerial
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            200620137112.2
            Apparatus
      for Image
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            200620136605.4
            Aerial
      Image Display
              with
      Plastic Optic
            Pending
            Utility
      patentHoloVision
            200620136604.X
            Projection
      System
              with
      Plastic Optic
            Pending
            Utility
      patent


7
 
 Product
                Supported
              Patent/
                Registration
      No.
              Title
              Status
              Type


HoloVision
            60/839,740
            Low
      Cost Plastic Optic
            Pending
            Utility
      patentHoloVision
            78/917,316
            Built
      with Technology
            Pending
            TrademarkHoloVision
            78/917,306
            Technology
            Pending
            TrademarkHoloVision
            78/917,286
            Holocasting
            Pending
            TrademarkHoloVision
            78/663,888
            HoloMedia
            Pending
            TrademarkHoloVision
            29/260,118
            3DEO
            Pending
            Design
      patentHoloVision
            78/615,380
            3DEO
      Rewards Program
            Pending
            TrademarkHoloVision
            78/615,364
            3DEO
            Pending
            TrademarkHoloVision
            11/105,857
            Aerial
      Display System
            Pending
            Utility
      patentHoloVision
            11/059,575
            Coupon/Product
              Dispensing
      Kiosk
            Pending
            Utility
      patentHoloVision
            PCT/US03/25506
            Projection
      system
              for
      aerial display
            Pending
            Utility
      patentHoloVision
            N/A
            Holovision
            Allowed
            Common
      law trademark





At
present, our patents and patent applications are supplemented by substantial
intellectual property we are currently protecting as trade secrets and
proprietary know-how. This includes matter related to all three product lines.
We expect to file additional patent applications on a regular basis in the
future.





We
believe that our intellectual property and expertise constitutes an important
competitive resource, and we continue to evaluate the markets and products that
are most appropriate to exploit this expertise. In addition, we maintain an
active program of intellectual property protection, both to assure that the
proprietary technology developed by us is appropriately protected and, where
necessary, to assure that there is no infringement of our proprietary technology
by competitive technologies.





Item 1A.
            RISK FACTORS.





An
investment in the our common stock involves a high degree of risk. In
determining whether to purchase our common stock, an investor should carefully
consider all of the material risks described below, together with the other
information contained in this report before making a decision to purchase our
securities. An investor should only purchase our securities if he or she can
afford to suffer the loss of his or her entire investment.




Risks
Related to our Business




We
have a limited operating history that makes it impossible to reliably predict
future growth and operating results.





We were
incorporated in December 2000 and have a limited operating history upon which an
investor can evaluate our business prospects, which makes it difficult to
forecast our future operating results. An investor must consider our business in
light of the risks, uncertainties and problems frequently encountered by
companies with limited operating histories. These include, but are not limited
to, competition, the need to develop customers and market expertise, market
conditions, sales, and marketing and governmental regulation.





We
have a history of losses and a large accumulated deficit and we may not be able
to achieve profitability in the future.





For the
fiscal years ended June 30, 2008 and the fiscal year ended June 30, 2007, we
incurred net losses of $5,005,943 and $1,794,624, respectively. From inception
through June 30, 2008, we have accumulated net losses of $11,710,217. There can
be no assurance that we will be profitable in the future. If we are not
profitable and cannot obtain sufficient capital to fund our operations we may
have to cease our operations.





Our
inability to protect our intellectual property rights could allow competitors to
use our property rights and technologies in competition against us, which would
reduce our sales.





We rely
on a combination of patent, patent pending, copyright, trademark and trade
secret laws, proprietary rights agreements and non-disclosure agreements to
protect our intellectual properties.  We cannot give any assurance that
these measures will prove to be effective in protecting our intellectual
properties.  We also cannot give any assurance that our existing patents
will not be invalidated, that any patents that we currently or prospectively
apply for will be granted, or that any of these patents will ultimately provide
significant commercial benefits.  Further, competing companies may
circumvent any patents that we may hold by developing products which closely
emulate but do not infringe our patents.  While we intend to seek patent
protection for our products in selected foreign countries, those patents may not
receive the same degree of protection as they would in the United States.
 We can give no assurance that we will be able to successfully defend our
patents and proprietary rights in any action we may file for patent
infringement.  Similarly, we cannot give any assurance that we will not be
required to defend against litigation involving the patents or proprietary
rights of others, or that we will be able to obtain licenses for these rights.
 Legal and accounting costs relating to prosecuting or defending patent
infringement litigation may be substantial.




8







We also
rely on proprietary designs, technologies, processes and know-how not eligible
for patent protection.  We cannot give any assurance that our competitors
will not independently develop the same or superior designs, technologies,
processes and know-how.





While we
have and will continue to enter into proprietary rights agreements with our
employees and third parties giving us proprietary rights to certain technology
developed by those employees or parties while engaged by us, we can give no
assurance that courts of competent jurisdiction will enforce those
agreements.





Our
future success is dependent on our existing key employees, and hiring and
assimilating new key employees.





Our
success depends on the continuing efforts of our current management team,
particularly Curt Thornton, our Chief Executive Officer. In addition, our future
success will depend, in part, on our ability to attract and retain highly
skilled employees, including management personnel. We will rely on our ability
to grant stock options as one mechanism for recruiting and retaining highly
skilled talent. Recent proposed accounting regulations requiring the expensing
of stock options may impair our future ability to provide these incentives
without incurring significant compensation costs. The loss of services of Mr.
Thornton or our other officers and directors, the inability to attract or retain
key personnel in the future, or delays in hiring required personnel could
materially harm our business. We may be unable to identify and attract highly
qualified personnel in the future. In addition, we may not be able to
successfully assimilate these employees or hire qualified personnel to replace
them.





Economic
conditions or changing consumer preferences could also adversely affect our
business.





Our
business is sensitive to consumer spending patterns, which can be affected by
prevailing economic conditions. A downturn in economic conditions in one or more
of its markets could have a material adverse effect on our results of
operations, financial condition, business and prospects. Although we attempt to
stay informed of consumer preferences for organic products, any sustained
failure to identify and respond to trends would have a material adverse effect
on our results of operations, financial condition, business and
prospects.





We
may need to raise capital to fund our operations, and our failure to obtain
funding when needed may force us to delay, reduce or eliminate its product
development efforts.





We will
require significant additional funds to complete our business plan. We cannot be
certain that funding will be available on acceptable terms, or at all. To the
extent that we raise additional funds by issuing equity securities, our
stockholders may experience significant dilution. Any debt financing, if
available, may involve restrictive covenants that impact our ability to conduct
our business. If we are unable to raise additional capital on acceptable terms,
or at all, we may have to significantly delay, scale back or discontinue the
development and/or commercialization of one or more of our product candidates,
restrict our operations or obtain funds by entering into agreements on
unattractive terms.





We
may have difficulties managing growth and possible future
acquisitions.





As part
of our growth strategy, in addition to product sales, we intend to make
acquisitions. Implementation of this growth strategy could involve a number of
risks, including diversion of management time and financial resources to
increased marketing efforts, review of acquisition candidates and assimilation
of the acquired companies, and the potential for adverse mid-term effects on our
reported operating results as a result of the amortization of acquired
intangible assets. Our ability to manage our growth effectively will require us
to continue to improve our operational, financial and management controls and
information systems to accurately forecast sales demand, to control our
overhead, to manage our marketing programs in conjunction with an emerging
market, and to attract, train, motivate and manage our employees effectively. If
management fails to manage the expected growth, our operating results and
financial condition will be adversely affected. In addition, our growth strategy
may depend on effectively integrating future entities, which requires
cooperative efforts from the managers and employees of the respective business
entities. If our management is unable to effectively integrate future
acquisitions or manage our growth our business could be adversely
affected.





Risks
Related to our Common Stock




9





There
may not be an active, liquid trading market for our common stock.





Our
common stock is listed on the OTC Bulletin Board. However, there is currently no
regular market or trading in our common stock, and we cannot give an assurance
that such a market will develop. If a market for our common stock develops,
there is a significant risk that our stock price may fluctuate dramatically in
the future in response to any of the following factors, some of which are beyond
our control:




•
            variations
      in our quarterly operating results;•
            announcements
      that our revenue or income are below analysts’
    expectations;•
            general
      economic slowdowns;•
            sales
      of large blocks of our common stock;•
            announcements
      by us or our competitors of significant contracts, acquisitions, strategic
      partnerships, joint ventures or capital commitments;
and•
            fluctuations
      in stock market prices and volumes, which are particularly common among
      highly volatile securities of early stage technology
      companies.





Ownership
of our common stock is highly concentrated, which may prevent a change in our
management.




Our
current executive officers and directors own approximately 47.79% of our
outstanding common stock. As a result, they will have the ability to exert
substantial control over the election of our board of directors and the outcome
of issues submitted to our stockholders. Such concentration of share ownership
may have the effect of discouraging, delaying or preventing a change in
control.




Our
common stock will be subject to the “penny stock” rules of the SEC, which may
make it more difficult for stockholders to sell our common stock.





The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





·
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and·
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.





In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:




·
            obtain
      financial information and investment experience objectives of the person;
      and·
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.





The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:





· sets forth the basis on which the
      broker or dealer made the suitability determination;
      and


· that the broker or dealer
      received a signed, written agreement from the investor prior to the
      transaction.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





The
regulations applicable to penny stocks may severely affect the market liquidity
for our common stock and could limit investors’ ability to sell our common stock
in the secondary market.




10





As
an issuer of “penny stock”, the protection provided by the federal securities
laws relating to forward looking statements does not apply to us.





Although
federal securities laws provide a safe harbor for forward-looking statements
made by a public company that files reports under the federal securities laws,
this safe harbor is not available to issuers of penny stocks. As a result, we
will not have the benefit of this safe harbor protection in the event of any
legal action based upon a claim that the material provided by us contained a
material misstatement of fact or was misleading in any material respect because
of our failure to include any statements necessary to make the statements not
misleading. Such an action could hurt our financial condition.





We
have not paid dividends in the past and does not expect to pay dividends for the
foreseeable future. Any return on investment may be limited to the value of our
common stock.




No cash
dividends have been paid on our common stock. We expect that any income received
from operations will be devoted to our future operations and growth. We do not
expect to pay cash dividends in the near future. Payment of dividends would
depend upon our profitability at the time, cash available for those dividends,
and other factors as our board of directors may consider relevant. If we do not
pay dividends, our common stock may be less valuable because a return on an
investor’s investment will only occur if our stock price
appreciates.




ITEM 2.
            PROPERTIES.





Our
principal executive offices are located at 9253 Eton Avenue, Chatsworth,
California 91311. The offices consist of approximately 7,500 square feet, which
are leased on a month to month basis for approximately $6,800 per month for rent
and related costs. We believe that our properties are adequate for our current
and immediately foreseeable operating needs. We do not have any policies
regarding investments in real estate, securities or other forms of property.







ITEM 3.
            LEGAL
PROCEEDINGS.





On August
26, 2004, in order to protect its legal rights and in the best interest of the
shareholders at large, Provision filed, in the Superior Court of California, a
complaint alleging breach of contract, rescission, tortuous interference and
fraud with Betacorp Management, Inc.  In an effort to resolve all
outstanding issues, the parties agreed, in good faith, to enter into arbitration
in the State of Texas, domicile of the defendants.  On August 11,
2006, a judgment was awarded against us in the sum of
$592,312.  Provision believes the judgment is without merit and has
filed an appeal.  A contingency loss of $592,312 was charged to
operations during the year ended June 30, 2007.  The Superior Court of
California entered a default judgment of $3,337,820 against Betacorp Management,
Inc.  No gain has been reflected in the accompanying financial
statements.




Provision
has filed suit against one of its distributors for breach of contract, breach of
covenant of good faith and fair dealing, intentional misrepresentation and
coercion. The court has issued a preliminary award in favor of Provision for
$226,222. No gain has been reflected in the accompanying financial
statements.





