UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  Form
10-Q
  (Mark
One)
  x QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended March 31, 2009
 
 OR
  o
TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from __________ to __________
 
 COMMISSION
FILE NUMBER 333-127347
 
 PROVISION
HOLDING, INC.
 (Exact
Name of registrant as specified in its charter)
  Nevada
                  20-0754724(State
      or other jurisdiction of
                  (I.R.S.
      Employerincorporation
      or organization)
                  Identification
      No.)
 
 9253 Eton Avenue,
Chatsworth, California 91311
 (Address
of principal executive offices) (Zip Code)
 
 Registrant’s
telephone Number: (818)
775-1624
  Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x   No o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes x   No o
 
 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
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
  Large
      accelerated filer o
              Accelerated
      filer o
              Non-accelerated
      filer o
                (do
      not check if 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 o   No x
  As
of March 31, 2009, the issuer had 26,415,372 outstanding shares of
common stock.
 
 
 1
  TABLE
OF CONTENTS
   PART
I
 PageItem
      1.
                  Financial
      Statements
                  3Condensed
      Consolidated Balance Sheets as of March 31, 2009 (unaudited) and June 30,
      2008
                  3Condensed
      Consolidated Statements of Operations for the three months and nine months
      ended March 31, 2009 and 2008 (Unaudited)
                  4Condensed
      Consolidated Statements of Cash Flows for the nine months ended March 31,
      2009 and 2008 (Unaudited).
                  5Notes
      to Condensed Consolidated Financial Statements March 31, 2009
      (Unaudited)
                  6Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                  10Item
      3.
                  Quantitative
      and Qualitative Disclosures about Market Risk
                  17Item
      4T.
                  Controls
      and Procedures
                  17PART
      IIItem
      1.
                  Legal
      Proceedings
                  18Item
      1A.
                  Risk
      Factors
                  18Item
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  18Item
      3.
                  Defaults
      Upon Senior Securities
                  18Item
      4.
                  Submission
      of Matters to a Vote of Security Holders
                  18Item
      5.
                  Other
      Information
                  18Item
      6.
                  Exhibits
                  18SIGNATURES
                  19
     2
   PROVISION
HOLDING, INC.
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 March
      31, 2009
                            (Unaudited)
                          
                          
                          June
      30, 2008ASSETSCURRENT
      ASSETSCash
                          
                          $
                          2,424
                          
                          
                          $
                          287,641Inventory
                          
                          
                          225,896
                          
                          
                          
                          322,793Investments
                          
                          
                          3,000
                          
                          
                          
                          6,000TOTAL
      CURRENT ASSETS
                          
                          
                          231,320
                          
                          
                          
                          616,434EQUIPMENT, net of
      accumulated depreciation
                          
                          
                          499,605
                          
                          
                          
                          541,568PREPAID
      FINANCING COSTS
                          
                          
                          123,665
                          
                          
                          
                          125,464INTANGIBLES, net of
      accumulated amortization
                          
                          
                          170,990
                          
                          
                          
                          137,556TOTAL
      ASSETS
                          
                          $
                          1,025,580
                          
                          
                          $
                          1,421,022LIABILITIES
      AND STOCKHOLDERS’ DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                          
                          $
                          408,792
                          
                          
                          $
                          299,152Accrued
      interest
                          
                          
                          486,409
                          
                          
                          
                          325,495Unearned
      revenue
                          
                          
                          62,577
                          
                          
                          
                          -Loss
      contingency payable
                          
                          
                          592,312
                          
                          
                          
                          592,312Current
      portion of long-term debt
                          
                          
                          870,000
                          
                          
                          
                          401,821TOTAL
      CURRENT LIABILITIES
                          
                          
                          2,420,090
                          
                          
                          
                          1,618,780NOTES PAYABLE,net of
      debt discount and current portion
                          
                          
                          367,838
                          
                          
                          
                          220,438TOTAL
      LIABILITIES
                          
                          
                          2,787,928
                          
                          
                          
                          1,839,218STOCKHOLDERS’
      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 – 26,415,372 and 24,446,353, respectively
                          