We have
received a final default judgment in its favor for these two legal proceedings
(in the amounts below, and considers the matters closed.





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




None.


11




PART
II




ITEM 5.
            MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY
  SECURITIES.





Our
common stock is listed on the OTC Bulletin Board, under the symbol “PVHO”
However, there is currently no regular market or trading in our common stock,
and we cannot give an assurance that such a market will develop.





As of
October 13 2008, there were approximately 531 holders of record of the our
common stock.





Dividends





We have
never declared or paid any cash dividends on its common stock. We currently
intend to retain future earnings, if any, to finance the expansion of its
business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
following table shows information with respect to each equity compensation plan
under which our common stock is authorized for issuance as of the fiscal year
ended June 30, 2008.





EQUITY
COMPENSATION PLAN INFORMATION





Plan
      category
            
            Number
      of securities
              to
      be issued upon
              exercise
      of
              outstanding
      options,
              warrants
      and rights
            
            
            Weighted
      average
              exercise
      price of
              outstanding
      options,
              warrants
      and rights
            
            
            Number
      of securities
              remaining
      available for future issuance under equity compensation plans (excluding
      securities reflected in column (a)(a)
            
            
            (b)
            
            
            (c)Equity
      compensation plans approved by security holders
            
            
            3,212,472
            
            
            $
            1.50
            
            
            
            1,047,197Equity
      compensation plans not approved by security holders
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/ATotal
            
            
            3,212,472
            
            
            $
            1.50
            
            
            
            1,047,197







Pursuant
to the Agreement, an option to purchase a share of common stock of ProVision was
automatically converted into an option to purchase two shares of our common
stock.




ITEM 6.
            SELECTED FINANCIAL
DATA




Not
applicable.




12




ITEM 7.
            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF
OPERATIONS.





Results of
Operations




Revenue
and Cost of Revenue




Revenues
for the year ended June 30, 2008 decreased 15% to $529,301 from $622,799 for the
year ended June 30, 2007.  Sales for the first half of the year
increased as a result of sales from Europe aided by the weak dollar and other
distributors.  These sales did not continue in the third quarter of
the current fiscal year.  We had a gross margin percentage of 45% for
the year ended June 30, 2008 compared to a gross margin percentage of 59% for
the year ended June 30, 2007.  The decrease in gross margin percentage
was a result of reducing the sales price on certain models to move out older
product.




Expenses




General and administrative expenses for
the year ended June 30, 2008 increased 142% to $2,748,461 from $1,135,241 for
the year ended June 30, 2007.  The increase was a result of an
increase in fees paid for accounting services in connection with the reverse
merger, additional legal services in preparation of the reverse merger, increase
in marketing expenses for marketing campaigns, tradeshows, and travel, and
additional payroll (including payroll taxes) for administration, sales and
production staff.  Additionally, we incurred $1,281,316 in non-cash
compensation related to options granted and stock granted for
services.





Forgiveness of Debt





During the year ended June 30, 2008, we
benefited from $81,200 of forgiveness of debt related primarily to legal
expenses incurred in relation to intellectual property as well as debt
obligations repaid with common stock.





Unrealized Loss on
Securities





During the year ended June 30, 2008, we
wrote down the value of securities it received in fiscal 2007 for settlement of
litigation and recorded a $14,000 unrealized loss on securities.





Interest
Expense




Interest expense increased $2,182,853
to $2,402,724 during the year ended June 30, 2008 from $219,871 during the year
ended June 30, 2007.  The increase in interest expense in directly
related to our increased borrowings along with debt discount charges on
convertible debt issued below market value.




Financial
Condition, Liquidity and Capital Resources




Management
remains focused on controlling cash expenses. We have limited cash resources and
plan our expenses accordingly.




We had cash of $337,641 at June 30,
2008 compared to cash of $1,229,978 at June 30, 2007.  The $892,337
decrease in cash had a negative impact on our working capital.  Our
working capital (i.e. the difference between current assets and current
liabilities), increased to a net negative working capital of $952,396 at June
30, 2008 from a net positive working capital of $661,503 at June 30,
2007.





During the year ended June 30, 2008, we
used $1,647,199 of cash for operating activities.  Cash used in
operating activities funded our net loss of $5,005,943 for the year ended June
30, 2008 and increased inventories by $101,631 and increased other assets by
$376,952.





Cash used in investing activities
during the year ended June 30, 2008 was $435,679 solely for the purchase of
equipment and demonstration units compared with $56,508 of cash used in
investing activities during the year ended June 30, 2007 for the purchase of
equipment, $10,051 and $46,457 for the purchase of intangible
assets.





Cash provided by financing activities
during the year ended June 30, 2008 was $1,190,541 as a result of the proceeds
from notes payable, net of fees, in the amount of $1,535,000 offset by the
repayment of notes payable totaling $344,459.  Cash provided by
financing activities during the year ended June 30, 2007 was $1,714,221 as a
result of the proceeds from notes payable, net of fees, in the amount of
$1,745,000 offset by the repayment of notes payable totaling
$30,779.




13




Prior to
the merger of the Subsidiary into Provision, Provision issued 1,675,000 shares
of common stock for debt for $1.00 per share and converted cashless options in
to common stock equal to 1,000,000 shares at $1.00 per share.




During
the year ended June 30, 2008, the Company issued 79,867 shares of its common
stock for services rendered.  In addition, 240,000 shares were issued
to its officers for services valued at $513,600. The shares had a
fair market value of $82,500.





During July through September, 2008,
the Company received $397,000 proceeds from the issuance of convertible notes
payable.  The convertible notes bear interest at 10% and are due two
years from the date of issuance.  In connection with the convertible
notes, the Company issued 254,658 warrants to the note holders with an exercise
price of $1.50.





Given our
plans and expectation that we will need additional capital, we will need to
issue additional shares of capital stock or securities convertible or
exercisable for shares of capital stock, including preferred stock, options or
warrants. The issuance of additional capital stock may dilute the ownership of
the current stockholders.




Off
Balance Sheet Arrangements




We do not
engage in any off balance sheet arrangements that are reasonably likely to have
a current or future effect on our financial condition, revenues, results of
operations, and liquidity or capital expenditures.




Critical
Accounting Policies





Use of
EstimatesThe preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make certain estimates
and assumptions that affect the reported amounts and timing of revenues and
expenses, the reported amounts and classification of assets and liabilities, and
the disclosure of contingent assets and liabilities.  These estimates
and assumptions are based on the Company’s historical results as well as
management’s future expectations.  The Company’s actual results could
vary materially from management’s estimates and assumptions.





Revenue Recognition- We
recognize revenue when persuasive evidence of an arrangement exists, title
transfer has occurred, the price is fixed or readily determinable, and
collectability is probable. We recognize revenue in accordance with Staff
Accounting Bulletin No. 104, "Revenue Recognition." Sales are recorded net
of sales returns and discounts, which are estimated at the time of shipment
based upon historical data.




Impairment of Long-Lived Assets
— We review the recoverability of the carrying value of long-lived assets
using the methodology prescribed in SFAS No. 144, "Accounting for the
Impairment and Disposal of Long-Lived Assets" whenever events or changes in
circumstances indicate that the carrying value of such assets may not be
recoverable. Upon such an occurrence, recoverability of these assets is
determined by comparing the forecasted undiscounted net cash flows to which the
assets relate, to the carrying amount. If the asset is determined to be unable
to recover its carrying value, it is written down to fair value. Fair value is
determined based on discounted cash flows, appraised values or other information
available in the market, depending on the nature of the assets. Methodologies
for determining fair value are inherently based on estimates that may change,
such as the useful lives of assets and our cash flow forecasts associated with
certain assets. A change in these estimates may result in impairment charges,
which would impact our operating results.





Going
Concern
 
 These
financial statements are presented on the basis that the Company is a going
concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. The Company has incurred a loss of approximately $5,000,000 in
the current year and has negative working capital of approximately $550,000.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to obtain
additional financing or refinancing as may be required and, ultimately, to
attain profitable operations. Management's plan to eliminate the going concern
situation include, but are not limited to, the raise of additional capital
through issuance of debt and equity, improved cash flow management, aggressive
cost reductions, and the creation of additional sales and profits across its
product lines.


Accounting
for Stock Option Based Compensation
 
 Effective
July 1, 2006, the Company adopted SFAS No. 123(R), "Share-Based Payment: An
Amendment of FASB Statements No. 123 and 95" using the modified prospective
method. Under this method, compensation cost is recognized on or after the
effective date for the portion of outstanding awards, for which the requisite
service has not yet been rendered, based on the grant date fair value of those
awards. Prior to July 1, 2006, the Company accounted for employee stock options
using the intrinsic value method in accordance with Accounting Principles Board
(APB) Opinion No. 25 (APB No. 25), "Accounting for Stock Issued to Employees,"
and adopted the disclosure only alternative of SFAS No. 123. For stock-based
awards issued on or after July 1, 2006, the Company recognizes the compensation
cost on a straight-line basis over the requisite service period for the entire
award. Measurement and attribution of compensation cost for awards that are
unvested as of the effective date of SFAS No. 123(R) are based on the same
estimate of the grant-date or modification-date fair value and the same
attribution method used under SFAS No. 123.
 
 On
November 10, 2005, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position No. FAS 123(R)-3 "Transition Election Related to Accounting for
Tax Effects of Share-Based Payment Awards". The Company has elected to adopt the
alternative transition method provided in the FASB Staff Position for
calculating the tax effects of stock-based compensation pursuant to SFAS No.
123(R). The alternative transition method includes simplified methods to
establish the beginning balance of the additional paid-in capital pool (APIC
pool) related to the tax effects of employee stock-based compensation, and to
determine the subsequent impact on the APIC pool and Consolidated Statements of
Cash Flows of the tax effects of employee stock-based compensation awards that
are outstanding upon adoption of SFAS No. 123(R). As the Company is currently in
a net operating loss position and has placed valuation allowances on its net
deferred tax assets, there is no net impact on the Company's APIC pool related
to stock-based compensation for the year ended June 30, 2008.




14




Recent Accounting
Pronouncements




SFAS No.
141(R) - In December 2007, the FASB issued Statement No. 141(R), Business
Combinations.  This Statement replaces FASB Statement No. 141,
Business Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement defines
the acquirer as the entity that obtains control of one or more businesses in the
business combination and establishes the acquisition date as the date that the
acquirer achieves control. Statement 141 did not define the acquirer, although
it included guidance on identifying the acquirer, as does this Statement. This
Statement’s scope is broader than that of Statement 141, which applied only to
business combinations in which control was obtained by transferring
consideration. By applying the same method of accounting - the acquisition
method - to all transactions and other events in which one entity obtains
control over one or more other businesses, this Statement improves the
comparability of the information about business combinations provided in
financial reports.





This
Statement 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. An entity may not apply it
before that date. The Company is currently evaluating SFAS 141(R), and has not
yet determined its potential impact on its future results of operations or
financial position.





SFAS No.
160 - In December 2007, the FASB issued Statement No. 160, Noncontrolling
Interests in Consolidated Financial Statements - an Amendment of ARB No.
51.  This Statement amends ARB 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. Before this
Statement was issued, limited guidance existed for reporting noncontrolling
interests. As a result, considerable diversity in practice existed. So-called
minority interests were reported in the consolidated statement of financial
position as liabilities or in the mezzanine section between liabilities and
equity. This Statement improves comparability by eliminating that
diversity.





This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. Earlier adoption is prohibited.
The effective date of this Statement is the same as that of the related
Statement 141(R). This Statement shall be applied prospectively as of the
beginning of the fiscal year in which this Statement is initially applied,
except for the presentation and disclosure requirements. The presentation and
disclosure requirements shall be applied retrospectively for all periods
presented.  The Company is currently evaluating SFAS 160 and has not
yet determined its potential impact on its future results of operations or
financial position.





SFAS No.
161 - In March 2008, the FASB issued Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities—an amendment of FASB Statement No.
133. This Statement changes the disclosure requirements for derivative
instruments and hedging activities. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.





This
Statement is intended to enhance the current disclosure framework in Statement
133. The Statement requires that objectives for using derivative instruments be
disclosed in terms of underlying risk and accounting designation. This
disclosure better conveys the purpose of derivative use in terms of the risks
that the entity is intending to manage. Disclosing the fair values of derivative
instruments and their gains and losses in a tabular format should provide a more
complete picture of the location in an entity’s financial statements of both the
derivative positions existing at period end and the effect of using derivatives
during the reporting period. Disclosing information about credit-risk-related
contingent features should provide information on the potential effect on an
entity’s liquidity from using derivatives. Finally, this Statement requires
cross-referencing within the footnotes, which should help users of financial
statements locate important information about derivative
instruments.





This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.  The Company is
currently evaluating SFAS 161 and has not yet determined its potential impact on
its future results of operations or financial position.




In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS No. 162"). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements presented in conformity
with generally accepted accounting principles in the United States of America.
SFAS No. 162 will be effective 60 days following the SEC's approval of
the Public Company Accounting Oversight Board (PCAOB) amendments to AU
Section 411, "The Meaning of, Present fairly in conformity with generally
accepted accounting principles". The Company does not believe the implementation
of SFAS No. 162 will have a material impact on its consolidated financial
statements.







ITEM 8.
            FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA.




Our
financial statements and related financial notes, together with the report from
Farber Hass Hurley LLP, are set forth immediately following the signature page
to this report.




15





ITEM 9.
            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL
DISCLOSURE.





On April
30, 2008, we dismissed Jasper & Hill, PC as its principal independent
accountant.  Effective April 30, 2008, we engaged Farber Hass Hurley
LLP as its new principal independent accountant. Our board of directors has
approved the dismissal of Jasper & Hill, PC and the appointment of Farber
Hass Hurley LLP as our new principal independent accountants.




From the
date of Jasper & Hill, PC’s appointment through the date of their dismissal
on April 30, 2008, there were no disagreements between our company and Jasper
& Hill, PC on any matter listed under Item 304 Section (a)(1)(iv)
A to E of Regulation S-B, including accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of Jasper & Hill, PC would have caused
Jasper & Hill, PC to make reference to the matter in its reports on our
financial statements.




Prior to
engaging Farber Hass Hurley LLP, we did not consult Farber Hass Hurley LLP
regarding either:





1.
            the
      application of accounting principles to any specified transaction, either
      completed or proposed, or the type of audit opinion that might be rendered
      our financial statements, and neither a written report was provided to our
      company nor oral advice was provided that Farber Hass Hurley LLP concluded
      was an important factor considered by our company in reaching a decision
      as to the accounting, auditing or financial reporting issue;
      or





2.
            any
      matter that was either subject of disagreement or event, as defined in
      Item 304(a)(1)(iv)(A) of Regulation S-B and the related instruction to
      Item 304 of Regulation S-B, or a reportable event, as that term is
      explained in Item 304(a)(1)(iv)(A) of Regulation
  S-B.




Prior to
engaging Farber Hass Hurley LLP, Farber Hass Hurley LLP has not provided our
company with either written or oral advice that was an important factor
considered by our company in reaching a decision to change our company’s new
principal independent accountant from Jasper & Hill, PC to Farber Hass
Hurley LLP.




ITEM 9A.
            CONTROLS AND
PROCEDURES.




Disclosure
Controls and Procedures




Our
principal executive and principal financial officers have evaluated the
effectiveness of our disclosure controls and procedures, as defined in Rules 13a
– 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), as of the end of the period covered by this annual
report. They have concluded that, based on such evaluation, our
disclosure controls and procedures were effective as of June 30, 2008, as
further described below.




Management’s
Annual Report on Internal Control Over Financial Reporting




Overview




Internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
refers to the process designed by, or under the supervision of, our principal
executive officer and principal financial officer, and effected by our board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. Management is responsible for establishing and
maintaining adequate internal control over financial reporting.




Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent
limitations. Internal control over financial reporting is a process that
involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal control over financial
reporting also can be circumvented by collusion or improper management
override. Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are
known features of the financial reporting process. Therefore, it is
possible to design into the process safeguards to reduce, though not eliminate,
this risk.




Management
has used the framework set forth in the report entitled “Internal Control —
Integrated Framework” published by the Committee of Sponsoring Organizations
(“COSO”) of the Treadway Commission to evaluate the effectiveness of our
internal control over financial reporting.




Management’s
Assessment




We
maintain “disclosure controls and procedures,” as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or
the Exchange Act, that are designed to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), as appropriate, to allow timely decisions
regarding required disclosures. In designing and evaluating our disclosure
controls and procedures, management recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable assurance of achieving the desired control objectives and we are
required to apply our judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures.




We
maintain “disclosure controls and procedures,” as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, that are designed to ensure that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer (CEO, to allow timely
decisions regarding required disclosures. In designing and evaluating our
disclosure controls and procedures, management recognized that disclosure
controls and procedures, no matter how well conceived and operated, can provide
only reasonable assurance of achieving the desired control objectives and we are
required to apply our judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures.




16




Our
management has evaluated the ongoing effectiveness of our design and operation
of our controls and procedures as of June 30, 2008, and identified the
following:




Resources: We have limited
number of personnel with requisite expertise in the key functional areas of
finance and accounting.




Written Policies &
Procedures: We need to prepare written policies and procedures for
accounting and financial reporting.




Audit Committee: We do not
have, and are not required, to have an audit committee.  An audit
committee would improve oversight in the establishment and monitoring of
required internal controls and procedures.




Management
is committed to improving its internal controls and will (1) continue to use
third party specialists to address shortfalls in staffing and to assist the
Company with accounting and finance responsibilities, (2) increase the frequency
of independent reconciliations of significant accounts which will mitigate the
lack of segregation of duties until there are sufficient personnel and
(3) prepare and implement sufficient written policies and checklists for
financial reporting and closing processes and (4) may consider appointing an
audit committee comprised of both management and outside board members in the
future.




Management,
including our Chief Executive Officer, has discussed internal controls with our
independent registered public accounting firm.




Based
upon this evaluation, our CEO has concluded that, without third-party
specialists, our current disclosure controls and procedures are not effective to
provide reasonable assurance that material information required to be included
in our periodic SEC reports is recorded, processed, summarized and reported
within the time periods specified in the SEC rules and forms, and accumulated
and communicated to our senior management, including our CEO, to allow timely
decisions regarding required disclosures. Management’s report is not subject to
attestation by our registered public accounting firm pursuant to temporary rules
of the SEC that permit us to provide only management’s report in this Annual
Report.




ITEM 9B.
            OTHER
INFORMATION




None.




17


PART
III




ITEM 10.
            DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE.




Our
executive officers, directors and significant employees and their ages and their
respective positions as of September 29, 2008 were as follows:




Name
            Age
            PositionCurt
      Thornton
            52
            Chief
      Executive Officer, Chairman, President, and DirectorRobert
      Ostrander
            54
            Vice
      President, Sales, Business Development, Secretary and
    DirectorJeff
      Vrachan
            53
            Vice
      President, Engineering and Chief Technology Officer, and
      DirectorJon
      Corfino
            49
            Director





Officers
are elected annually by the Board of Directors (subject to the terms of any
employment agreement), at our annual meeting, to hold such office until an
officer’s successor has been duly appointed and qualified, unless an officer
sooner dies, resigns or is removed by the Board.





Background
of Executive Officers and Directors





Curt
Thornton





Curt
Thornton has been chief executive officer, president, chairman and a director of
the Company since Mach 2008. Mr. Thornton is the founder of ProVision and has
been chief executive officer, president, chairman and director of ProVision
since our inception in December 2000.  Mr. Thornton has over 20 years
of international executive experience in operations, manufacturing,
engineering and sales driven companies. He has held senior executive positions
at Iwerks Entertainment Corp., Northern Telecom and Tandon Computers. Mr.
Thornton earned an MBA from Pepperdine University and a Bachelor’s degree in
Engineering from Western Illinois University.





Robert
Ostrander





Robert
Ostrander has been Vice President, Sales, Business Development, secretary, and a
director of the Company since March 2008. Mr. Ostrander has been President,
Sales, Marketing, Business Development, secretary, and a director for ProVision
since March 2001.





Mr.
Ostrander has 20 years of sales and business development experience, both
domestic and international. He has held senior positions in sales at Allied
Domecq, Kraft Foods, Sara Lee and Welch Foods. He holds an MBA from Pepperdine
University, and a B.S. from the State University of New York.





Jeff
Vrachan





Jeff
Vrachan has been Vice President Engineering, Chief Technology Officer, and a
director of the Company since March 2008. Mr. Vrachan has been Vice President
Engineering and Chief Technology Officer, and a director of ProVision since our
inception in December 2000.





Prior to
joining Provision, Mr. Vrachan served as a Project Manager, Engineering Manager
and Operations Manager for high-tech companies such as Allied Signal, Mitsubishi
Electronics and Southwestern Industries. Mr. Vrachan has a Bachelor’s degree in
Electrical Engineering from the University of California and a second Bachelor’s
degree in Business Management from the University of Phoenix.





Jon
Corfino





Jonathan
Corfino has been a director of the Company since March 2008. Mr. Corfino has
been a director of ProVision since 2003. Mr. Corfino is a senior executive with
20 years experience in the theme park, location-based and interactive
entertainment industry. Mr. Corfino is the founder of Attraction Media &
Entertainment, Inc. and has been its chief executive officer since 2001. Mr.
Corfino was president, location-based entertainment for Stan Lee Media, Inc.
from 1999 to 2000. He was senior vice president in charge of production at
Iwerks Entertainment, from 1993 to 1999, where he supervised the production
and/or acquisition of over 30 specialty films for Simulation, Attraction and
Large Format venues. Prior to Iwerks, from 1978 to 1991, Mr. Corfino worked in
the Planning and Development group at MCA/Universal as a Project Manager. He was
directly involved in the creative development and construction of a variety of
projects and attractions, including "The Star Trek Adventure", "Back to the
Future - The Ride”, "ET the Extraterrestrial" and studio center expansion plus
special effects stages. Mr. Corfino holds a Bachelor of Arts degree from
UCLA.




18





Term
of Office





Our
directors are appointed for a one-year term to hold office until the next annual
meeting of our shareholders or until removed from office in accordance with our
bylaws.




Our
executive officers are appointed by our board of directors and hold office until
removed by the board.





Significant
Employees





We have
no significant employees other than our officers and directors.





Family
Relationships





There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.





Involvement
in Certain Legal Proceedings





To the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present director, person nominated to become
director, executive officer, or control person: (1) any bankruptcy petition
filed by or against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years prior
to that time; (2) any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses); (3) being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his or her involvement in any type of business, securities or banking
activities; and (4) being found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.





Audit
Committee





We do not
have a separately-designated standing audit committee. The entire board of
directors performs the functions of an audit committee, but no written charter
governs the actions of the board of directors when performing the functions of
that would generally be performed by an audit committee. The board of directors
approves the selection of our independent accountants and meets and interacts
with the independent accountants to discuss issues related to financial
reporting. In addition, the board of directors reviews the scope and results of
the audit with the independent accountants, reviews with management and the
independent accountants our annual operating results, considers the adequacy of
our internal accounting procedures and considers other auditing and accounting
matters including fees to be paid to the independent auditor and the performance
of the independent auditor.




We do not
have an audit committee financial expert because of the size of our
company and our board of directors at this time. We believe that we do not
require an audit committee financial expert at this time because we retain
outside consultants who possess these attributes. .





Nominating
Committee





We do not
have a nominating committee. The board of directors acts as the nominating
committee and members of the board participate in the discussions. If the size
of the board expands, the board will reconsider the need or desirability of a
nominating committee.