                          
                          26,415
                          
                          
                          
                          24,446Additional
      paid-in capital
                          
                          
                          12,061,784
                          
                          
                          
                          11,317,575Less  receivable
      for stock
                          
                          
                          (50,000
                          )
                          
                          
                          (50,000
                          )Accumulated
      deficit
                          
                          
                          (13,800,547
                          )
                          
                          
                          (11,710,217
                          )TOTAL
      STOCKHOLDERS’ DEFICIT
                          
                          
                          (1,762,348
                          )
                          
                          
                          (418,196
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                          
                          $
                          1,025,580
                          
                          
                          $
                          1,421,022
 
 The
accompanying notes are an integral part of the financial statements
 
    3
 
 PROVISION
HOLDING, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR
THE THREE AND NINE MONTHS ENDED MARCH 31, 2009 AND 2008
 (UNAUDITED)
 
 
 For
      the Three Months Ended
                            March
      31,
                          
                          
                          For
      the Nine Months Ended
                            March
      31,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008REVENUES
                          
                          $
                          65,275
                          
                          
                          $
                          38,963
                          
                          
                          $
                          407,392
                          
                          
                          $
                          461,245COST
      OF REVENUES
                          
                          
                          33,366
                          
                          
                          
                          22,411
                          
                          
                          
                          204,842
                          
                          
                          
                          294,921GROSS
      PROFIT
                          
                          
                          31,909
                          
                          
                          
                          16,552
                          
                          
                          
                          202,550
                          
                          
                          
                          166,324EXPENSESGeneral
      and administrative
                          
                          
                          442,228
                          
                          
                          
                          476,170
                          
                          
                          
                          1,603,321
                          
                          
                          
                          1,242,196Research
      and development
                          
                          
                          49,797
                          
                          
                          
                          
                          
                          
                          
                          132,644TOTAL
      EXPENSES
                          
                          
                          492,085
                          
                          
                          
                          476,170
                          
                          
                          
                          1,735,965
                          
                          
                          
                          1,242,196(LOSS)
      FROM OPERATIONS
                          
                          
                          (460,176
                          )
                          
                          
                          (459,618
                          )
                          
                          
                          (1,533,415
                          )
                          
                          
                          (1,075,872
                          )OTHER
      INCOME (EXPENSE)Unrealized
      loss on securities
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (3,000
                          )
                          
                          
                          -Gain
      on disposal of fixed asset
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          5,725
                          
                          
                          
                          -Forgiveness
      of debt
                          
                          
                          -
                          
                          
                          
                          12,280
                          
                          
                          
                          -
                          
                          
                          
                          18,447Interest
      expense
                          
                          
                          (179,178
                          )
                          
                          
                          (209,287
                          )
                          
                          
                          (559,640
                          )
                          
                          
                          (218,983
                          )TOTAL
      OTHER INCOME (EXPENSE)
                          
                          
                          (179,178
                          )
                          
                          
                          (197,007
                          )
                          
                          
                          (556,915
                          )
                          
                          
                          (200,536
                          )(LOSS)
      BEFORE INCOME TAXES
                          
                          
                          (639,354
                          )
                          
                          
                          (656,625
                          )
                          
                          
                          (2,090,330
                          )
                          
                          
                          (1,276,408
                          )Income
      tax expense
                          
                          
                          -
                          
                          
                          
                          1,600
                          
                          
                          
                          -
                          
                          
                          
                          1,600NET
      (LOSS)
                          
                          $
                          (639,354
                          )
                          
                          $
                          (658,225
                          )
                          
                          
                          (2,090,330
                          )
                          
                          
                          (1,278,008
                          )NET
      (LOSS) PER COMMON SHAREBasic
      and diluted
                          
                          $
                          (0.03
                          )
                          
                          $
                          (0.03
                          )
                          
                          
                          (0.08
                          )
                          
                          
                          (0.06
                          )WEIGHTED
      AVERAGE NUMBER OFCOMMON
      SHARES OUTSTANDINGBasic
      and diluted
                          
                          
                          24,982,039
                          
                          
                          