19





Compensation
Committee





We do not
have a compensation committee. If the size of the board expands, the board will
reconsider the need or desirability of a compensation committee.





For the
fiscal year ending June 30, 2008, the board of directors:





1.
            Reviewed
      and discussed the audited financial statements with management,
      and





2.
            Reviewed
      and discussed the written disclosures and the letter from our independent
      auditors on the matters relating to the auditor's
      independence.





Based
upon the board of directors’ review and discussion of the matters above, the
board of directors authorized inclusion of the audited financial statements for
the year ended June 30, 2008 to be included in this Annual Report on Form 10-K
and filed with the Securities and Exchange Commission.





Code
of Ethics Disclosure





We
adopted a Code of Ethics for Financial Executives, which include our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The code of ethics was
filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year
ended March 31, 2006, as filed with the SEC on July 14, 2006.







20





ITEM 11.
            EXECUTIVE
COMPENSATION.





The
following table sets forth all compensation paid in respect of ProVision’s Chief
Executive Officer and those individuals who received compensation in excess of
$100,000 per year (collectively, the "Named Executive Officers") for the last
three completed fiscal years.





SUMMARY
COMPENSATION TABLE




Name
      & Principal
              Position
            Year
            
            Salary
      ($)
            
            Bonus
      ($)
            
            Stock
              Awards
      ($)
            
            Option
              Awards
      ($)
            
            Non-Equity
              Incentive
      Plan
              Compensation
      ($)
            
            Change
      in Pension
              Value
      and Non-
              Qualified
              Deferred
              Compensation
              Earnings
      ($)
            All
              Other
              Compensation
      ($)
            
            Total
      ($)Curt
      Thornton
            2008
            
            $
            144,000
            
            0
            
            
            299,600
            
            0
            
            
            0
            
            0
            0
            
            $
            443,600Chief
      Executive Officer
            2007
            
            $
            144,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0and
      Director
            2006
            
            $
            144,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Robert
      Ostrander
            2008
            
            $
            125,000
            
            0
            
            
            214,000
            
            0
            
            
            0
            
            0
            0
            
            $
            339,000Vice
      President, Sales,
              Business
      Development
            2007
            
            $
            125,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            02006
            
            $
            125,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Jeff
      Vrachan
              Vice
      President
              Engineering
      and
            2008
            
            $
            125,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            125,000Chief
      Technology Officer
            2007
            
            $
            125,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            02006
            
            $
            125,000
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0W.
      Ross C. Corace*
            2008
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Former
      CEO, CFO
            2007
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            02006
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Eric
      R. Thatcher**
            2008
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Former
      CEO, CFO
            2007
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            02006
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Jeff
      A. Hanks***
            2008
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0Former
      CEO, CFO
            2007
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            02006
            
            $
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            0
            
            $
            0


______________


* W. Ross
C. Corace was MailTec’s CEO from the date of inception to January 10,
2007.


** Eric
R. Thatcher was MailTec’s CEO from January 10, 2007 to April 11,
2007.


*** Jeff
A. Hanks was MailTec’s CEO from April 11, 2007 to March 4, 2008.





Employment
Agreements





We are
party to an employment agreement with Curt Thornton, dated May 30, 2006,
pursuant to which Mr. Thornton serves as our chief executive officer, president
and chairman. Pursuant to the terms of the agreement, Mr. Thornton receives a
minimum annual base salary of $144,000, subject to increases in the sole
discretion of our board of directors. Mr. Thornton is also eligible to receive
an annual cash bonus in an amount determined by the board of directors, and is
eligible to participate in ProVision’s annual equity participation program. The
agreement has a term of five years, unless terminated earlier in accordance with
the terms thereof. ProVision may terminate the agreement for cause. If ProVision
terminates the agreement without cause, Mr. Thornton will receive one year’s
annual salary for each full year of employment completed, the amount of the
previous year’s bonus, and continuance of medical/dental benefits for a period
of one year.





We are
party to an employment agreement with Robert Ostrander, dated May 30, 2006,
pursuant to which Mr. Ostrander serves as our vice president. Pursuant to the
terms of the agreement, Mr. Ostrander receives a minimum annual base salary of
$125,000, subject to increases in the sole discretion of our board of directors.
Mr. Ostrander is also eligible to receive an annual cash bonus in an amount
determined by the board of directors, and is eligible to participate in
ProVision’s annual equity participation program. The agreement has a term of
five years, unless terminated earlier in accordance with the terms thereof.
ProVision may terminate the agreement for cause.




21





We are
party to an employment agreement with Jeff Vrachan, dated May 30, 2006, pursuant
to which Mr. Vrachan serves as our vice president. Pursuant to the terms of the
agreement, Mr. Vrachan receives a minimum annual base salary of $125,000,
subject to increases in the sole discretion of our board of directors. Mr.
Vrachan is also eligible to receive an annual cash bonus in an amount determined
by the board of directors, and is eligible to participate in ProVision’s annual
equity participation program. The agreement has a term of five years, unless
terminated earlier in accordance with the terms thereof. ProVision may terminate
the agreement for cause.




Director
Compensation





No
director of ProVision received any compensation for services as director for the
year ended June 30, 2008.





ITEM 12.
            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





The
following table sets forth certain information, as of September 30, 2008 with
respect to the beneficial ownership of the outstanding common stock by (i) any
holder of more than five (5%) percent; (ii) each of our executive officers and
directors; and (iii) our directors and executive officers as a group. Except as
otherwise indicated, each of the stockholders listed below has sole voting and
investment power over the shares beneficially owned.




Name
      of Beneficial Owner (1)
            
            Common
      Stock
              Beneficially
      Owned
            
            Percentage
      of
              Common
      Stock (2)Curt
      Thornton
            
            
            6,865,200
            (3)
            27.87
            %Robert
      Ostrander
            
            
            2,500,000
            (4)
            9.92
            %Jeff
      Vrachan
            
            
            2,440,000
            
            10.08
            %Jon
      Corfino
            
            
            200,000
            
            0.83
            %Catalpa
      Enterprises, Ltd.
              155
      Edgehill Dr. Kitchener Ontario Canada N2P2C6
            
            
            3,394,800
            
            14.03
            %All
      officers and directors as a group (4 persons owning stock)
            
            
            11,465,200
            
            47.52
            %





(1)
            Except
      as otherwise indicated, the address of each beneficial owner is c/o
      Provision Holding, Inc. 9253 Eton Avenue, Chatsworth, California
      91311.(2)
            Applicable
      percentage ownership is based on 24,206,353 shares of common stock
      outstanding as of September 30, 2008, together with securities exercisable
      or convertible into shares of common stock within 60 days of September 30,
      2008 for each stockholder. Beneficial ownership is determined in
      accordance with the rules of the Securities and Exchange Commission and
      generally includes voting or investment power with respect to securities.
      Shares of common stock that are currently exercisable or exercisable
      within 60 days of September 30, 2008 are deemed to be beneficially owned
      by the person holding such securities for the purpose of computing the
      percentage of ownership of such person, but are not treated as outstanding
      for the purpose of computing the percentage ownership of any other
      person.(3)
            Includes
      140,000 shares receivable upon exercise of a warrant.(4)
            Includes
      100,000 shares receivable upon exercise of a
warrant.




ITEM 13.
            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE.




None.




22





ITEM 14.
            PRINCIPAL ACCOUNTING FEES AND
    SERVICES.





Our
financial statements for the fiscal year ended June 30, 2007 were audited by
Jasper & Hill, PC (“Jasper & Hill”). On April 30, 2008, our board of
directors dismissed Jasper & Hill as our independent registered accounting
firm and appointed Farber Hass Hurley LLP (“Farber Hass Hurley”) to serve as our
independent registered accounting firm. We also changed our fiscal year to June
30, which is the fiscal year of Provision.




Since we
do not have a formal audit committee, our board of directors serves as our audit
committee. We have not adopted pre-approval policies and procedures with respect
to our accountants. All of the services provided and fees charged by our
independent registered accounting firms were approved by the board of
directors.




Services rendered by Farber
Hass Hurley




The
following is a summary of the fees for professional services rendered by Farber
Hass Hurley for the year ended June 30, 2008.




Fee
      Category
            
            2008Audit
      fees
            
            $
            48,875Audit-related
      feesTax
      feesOther
      feesTotal
      Fees
            
            $
            48,875





Audit
fees.    Audit fees represent fees for professional
services performed by Farber Hass Hurley LLP for the audit of our annual
financial statements and the review of our quarterly financial statements, as
well as services that are normally provided in connection with statutory and
regulatory filings or engagements.




Audit-related
fees.    We did not incur any other fees for services
performed by Farber Hass Hurley LLP, other than the services covered in "Audit
Fees" for the fiscal year ended June 30, 2008.




Tax Fees. We did not incur
any fees for tax services performed by Farber Hass Hurley LLP.




Other
fees.     Farber Hass Hurley LLP did not receive any
other fees during 2008.




Services rendered by Jasper
& Hill




The
following is a summary of the fees for professional services rendered by Jasper
& Hill for the year ended June 30, 2007.




Fee
      Category
            
            2007Audit
      fees
            
            $
            4,500Audit-related
      fees
            
            $
            0Tax
      fees
            
            $
            0Other
      fees
            
            $
            0Total
      Fees
            
            $
            4,500





Audit
fees.    Audit fees represent fees for professional
services performed by Jasper & Hill for the audit of our annual financial
statements and the review of our quarterly financial statements, as well as
services that are normally provided in connection with statutory and regulatory
filings or engagements.




Audit-related
fees.    We did not incur any other fees for services
performed by Jasper & Hill other than the services covered in "Audit Fees"
for the fiscal years ended June 30, 2007.




Tax Fees.
We did not incur any fees for tax services performed by Jasper &
Hill.




Other
fees. Jasper & Hill did not receive any other fees during 2007.




23




PART
IV




ITEM 15.
            EXHIBITS, FINANCIAL STATEMENT
    SCHEDULES.





Exhibit
      Number
            
            Description3.1
            
            Certificate
      of Amendment to Articles of Incorporation of MailTec, Inc. (incorporated
      by reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on March 20, 2008)3.2
            
            Restated
      Bylaws of Provision Holding, Inc. (incorporated by reference to the Form
      8-K, as filed with the Securities and Exchange Commission on March 20,
      2008)10.1
            
            Agreement
      and Plan of Merger by and among MailTec, Inc., ProVision Merger Corp and
      Provision Interactive Technologies, Inc. (previously filed as an exhibit
      to Amendment No.1 to Form 8-K filed with the Securities and Exchange
      Commission on March 3, 2008)10.2
            
            Amended
      and Restated Agreement and Plan of Merger by and among MailTec, Inc.,
      ProVision Merger Corp and Provision Interactive Technologies, Inc.
      (previously filed as an exhibit to Amendment No. 2 to Form 8-K filed with
      the Securities and Exchange Commission on March 5,
2008)10.3
            
            Employment
      Agreement, dated May 30, 2006, by and between Provision Interactive
      Technologies, Inc. and Curt Thornton (incorporated by reference to the
      Form 8-K, as filed with the Securities and Exchange Commission on March
      20, 2008).10.4
            
            Employment
      Agreement, dated May 30, 2006, by and between Provision Interactive
      Technologies, Inc. and Robert Ostrander (incorporated by reference to the
      Form 8-K, as filed with the Securities and Exchange Commission on March
      20, 2008).10.5
            
            Employment
      Agreement, dated May 30, 2006, by and between Provision Interactive
      Technologies, Inc. and Jeff Vrachan (incorporated by reference to the Form
      8-K, as filed with the Securities and Exchange Commission on March 20,
      2008).10.6
            
            Provision
      Interactive Technologies, Inc. 2002 Stock Option and Incentive Plan
      (incorporated by reference to the Form 8-K, as filed with the Securities
      and Exchange Commission on March 20, 2008).10.8
            
            Joint
      Venture Contract, by and between Provision Interactive Technologies, Inc.
      and Guoshengruiming Co., Ltd. (incorporated by reference to the Form 8-K,
      as filed with the Securities and Exchange Commission on March 20,
      2008).10.9
            
            International
      Distributor Agreement, dated August 7, 2006, by and between Provision
      Interactive Technologies, Inc. and Datavoice Solutions Corporation
      (incorporated by reference to the Form 8-K, as filed with the Securities
      and Exchange Commission on March 20, 2008).10.10
            
            Distributor
      Agreement, dated July 7, 2005, by and between Provision Interactive
      Technologies, Inc. and National Data Japan Co., Ltd. (incorporated by
      reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on March 20, 2008).10.14
            
            International
      Distributor Agreement, dated June 26, 2007, by and between Provision
      Interactive Technologies, Inc. and Nam Tien New Technology Joint Stock
      Company (incorporated by reference to the Form 8-K, as filed with the
      Securities and Exchange Commission on March 20, 2008).10.15
            
            Marketing
      Agreement, dated February 28, 2007, by and between Intel Corporation and
      Provision Interactive Technologies, Inc. (incorporated by reference to the
      Form 8-K, as filed with the Securities and Exchange Commission on March
      20, 2008).10.16
            
            International
      Distributor Agreement, dated July 21, 2006, by and between Provision
      Interactive Technologies, Inc. and 3 Boyut Tanitim Ve Refklamcilik
      Hizmetler (incorporated by reference to the Form 8-K, as filed with the
      Securities and Exchange Commission on March 20, 2008).10.17
            
            International
      Distributor Agreement, dated July 22, 2006, by and between Provision
      Interactive Technologies, Inc. and Beyaz Ileisim Teknolojileri Yazihm
      Insaat Sanayi Ve Dis Ticaret Limited Sirketi (incorporated by reference to
      the Form 8-K, as filed with the Securities and Exchange Commission on
      March 20, 2008).




24




10.20
            
            International
      Distributor Agreement, dated June 20, 2006, by and between Provision
      Interactive Technologies, Inc. and Trendform Ou (incorporated by reference
      to the Form 8-K, as filed with the Securities and Exchange Commission on
      March 20, 2008).10.21
            
            International
      Distributor Agreement, dated July 3, 2007, by and between Provision
      Interactive Technologies, Inc. and Mas Dimensiones Sociedad Cooperativa De
      Responsabilidad Limitada (incorporated by reference to the Form 8-K, as
      filed with the Securities and Exchange Commission on March 20,
      2008).10.22
            
            International
      Distributor Agreement, dated June 26, 2007, by and between Provision
      Interactive Technologies, Inc. and Nam Tien New Technology Joint Stock
      Company (incorporated by reference to the Form 8-K, as filed with the
      Securities and Exchange Commission on March 20, 2008).10.24
            
            Strategic
      Alliance and Purchase Agreement, dated October 19, 2006, by and among
      Provision Interactive Technologies, Inc., Studio One Media, Inc., and
      Xtreme Technologies and Media Groups, Inc. (incorporated by reference to
      the Form 8-K, as filed with the Securities and Exchange Commission on
      March 20, 2008).10.25
            
            Sales
      and Marketing Agreement, dated February 1, 2006, by and between Provision
      Interactive Technologies, Inc. and The Benites Group, Inc. (incorporated
      by reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on March 20, 2008).10.26
            
            Sales
      and Marketing Agreement, dated November 9, 2006, by and between Provision
      Interactive Technologies, Inc. and Kimmelman Neil Group (incorporated by
      reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on March 20, 2008).10.30
            
            Sales
      and Marketing Agreement, dated October 27, 2006, by and between Provision
      Interactive Technologies, Inc. and Wonderworks Media Limited (incorporated
      by reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on March 20, 2008).16.1
            
            Letter
      from Jasper & Hill, PC, dated April 30, 2008 (incorporated by
      reference to the Form 8-K, as filed with the Securities and Exchange
      Commission on May 6, 2008)21
            
            List
      of Subsidiaries (incorporated by reference to the Form 8-K, as filed with
      the Securities and Exchange Commission on March 20,
  2008).99.1
            
            Pro
      forma financial information (incorporated by reference to the Form 8-K, as
      filed with the Securities and Exchange Commission on March 20,
      2008).










25








SIGNATURES




In
accordance with the requirements of Section 13 or 15(d) of the Exchange
Act, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.






PROVISION
      HOLDING, INC.Dated:
      October 14, 2008
              By:
              /s/ Curt ThorntonName:
      Curt ThorntonTitle:   Chief
      Executive Officer





In
accordance with the Exchange Act, this report has been signed below by the
following persons on October 14, 2008, on behalf of the registrant and in the
capacities Indicated.








Signature
            Title/s/
      Curt Thornton
            Chief
      Executive Officer, Chairman of the Board,
              President
      and DirectorCurt
      Thornton
            (Principal
      Executive Officer and Principal Financial Officer)/s/
      Robert Ostrander
            Vice
      President, Sales, Business Development,Robert
      Ostrander
            Secretary
      and Director/s/
      Jeff Vrachan
            Vice
      President, Engineering,Jeff
      Vrachan
            Chief
      Technology Officer and Director/s/
      Jon Corfino
            DirectorJon
      Corfino


26






REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  TO
THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PROVISION HOLDING, INC.:
  We have
audited the accompanying consolidated balance sheet of Provision Holding, Inc.
(the "Company") as of June 30, 2008, and the related statements of operations,
stockholders' deficit, and cash flows for the year ended June 30, 2008. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control
over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
  In our
opinion, based on our audits, such financial statements present fairly, in all
material respects, the financial position of the Company as of June 30, 2008,
and the results of its operations and its cash flows for the year ended June 30,
2008, in conformity with accounting principles generally accepted in the United
States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in the
notes to the financial statements, the Company has incurred a loss of
approximately $5,000,000 in the current year and has negative working capital of
approximately $1,000,000. These matters raise substantial doubt about the
Company’s ability to continue as a going concern.  Management’s plans
concerning these matters are also described in the notes to the consolidated
financial statements.  The consolidated financial statements do not
include adjustments that might result from the outcome of this
uncertainty.
 
 
 /s/
Farber Hass Hurley LLP
 
 
 Camarillo,
California
 September
30, 2008
  27
  INDEPENDENT
AUDITORS' REPORT
 
  TO
THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PROVISION INTERACTIVE TECHNOLOGIES,
INC.:
 
 We
      have audited the accompanying balance sheet of Provision Interactive
      Technologies, Inc. (the "Company") as of June 30, 2007 and the
      related statements of operations, stockholders’ deficit and cash flows for
      the year then ended.  These financial statements are the
      responsibility of the Company's management.  Our responsibility
      is to express an opinion on these financial statements based on our
      audit.
 
 We
      conducted our audit in accordance with auditing standards generally
      accepted in the United States of America.  Those standards
      require that we plan and perform the audit to obtain reasonable assurance
      about whether the financial statements are free of material
      misstatement.  An audit includes examining, on a test basis,
      evidence supporting the amounts and disclosures in the financial
      statements.  An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall presentation of the financial
      statements.  We believe that our audit provides a reasonable
      basis for our opinion.
 
 In
      our opinion, the accompanying financial statements present fairly, in all
      material respects, the financial position of the Company at June 30, 2007
      and the results of its operations and its cash flows for the year then
      ended in conformity with accounting principles generally accepted in the
      United States of America.
 
 
 /s/
Tignino & Lutz Accountancy Corporation
 
 
 Westlake
Village, California
 November
16, 2007
 
  28








PROVISION
HOLDING, INC.
 CONSOLIDATED
BALANCE SHEETS
 
 June
      30, 2008
              
              
              June
      30, 2007
                (as
      restated)ASSETSCURRENT
      ASSETSCash
              
              $
              337,641
              
              
              $
              1,229,978Accounts
      receivable
              
              
              -
              
              
              
              705Inventory
              
              
              322,793
              
              
              
              221,162Investments
              
              
              6,000
              
              
              
              20,000TOTAL
      CURRENT ASSETS
              
              
              666,434
              
              
              
              1,471,845EQUIPMENT, net of
      accumulated depreciation
              
              
              541,568
              
              
              
              123,570PREPAID FINANCING COSTS
              
              
              125,464
              
              
              
              206,194INTANGIBLE,
      net of accumulated
      amortization
              
              
              137,556
              
              
              
              116,605TOTAL
      ASSETS
              
              $
              1,471,022
              
              
              $
              1,918,214LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              $
              299,152
              
              
              $
              269,142Accrued
      interest
              
              
              325,495
              
              
              
              201,375Payroll
      taxes payable
              
              
              -
              
              
              
              39,100Deferred
      income
              
              
              -
              
              
              
              52,140Loss
      contingency payable
              
              
              592,312
              
              
              
              592,312Current
      portion of long-term debt
              
              
              401,821
              
              
              
              979,279TOTAL
      CURRENT LIABILITIES
              
              
              1,618,780
              
              
              
              2,133,348NOTES PAYABLE,net of
      current portion
              
              
              220,438
              
              
              
              396,342TOTAL
      LIABILITIES
              
              
              1,839,218
              
              
              
              2,529,590STOCKHOLDERS’
      DEFICITPreferred
      stock, par value $0.001 per shareAuthorized
      – 4,000,000 sharesIssued
      and outstanding – 0 shares
              
              
              -
              
              
              
              -Common
      stock, par value $0.001 per shareAuthorized
      – 100,000,000 sharesIssued
      and outstanding – 24,446,353 and 21,364,312, respectively
              
              
              24,446
              
              
              
              21,364Additional
      paid-in capital
              
              
              11,317,575
              
              
              
              6,071,534Accumulated
      deficit
              
              
              (11,710,217
              )
              
              
              (6,704,274
              )TOTAL
      STOCKHOLDERS’ DEFICIT
              
              
              (368,196
              )
              
              
              (611,376
              )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
              
              $
              1,471,022
              
              
              $
              1,918,214
 
 The
accompanying notes are an integral part of the financial
statements
  29
  PROVISION
HOLDING, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007 (as restated)
 
 
 2008
              
              
              2007
                (as
      restated)REVENUES
              
              $
              529,301
              
              
              $
              622,799COST
      OF REVENUES
              
              
              290,292
              
              
              
              257,188GROSS
      PROFIT
              
              
              239,009
              
              
              
              365,611EXPENSESGeneral
      and administrative
              
              
              2,748,461
              
              
              
              1,135,241Research
      and development
              
              
              157,767
              
              
              
              200,171TOTAL
      EXPENSES
              
              
              2,906,228
              
              
              
              1,335,412(LOSS)
      FROM OPERATIONS
              
              
              (2,667,219
              )
              
              
              (969,801
              )OTHER
      INCOME (EXPENSE)Forgiveness
      of debt
              
              
              81,200
              
              
              
              -Other
      income
              
              
              -
              
              
              
              20,248Other
      expense
              
              
              
              
              
              
              (625,200
              )Unrealized
      loss on securities
              
              
              (14,000
              )
              
              
              -Interest
      expense
              
              
              (2,402,724
              )
              
              
              (219,871
              )TOTAL
      OTHER INCOME (EXPENSE)
              
              
              (2,335,524
              )
              
              
              (824,823
              )(LOSS)
      BEFORE INCOME TAXES
              
              
              (5,002,743
              )
              
              
              (1,794,624
              )Income
      tax expense
              
              
              3,200
              
              
              
              -NET
      (LOSS)
              
              $
              (5,005,943
              )
              
              $
              (1,794,624
              )NET
      (LOSS) PER COMMON SHAREBasic
      and diluted
              
              $
              (0.20
              )
              
              $
              (0.08
              )WEIGHTED
      AVERAGE NUMBER OFCOMMON
      SHARES OUTSTANDINGBasic
      and diluted
              
              
              24,446,353
              
              
              
              21,364,312
  The
accompanying notes are an integral part of the financial statements
 30
  PROVISION
HOLDING, INC.
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007 (as restated)
 
 Common
      StockShares
              
              
              Amount
              
              
              Additional
      Paid-in Capital
              
              
              Accumulated
                Deficit
              
              
              Total
      Stockholders’ DeficitBalance,
      June 30, 2006, as originally
      reported, recapitalized
              
              
              21,364,312
              
              
              $
              21,364
              
              
              $
              5,175,519
              
              
              $
              (4,160,000
              )
              
              $
              1,036,883Net
      adjustments
              
              
              -
              
              
              
              -
              
              
              
              (564,665
              )
              
              
              (749,650
              )
              
              
              (1,314,315
              )Balance,
      June 30, 2006, asrestated
              
              
              21,364,312
              
              
              
              21,364
              
              
              
              4,610,854
              
              
              
              (4,909,650
              )
              
              
              (277,432
              )Issuance
      of stock options
              
              
              -
              
              
              
              -
              
              
              
              226,048
              
              
              
              -
              
              
              
              226,048Debt
      discount
              
              
              -
              
              
              
              -
              
              
              
              1,234,632
              
              
              
              -
              
              
              
              1,234,632Net
      (loss) for the yearEnded
      June 30, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,794,624
              )
              
              
              (1,794,624
              )Balance,
      June 30, 2007 (as restated)
              
              
              21,364,312
              
              
              
              21,364
              
              
              
              6,071,534
              
              
              
              (6,704,274
              )
              
              
              (611,376
              )Issuance
      of common stock for debt
              
              
              1,675,000
              
              
              
              1,675
              
              
              
              1,673,325
              
              
              
              -
              
              
              
              1,675,000Issuance
      of common stock forinterest
      expense
              
              
              87,174
              
              
              
              87
              
              
              
              87,087
              
              
              
              -
              
              
              
              87,174Issuance
      of common stock forservices
              
              
              319,867
              
              
              
              320
              
              
              
              595,780
              
              
              
              -
              
              
              
              596,100Conversion
      of options
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              216,875
              
              
              
              -
              
              
              
              217,875Issuance
      of stock options
              
              
              -
              
              
              
              -
              
              
              
              549,841
              
              
              
              -
              
              
              
              549,841Debt
      discount
              
              
              -
              
              
              
              -
              
              
              
              2,123,133
              
              
              
              -
              
              
              
              2,123,133Net
      (loss) for the yearEnded
      June 30, 2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (5,005,943
              )
              
              
              (5,005,943
              )Balance,
      June 30, 2008
              
              
              24,446,353
              
              
              $
              24,446
              
              
              $
              11,317,575
              
              
              $
              (11,710,217
              )
              
              $
              (368,196
              )
  The
accompanying notes are an integral part of the financial statements
  31
  PROVISION
HOLDING, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007 (as restated)
 
 
 2008
              
              
              2007
                (as
      restated)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
              
              $
              (5,005,943
              )
              
              $
              (1,794,624
              )Adjustments
      to reconcile net (loss) to net cash(used)
      by operating activities:Non-cash
      compensation
              
              
              1,281,316
              
              
              
              226,048Forgiveness
      of debt
              
              
              (81,200
              )
              
              
              -Depreciation
      expense
              
              
              17,681
              
              
              
              17,285Amortization
              
              
              1,944
              
              
              
              1,741Unrealized
      loss on securities
              
              
              14,000
              
              
              
              -Amortization
      of debt discount
              
              
              1,953,507
              
              
              
              101,593Common
      stock issued for services
              
              
              82,500
              
              
              
              -Shares
      received for litigation settlement
              
              
              -
              
              
              
              (20,000
              )Loss
      contingency
              
              
              -
              
              
              
              592,312Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              705
              
              
              
              3,390Prepaid
      expenses
              
              
              -
              
              
              
              2,321Due
      from shareholder
              
              
              -
              
              
              
              111,489Inventory
              
              
              (101,631
              )
              
              
              42,483Accounts
      payable and accrued liabilities
              
              
              69,745
              
              
              
              156,723Payroll
      taxes payable
              
              
              (39,100
              )
              
              
              38,772Accrued
      interest
              
              
              211,417
              
              
              
              -Deferred
      income
              
              
              (52,140
              )
              
              
              (157,415
              )NET
      CASH (USED) BY OPERATING ACTIVITIES
              
              
              1,647,199
              
              
              
              (677,882
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of equipment
              
              
              (435,679
              )
              
              
              (10,051
              )Purchase
      of intangible assets
              
              
              -
              
              
              
              (46,457
              )NET
      CASH (USED) PROVIDED BY INVESTING ACTIVITES
              
              
              (435,679
              )
              
              
              (56,508
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from note payable, net of fees
              
              
              1,535,000
              
              
              
              1,745,000Prepayments
      of notes payable
              
              
              (344,459
              )
              
              
              (30,779
              )NET
      CASH PROVIDED BY FINANCING ACTIVITES
              
              
              1,190,541
              
              
              
              1,714,221NET
      INCREASE (DECREASE) IN CASHAND
      CASH EQUIVALENTS
              
              
              (892,337
              )
              
              
              979,831CASH
      AND CASH EQUIVALENTSAT
      THE BEGINNING OF
                THE
      PERIOD
              
              
              1,229,978
              
              
              
              250,147CASH
      AND CASH EQUIVALENTSAT
      THE END OF THE PERIOD
              
              $
              337,641
              
              
              $
              1,229,978
 
 
 The
accompanying notes are an integral part of the financial
statements
  32
  PROVISION
HOLDING, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS CONTINUED
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007 (as restated)
 
 2008
              
              
              2007
                (as
      restated)SUPPLEMENTAL
      DISCLOSURE OFCASH
      FLOW INFORMATIONInterest
      paid
              
              $
              42,551
              
              
              $
              21,180Taxes
      paid
              
              $
              3,200
              
              
              $
              -SCHEDULE
      OF NON-CASH INVESTING ANDFINANCING
      ACTIVITIES:Issuance
      of 1,675,000 shares of common stock for debt conversion
              
              $
              1,675,000
              
              
              $
              -Issuance
      of 87,174 shares of common stock for interest expense
              
              $
              87,174
              
              
              $
              -
  
 
 
 The
accompanying notes are an integral part of the financial statements
 33
 PROVISION
HOLDING, INC.
 NOTES
TO CONSOLIDATE FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007 (as restated)
 
 
 NOTE
1 ORGANIZATION AND BASIS OF PRESENTATION
 
 Business
Description
 
 On
February 14, 2008, MailTec, Inc. (now known as Provision Holding, Inc.) (the
“Company”) entered into an Agreement and Plan of Merger, which was amended and
restated on February 27, 2008 (as amended and restated, the “Agreement”), and
closed effective February 28, 2008, with ProVision Merger Corp., a Nevada
corporation and wholly owned subsidiary of the Company (the “Subsidiary”) and
Provision Interactive Technologies, Inc., a California corporation
(“Provision”).  Pursuant to the Agreement, the Subsidiary merged into
Provision, and Provision became a wholly owned subsidiary of the Company. As
consideration for the merger of the Subsidiary into Provision, the Company
issued 20,879,350 shares of the Company’s common stock to the shareholders,
creditors, and certain warrant holders of Provision, representing approximately
86.5% of the Company’s aggregate issued and outstanding common stock, and the
outstanding shares and debt, and those warrants whose holders received shares of
the Company’s common stock, of Provision were transferred to the Company and
cancelled.
 
 The
Company is focused on the development and distribution of Provision’s patented
three-dimensional, holographic interactive displays focused at grabbing and
holding consumer attention particularly and initially in the advertising and
product merchandising markets.  The systems display a moving 3D image
size to forty inches in front of the display, projecting a digital video image
out into space detached from any screen, rendering truly independent floating
images featuring high definition and crisp visibility from far
distances.  The nearest comparable to this technology can be seen in
motion pictures such as Star Wars and Minority Report, where objects and humans
are represented through full-motion holograms.
  Provision’s
proprietary and patented display technologies and software, and innovative
solutions aim to attract consumer attention.  Currently THE Company
has multiple contracts to place Provision’s products into large California
grocery stores, independent Hispanic grocery stores, as well as signed
agreements with advertising agents to sell ad space to Fortune 500 customers.
Given the technology’s potential in the advertising market, the Company is
focused on creating recurring revenue streams from the sale of advertising space
on each unit.
 
 Restatement
 
 The
consolidated financial statements have been restated for the year ended June 30,
2007 to account for: (1) the capitalization of certain costs as Intangible
Assets; (2) the valuation of warrants issued in connection with convertible
debentures (and the related amortization of the debt discount); and (3) the
application of accounting for stock compensation from 2003 through 2007. The net
impact of these corrections on fiscal 2006 was to reduce total assets by
approximately $1.8 million, reduce liabilities by approximately $480,000 and
increase the accumulated deficit by approximately $750,000. The net impact of
these corrections on fiscal 2007 was to reduce total assets by approximately
$1.3 million, reduce total liabilities by approximately $1.6 million and
increase the net loss by approximately $400,000.
 
 Going
Concern
 
 These
financial statements are presented on the basis that the Company is a going
concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. The Company has incurred a loss of approximately $5,000,000 in
the current year and has negative working capital of approximately $550,000.
These matters raise substantial doubt about the Company’s ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to obtain
additional financing or refinancing as may be required and, ultimately, to
attain profitable operations. Management’s plan to eliminate the going concern
situation include, but are not limited to, the raise of additional capital
through issuance of debt and equity, improved cash flow management, aggressive
cost reductions, and the creation of additional sales and profits across its
product lines.
  34
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the financial statements of the
Company and its wholly owned subsidiary.  All significant
inter-company balances and transactions have been eliminated in
consolidation.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts and timing of
revenues and expenses, the reported amounts and classification of assets and
liabilities, and the disclosure of contingent assets and
liabilities.  These estimates and assumptions are based on the
Company’s historical results as well as management’s future
expectations.  The Company’s actual results could vary materially from
management’s estimates and assumptions.
 
 Disclosure
About Fair Value of Financial Instruments
 
 The
Company estimates that the fair value of all financial instruments at June 30,
2008 as defined in FASB 107 does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheet.  The estimated fair value amounts have been determined
by the Company using available market information and appropriate valuation
methodologies.  Considerable judgment is required in interpreting
market data to develop the estimates of fair value, and accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
 
 Cash and Cash
Equivalents
 
 The
Company considers all highly liquid investments, with an original maturity of
three months or less when purchased, to be cash equivalents.
 
 Concentration of Credit
Risk
 
 Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist principally of cash equivalents.  The Company maintains
cash balances at five financial institutions that are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000.  As of June 30,
2008, the Company had $193,695 in cash at one financial institution in excess of
the federally insured amount
 
 Inventories
 
 Inventories
are stated at the lower of cost (first-in, first-out) or market.
 
 Intangibles
 
 Intangibles
represent primarily costs incurred in connection with patent
applications.  Such costs are amortized using the straight-line method
over the useful life of the patent once issued, or expensed immediately if any
specific application is unsuccessful.
 
 Impairment
of Long-Lived Assets and Goodwill
 
 In
accordance with SFAS No. 142, “Goodwill and Other Intangible
Assets”, goodwill andintangible assets that
are not subject to amortization shall be tested for impairment annually, or more
frequently if events or changes in circumstances indicate that the asset might
be impaired. The impairment test shall consist of a comparison of the fair value
of an intangible asset with its carrying amount, as defined. If the carrying
amount of goodwill or an intangible asset exceeds its fair value, an impairment
loss shall be recognized in an amount equal to that excess.
  35
 
 In
accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-lived Assets”,the carrying value of long-lived assets,
including amortizable intangibles and property and equipment, are evaluated
whenever events or changes in circumstances indicate that a potential impairment
has occurred relative to a given asset or assets. Impairment is deemed to have
occurred if projected undiscounted cash flows associated with an asset are less
than the carrying value of the asset. The estimated cash flows include
management’s assumptions of cash inflows and outflows directly resulting from
the use of that asset in operations. The amount of the impairment loss
recognized is equal to the excess of the carrying value of the asset over its
then estimated fair value. There were no impairment losses recognized in fiscal
2008 or 2007.
 
 Revenue
Recognition
 
 The
Company uses the accrual method of accounting. Sales are recognized when goods
are shipped and title has passed.  Revenue from licensing,
distribution and marketing agreements is recognized over the term of the
contract.
 
 Significant
Customers
 
 During
fiscal years ended June 30, 2008 and 2007, no single customer accounted for more
than 10% of the Company’s net sales.
 
 Research and Development
Costs
 
 The
Company charges all research and development costs to expense when
incurred.  Manufacturing costs associated with the development of a
new process or a new product are expensed until such times as these processes or
products are proven through final testing and initial acceptance by the
customer.
 
 Depreciation
and Amortization
 
 The
Company depreciates its property and equipment using the straight-line method
with estimated useful lives from three to seven years.  For federal
income tax purposes, depreciation is computed using an accelerated
method.
 
 Shipping and Handling
Costs
 
 The
Company’s policy is to classify shipping and handling costs as a component of
Costs of Products Sold in the Statement of Operations.
 
 Advertising
Costs
 
 Advertising
costs are expensed as incurred.  Advertising expense was approximately
$186,552 and $-0- in  2008 and 2007, respectively.
 
 Accounting for Stock Option Based
Compensation
 
 Effective
July 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based Payment: An Amendment of
FASB Statements No. 123 and 95” using the modified prospective method.
Under this method, compensation cost is recognized on or after the effective
date for the portion of outstanding awards, for which the requisite service has
not yet been rendered, based on the grant date fair value of those awards. Prior
to July 1, 2006, the Company accounted for employee stock options using the
intrinsic value method in accordance with Accounting Principles Board (APB)
Opinion No. 25 (APB No. 25), “Accounting for Stock Issued to
Employees,” and adopted the disclosure only alternative of SFAS No. 123.
For stock-based awards issued on or after July 1, 2006, the Company recognizes
the compensation cost on a straight-line basis over the requisite service period
for the entire award. Measurement and attribution of compensation cost for
awards that are unvested as of the effective date of SFAS No. 123(R) are based
on the same estimate of the grant-date or modification-date fair value and the
same attribution method used under SFAS No. 123.
 
 On
November 10, 2005, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position No. FAS 123(R)-3 “Transition Election Related to
Accounting for Tax Effects of Share-Based Payment Awards". The Company
has elected to adopt the alternative transition method provided in the FASB
Staff Position for calculating the tax effects of stock-based compensation
pursuant to SFAS No. 123(R). The alternative transition method includes
simplified methods to establish the beginning balance of the additional paid-in
capital pool (APIC pool) related to the tax effects of employee stock-based
compensation, and to determine the subsequent impact on the APIC pool and
Consolidated Statements of Cash Flows of the tax effects of employee stock-based
compensation awards that are outstanding upon adoption of SFAS No. 123(R). As
the Company is currently in a net operating loss position and has placed
valuation allowances on its net deferred tax assets, there is no net impact on
the Company’s APIC pool related to stock-based compensation for the year ended
June 30, 2008.
  36
  Income
Taxes
 
 The
Company accounts for income taxes under SFAS 109, “Accounting for Income Taxes.”
Under the asset and liability method of SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs. A valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Company will not realize tax
assets through future operations.
 
 Basic
and Diluted Income (Loss) per Share
 
 In
accordance with SFAS No. 128, “Earnings Per Share,” basic income (loss) per
common share is computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income (loss) per common share is computed similar to basic income per
common share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
As of June 30, 2008, the Company had debt instruments outstanding that can
potentially be converted into 3,890,000 shares of common stock.
 
 Reclassification
 
 Certain
reclassifications have been made to conform the prior period amounts to the June
30, 2008 amounts for comparative purposes.
 
 Recent
Accounting Pronouncements
 
 SFAS No.
141(R) - In December 2007, the FASB issued Statement No. 141(R), Business
Combinations.   This Statement replaces FASB Statement No. 141,
Business Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement defines
the acquirer as the entity that obtains control of one or more businesses in the
business combination and establishes the acquisition date as the date that the
acquirer achieves control. Statement 141 did not define the acquirer, although
it included guidance on identifying the acquirer, as does this Statement. This
Statement’s scope is broader than that of Statement 141, which applied only to
business combinations in which control was obtained by transferring
consideration. By applying the same method of accounting - the acquisition
method - to all transactions and other events in which one entity obtains
control over one or more other businesses, this Statement improves the
comparability of the information about business combinations provided in
financial reports.
  37
 
 This
Statement 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. An entity may not apply it
before that date. The Company is currently evaluating SFAS 141(R), and has not
yet determined its potential impact on its future results of operations or
financial position.
 
 SFAS No.
160 - In December 2007, the FASB issued Statement No. 160, Noncontrolling
Interests in Consolidated Financial Statements - an Amendment of ARB No.
51.  This Statement amends ARB 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. Before this
Statement was issued, limited guidance existed for reporting noncontrolling
interests. As a result, considerable diversity in practice existed. So-called
minority interests were reported in the consolidated statement of financial
position as liabilities or in the mezzanine section between liabilities and
equity. This Statement improves comparability by eliminating that
diversity.
 
 This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. Earlier adoption is prohibited.
The effective date of this Statement is the same as that of the related
Statement 141(R). This Statement shall be applied prospectively as of the
beginning of the fiscal year in which this Statement is initially applied,
except for the presentation and disclosure requirements. The presentation and
disclosure requirements shall be applied retrospectively for all periods
presented.  The Company is currently evaluating SFAS 160 and has not
yet determined its potential impact on its future results of operations or
financial position.
 
 SFAS No.
161 - In March 2008, the FASB issued Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities—an amendment of FASB Statement No.
133. This Statement changes the disclosure requirements for derivative
instruments and hedging activities. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.
 
 This
Statement is intended to enhance the current disclosure framework in Statement
133. The Statement requires that objectives for using derivative instruments be
disclosed in terms of underlying risk and accounting designation. This
disclosure better conveys the purpose of derivative use in terms of the risks
that the entity is intending to manage. Disclosing the fair values of derivative
instruments and their gains and losses in a tabular format should provide a more
complete picture of the location in an entity’s financial statements of both the
derivative positions existing at period end and the effect of using derivatives
during the reporting period. Disclosing information about credit-risk-related
contingent features should provide information on the potential effect on an
entity’s liquidity from using derivatives. Finally, this Statement requires
cross-referencing within the footnotes, which should help users of financial
statements locate important information about derivative
instruments.
 
 This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.   The
Company is currently evaluating SFAS 161 and has not yet determined its
potential impact on its future results of operations or financial
position.
  In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS No. 162"). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements presented in conformity
with generally accepted accounting principles in the United States of America.
SFAS No. 162 will be effective 60 days following the SEC's approval of
the Public Company Accounting Oversight Board (PCAOB) amendments to AU
Section 411, "The Meaning of, Present fairly in conformity with generally
accepted accounting principles". The Company does not believe the implementation
of SFAS No. 162 will have a material impact on its consolidated financial
statements.
 
 NOTE
2 INVENTORY
 
 Inventory
consists of the following:
 
 June
      30, 2008
              
              
              June
      30, 2007Raw
      materials
              
              $
              170,493
              
              
              $
              107,123Work
      in process
              
              
              125,715
              
              
              
              114,039Finished
      goods
              
              
              26,585
              
              
              
              -Total
              
              $
              322,793
              
              
              $
              221,162
  38
 
 NOTE
3 EQUIPMENT, net
 
 Equipment
consists of the following:
 
 June
      30, 2008
              
              
              June
      30, 2007Furniture
      and fixtures
              
              $
              17,018
              
              
              $
              13,486Computer
      equipment
              
              
              18,899
              
              
              
              18,899Equipment
              
              
              166,602
              
              
              
              127,629Demo
      units
              
              
              162,915
              
              
              
              82,944BDEO
      Kiosks
              
              
              313,203
              
              
              
              -678,637
              
              
              
              242,958Less
      accumulated depreciation
              
              
              (137,069
              )
              
              
              (119,388
              )Total
              
              $
              541,568
              
              
              $
              123,570
 
 
 NOTE
4 INTANGIBLES, net
 
 Intangibles
consist of the following:
 
 June
      30, 2008
              
              
              June
      30, 2007Intellectual
      property
              
              $
              145,017
              
              
              $
              122,122Less
      accumulated amortization
              
              
              (7,461
              )
              
              
              (5,517
              )Total
              
              $
              137,556
              
              
              $
              116,605
 
 
 NOTE
5 NOTES PAYABLE
  On March
8, 2004, the Company issued $750,000 of convertible debt with warrants to
purchase 500,000 shares of common stock. The notes are convertible at the option
of the holder at a conversion price of $2.50 per share. During the five-year
note term, the interest rate shall be eight percent the first year, seven
percent the second year, six percent the third year, five percent the fourth
year, and four percent the fifth year. Under EITF 98-5 and 00-27, the relative
fair value of the warrants and the intrinsic value of the beneficial conversion
feature were recorded as a discount to the notes A debt discount of $637,889 was
recorded thereby reducing the carrying value of the convertible note payable
with a corresponding increase to additional paid-in capital. The debt discount
is being amortized to interest expense over the term of the note
payable.
 
 In May of
2007 the Company issued $1,000,000 of convertible debt with warrants to purchase
1,000,000 shares of common stock. The note is convertible at the option of the
holder at a conversion price of $1.00 per share. The note pays interest at a
rate of 10% per annum and had an original term of one year which has been
extended for an additional two years. Under EITF 98-5 and 00-27, the relative
fair value of the warrants and the intrinsic value of the beneficial conversion
feature were recorded as a discount to the notes. These discounts, totaling
$1,000,000 will be amortized and charged to interest expense over the term of
the notes using the effective interest rate method.
 
 During
May and June of 2007, the Company issued $745,000 of convertible debt with
warrants to purchase 372,500 shares of common stock. The notes are automatically
convertible at $1.00 per share into common stock of the Company at the time it
consummated a reverse merger with a publically traded company.. The notes had a
three year term and bore interest of 10% per annum. Interest will accrue and can
be converted with the note.  Under EITF 98-5 and 00-27 the relative
fair value of the warrants and the intrinsic value of the beneficial conversion
feature were recorded as a discount to the notes. These discounts, totaling $
745,000, were to be amortized and charged to interest expense over the term of
the notes using the effective interest rate method. The notes converted in
February 2008 into 745,000 shares of common stock. As a result, the unamortized
debt discount was charged to interest expense.
  39
 
 During
the fiscal year ended 2008, the Company issued $930,000 of convertible debt with
warrants to purchase 465,000 shares of common stock. The notes are automatically
convertible at $1.00 per share  into common stock of the Company at
the time it consummated a reverse merger with a publically traded company.. The
notes had a three year term and bore interest of 10% per annum. Interest will
accrue and can be converted with the note.  Under EITF 98-5 and 00-27
the relative fair value of the warrants and the intrinsic value of the
beneficial conversion feature were recorded as a discount to the notes. These
discounts, totaling $930,000, were to be amortized and charged to interest
expense over the term of the notes using the effective interest rate method. The
notes converted in February 2008 into 930,000 shares of common stock. As a
result, the unamortized debt discount was charged to interest
expense.
 
 In May of
2008, the Company issued $500,000 of convertible debt with warrants to purchase
333,333 shares of common stock. The note is convertible at the option of the
holder at a conversion price of $.75 per share. The note pays interest at a rate
of 10% per annum and is due 24 months from the date of issuance. Under EITF 98-5
and 00-27 the relative fair value of the warrants and the intrinsic value of the
beneficial conversion feature were recorded as a discount to the notes. These
discounts, totaling $500,000 will be amortized and charged to interest expense
over the term of the notes using the effective interest rate
method.
 
 In June
of 2008, the Company issued $65,000 of convertible debt with warrants to
purchase 43,332 shares of common stock. The note is convertible at the end of
two years from the date of the note at a conversion price of $.75 per share. The
note pays interest at a rate of 10% per annum and is due June 2010. Under EITF
98-5 and 00-27 the relative fair value of the warrants and the intrinsic value
of the beneficial conversion feature were recorded as a discount to the notes.
These discounts, totaling $20,838 will be amortized and charged to interest
expense over the term of the notes using the effective interest rate
method.
 
 In June
of 2008, the Company issued $40,000 of convertible debt with warrants to
purchase 26,664 shares of common stock. The note is convertible at the option of
the holder at a conversion price of $.75 per share. The note pays interest at a
rate of 10% per annum and is due June 2010. Under EITF 98-5 and 00-27 the
relative fair value of the warrants and the intrinsic value of the beneficial
conversion feature were recorded as a discount to the notes. These discounts,
totaling $27,269 will be amortized and charged to interest expense over the term
of the notes using the effective interest rate method.
 Notes
payable consist of the following:
 
 June
      30, 2008
              
              
              June
      30, 2007Convertible
      notes payable, annual interest rate of 10%, due dates range from May 2010
      to June 2010 convertible into common stock at a rate of $0.50 to $1.50 per
      share.
              
              $
              1,605,000
              
              
              $
              1,745,000Convertible
      note payable, annual interest rates range from 8% to 4%, due March 8,
      2009, convertible into common stock at a rate of $1 per
    share.
              
              
              750,000
              
              
              
              750,000Loan
      payable to a bank, due in monthly installments of $2,500, due May 29,
      2008.
              
              
              -
              
              
              
              42,796Lease
      payable due in monthly installments of $1,417, secured by equipment, due
      August 16, 2009.
              
              
              -
              
              
              
              14,343Note
      payable to a private company, 10% interest per annum, and entire balance
      in default as of June 30, 2007.
              
              
              -
              
              
              
              250,000Note
      payable to an individual, 10% interest per annum, due December 31,
      2007.
              
              
              -
              
              
              
              25,000Note
      payable to a shareholder, 10% interest per annum, due December 31,
      2007.
              
              
              -
              
              
              
              24,600Unamortized
      debt discount
              
              
              (1,731,241
              )
              
              
              (1,476,218
              )622,259
              
              
              
              1,375,521Less
      current portion
              
              
              (401,821
              )
              
              
              (979,279)Notes
      payable, net of current portion
              
              $
              220,438
              
              
              $
              396,242
  40
  NOTE
6 COMMITTMENTS
 
 Lease
Agreement - The Company leases its office space under a month-to-month
lease.  Rent expense for the years ended June 30, 2008 and 2007 was
$74,024 and $73,824, respectively.
 
 Royalty
Fees - The Company has entered into a royalty agreement with another company.
The other entity’s technology has certain characteristics and properties used in
conjunction with the Company’s products. The agreement requires royalties to be
paid at 4% of applicable sales. The Company is currently in contract
negotiations to purchase the other entity’s patent. Royalty expense for the
years ended June 30, 2008 and 2007 was $4,944 and $18,430,
respectively.
 
 NOTE
7 EQUITY
 
 Common
Stock
 
 During
December 2007, the Company issued 240,000 shares of its common stock to two
officers for services rendered.  The shares had a fair market value of
$513,600.
 
 During
February 2008, the Company issued 1,675,000 and 87,174 shares of its common
stock in payment of principal and interest, respectively, for convertible
debt.  The shares had a fair market value of $1,675,000 and $87,174,
respectively.
 
 During
the year ended June 30, 2008, the Company issued 79,867 shares of its common
stock for services rendered.  The shares had a fair market value of
$82,500.
  Warrants
  During
May and June 2007, the Company issued warrants to purchase 372,500 shares of
common stock in connection with convertible notes.  These warrants
have an exercise price of $1.50 per share and expire three years from the date
of issue.
  On May 7,
2007 the Company issued warrants to purchase 1,000,000 shares of common stock in
connection with convertible notes. These warrants have an exercise price of
$1.50 and expire three years from the date of issuance.
  During
July, August, and September 2007 the Company issued warrants to purchase 127,500
shares of common stock in connection with convertible notes.  These
warrants have an exercise price of $1.50 per share and expire three years from
the date of issue.
  From
October to February 1, the Company issued 337,500 warrants to purchase shares of
common stock in connection with convertible notes. The warrants have an exercise
price of $1.50 per share and expire three years from the date of
issue.
  On May
19, 2008 the Company issued 333,333 warrants to purchase shares of common stock
in connection with convertible notes. These warrants have an exercise price of
$1.50 and expire three years from the date of issuance.
  During
June 2008, the Company issued 69,996 warrants to purchase shares of common stock
in connection with convertible notes. These warrants have an exercise price of $
1.50 and expire three years from the date
of  issuance.
 Stock Option
Plan
  The
Company has one stock option plan:  The Provision Interactive
Technologies, Inc. 2002 Stock Option and Incentive Plan, (the
“Plan”).  As of June 30, 2008, there were 3,886,649 shares available
for issuance under the Plan.  The Plan is administered by the
Company’s Board of Directors, (the “Board”).
 
 As of
June 30, 2008, the Plan provides for the granting of non-qualified and incentive
stock options to purchase up to 5,000,000 shares of common
stock.  Options vest at rates set by the Board, not to exceed five
year and are exercisable up to ten years from the date of
issuance.   The option exercise price is set by the Board at time
of grant.  Options and restricted stock awards may be granted to
employees, officers, directors and consultants.
  41
  Stock
option transactions for fiscal years 2007 and 2008 are summarized as
follows:
  Shares
              
              
              Weighted
      Average
                Exercise
      PriceOutstanding,
      June 30, 2006
              
              
              1,322,971
              
              
              $
              1.07Granted
              
              
              382,500
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Expired
              
              
              -
              
              
              
              -Outstanding,
      June 30, 2007
              
              
              1,705,471
              
              
              $
              1.07Granted
              
              
              432,413
              
              
              $
              1.50Exercised
              
              
              (1,000,000
              )
              
              
              -Expired
              
              
              (24,533
              )
              
              $
              (0.84
              )Outstanding,
      June 30, 2008
              
              
              1,113,351
              
              
              $
              1.50Exercisable,
      June 30, 2008
              
              
              1,113,351
              
              
              $
              1.50
 
 The
intrinsic value of options exercised in fiscal years 2008 and 2007 was
approximately $731,475 and $0, respectively.
 
 Information
regarding stock options outstanding as of June 30, 2008 is as
follows:
  Options Outstanding and
      ExercisablePrice
      Range
                
                
                (in
      000s)
                  Shares
                
                
                Weighted
      Average
                  Exercise
      Price
                
                
                Weighted
      Average
                  Remaining
      Life$
                1.50
                
                
                
                1,113,351
                
                
                $
                1.50
                
                
                
                2.50
 The
Company accounts for stock-based incentives plans, in accordance with Statement
of Financial Accounting Standards No. 123(R), “Share-Based
Payment”(SFAS No. 123(R)). Accordingly, the Company estimates the fair
value of stock-based awards utilizing the Black-Scholes pricing model. The fair
value of the awards is amortized as compensation expense on a straight-line
basis over the requisite service period of the award, which is generally the
vesting period. The fair value calculations involve significant judgments,
assumptions, estimates and complexities that impact the amount of compensation
expense to be recorded in current and future periods. The following table
summarizes the assumptions and variables used to compute the weighted average
fair value of stock option grants:
 
 42
  Year
      EndedJune
      30, 2008
              
              
              June
      30, 2007Option
      Plan Shares:Expected
      term (in years)
              
              
              5
      to 10
              
              
              
              5
      to 10Volatility
              
              
              13.2%
      to 34.8%
              
              
              
              0%
      to 15.4%Expected
      dividend
              
              
              0%
              
              
              
              0%Risk-free
      interest rate
              
              
              2.15%
      to 4.91%
              
              
              
              2.34%
      to 4.88%Weighted-average
      grant date fair value
              
              $
              0.88
              
              
              $
              0.59
  Under the
provisions of SFAS No. 123(R), the Company recorded $731,475 and $226,048 of
stock compensation expense in our consolidated statements of operations for the
years ended June 30, 2008 and 2007, respectively.
  As of
June 30, 2008, there was $36, 313 of total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under
existing stock option plans. This cost is expected to be recognized over a
weighted-average period of two months.
  NOTE
8 INCOME TAXES
 
 Deferred
income tax assets and liabilities are computed annually for differences between
the financial statement and income tax bases of assets and liabilities. Such
deferred income tax asset and liability computations are based on enacted tax
laws and rates applicable to periods in which the differences are expected to
reverse.  Valuation allowances are established, when necessary, to
reduce deferred income tax assets to the amounts  expected to be
realized.  Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred income tax assets
and liabilities.
 
 Deferred income taxes result from
temporary differences in the recognition of revenues and expenses for financial
and tax reporting purposes.  At June 30, 2008 and 2007, deferred
income tax assets, which are fully reserved, were comprised primarily of the Net
operating loss carryforwards  of approximately $2,700,000
and $2,000,000,
respectively.
 
 The
valuation allowance increased by approximately $700,000 and
$470,000 during  the  years  ended  June  30,  2008
and 2007,  as a result of the increase in the Net Operating
Carryforwards.
 
 For
federal
income  tax  purposes,  the  Company  has  net  operating
loss carryforwards of approximately $8,900,000 as of June 30,
2008 that expire through
2028.  Additionally,  the  ultimate
utilization  of
net  operating  losses  may
be  limited  by  change  of  control
provision under section 382 of the Internal Revenue Code.
 
 Income
tax expense for 2008, and 2007  consists  of
the  minimum  state franchise tax.
 
 43
 
 
 NOTE 9
LEGAL PROCEEDINGS
 
 On August
26, 2004, in order to protect its legal rights and in the best interest of the
shareholders at large, the Company filed, in the Superior Court of California, a
complaint alleging breach of contract, rescission, tortuous interference and
fraud with Betacorp Management, Inc. In an effort to resolve all outstanding
issues, the parties agreed, in good faith, to enter into arbitration in the
State of Texas, domicile of the defendants. On August 11, 2006, a judgment was
awarded against the Company in the sum of $592,312. The Company believes the
judgment is without merit and has filed an appeal. A contingency loss of
$592,312 was charged to operations during the year ended June 30,
2007.
 
 Effective
November 30, 2007, the Superior Court of California entered a default judgment
against Betacorp Management, Inc. The final judgment in the amount of $3,337,000
is expected within the next 45 to 60 days. No gain provision has been reflected
in the accompanying financial statements.
 
 While a
Texas arbitrator rendered an award against the Company for $592,312, management
feels once they receive a final judgment in the California case, as well as, the
outcome from its appeal, the effect for the Company could result in a net gain
ranging from $2,744,688 to $3,337,000.
 
 The
Company has filed suit against one of its distributors for breach of contract,
breach of covenant of good faith and fair dealing, intentional misrepresentation
and coercion. Based upon the information provided by the Company’s counsel, the
court has issued a preliminary award in favor of the Company. At this time, the
estimated amount is $226,222. No gain provision has been reflected in the
accompanying financial statements.
 
 NOTE 10 SUBSEQUENT
EVENTS (UNAUDITED)
 
 Convertible
Debt
  During
July through September, 2008, the Company received $397,000 proceeds from the
issuance of convertible notes payable.  The convertible notes bear
interest at 10% and are due two years from the date of issuance.  In
connection with the convertible notes, the Company issued 254,658 warrants to
the note holders with an exercise price of $1.50.


















44