                          22,760,575
                          
                          
                          
                          24,665,132
                          
                          
                          
                          21,826,349
  
 The
accompanying notes are an integral part of the financial statements
    4
  
 PROVISION
HOLDING, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008
 (UNAUDITED)
 
 
 2009
                          
                          
                          2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
                          
                          $
                          (2,090,330
                          )
                          
                          $
                          (1,278,008
                          )Adjustments
      to reconcile net (loss) to net cash(used)
      by operating activities:Non-cash
      compensation
                          
                          
                          36,313
                          
                          
                          
                          50,000Forgiveness
      of debt
                          
                          
                          -
                          
                          
                          
                          (18,447
                          )Stock
      issued for services
                          
                          
                          427,062
                          
                          
                          
                          -Depreciation
      expense
                          
                          
                          91,007
                          
                          
                          
                          13,000Amortization
                          
                          
                          1,872
                          
                          
                          
                          68,130Gain
      on disposal of fixed asset
                          
                          
                          (5,725
                          )
                          
                          
                          -Unrealized
      loss on securities
                          
                          
                          3,000
                          
                          
                          
                          -Amortization
      of debt discount
                          
                          
                          313,382
                          
                          
                          
                          -Changes
      in operating assets and liabilities:Accounts
      receivable
                          
                          
                          -
                          
                          
                          
                          (28,534
                          )Inventory
                          
                          
                          96,897
                          
                          
                          
                          (290,116
                          )Prepaid
      financing costs
                          
                          
                          70,049
                          
                          
                          
                          -Other
      assets
                          
                          
                          -
                          
                          
                          
                          (68,761
                          )Accounts
      payable and accrued liabilities
                          
                          
                          109,640
                          
                          
                          
                          (72,438
                          )Accrued
      interest
                          
                          
                          160,914
                          
                          
                          
                          179,096Unearned
      revenue
                          
                          
                          62,577
                          
                          
                          
                          (52,140
                          )NET
      CASH (USED) BY OPERATING ACTIVITIES
                          
                          
                          (723,342
                          )
                          
                          
                          (1,498,218
                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of equipment
                          
                          
                          (43,319
                          )
                          
                          
                          (8,025
                          )Patents
                          
                          
                          (35,306
                          )
                          
                          
                          -NET
      CASH (USED) BY INVESTING ACTIVITIES
                          
                          
                          (78,625
                          )
                          
                          
                          (8,025
                          )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from notes payable, net of fees
                          
                          
                          516,750
                          
                          
                          
                          800,500Prepayments
      of notes payable
                          
                          
                          -
                          
                          
                          
                          (333,954
                          )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                          
                          
                          516,750
                          
                          
                          
                          466,546NET
      (DECREASE) IN CASHAND
      CASH EQUIVALENTS
                          
                          
                          (285,217
                          )
                          
                          
                          (1,039,697
                          )CASH
      AND CASH EQUIVALENTSAT
      THE BEGINNING OF
                            THE
      PERIOD
                          
                          
                          287,641
                          
                          
                          
                          1,229,978CASH
      AND CASH EQUIVALENTSAT
      THE END OF THE PERIOD
                          
                          $
                          2,424
                          
                          
                          $
                          190,281
 
 The
accompanying notes are an integral part of the financial statements
    5
   PROVISION
HOLDING, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
 FOR
THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008
 (UNAUDITED)
 
 2009
                  
                  
                  2008SUPPLEMENTAL
      DISCLOSURE OFCASH
      FLOW INFORMATIONInterest
      paid
                  
                  $
                  12,500
                  
                  
                  $
                  39,887Taxes
      paid
                  
                  $
                  -
                  
                  
                  $
                  1,600SCHEDULE
      OF NON-CASH INVESTING ANDFINANCING
      ACTIVITIES:Issuance
      of 1,675,000 shares of common stock for debt conversion
                  
                  $
                  -
                  
                  
                  $
                  1,675,000Issuance
      of 87,174 shares of common stock for interest expense
                  
                  $
                  -
                  
                  
                  $
                  87,174
 
 
 
 
 
 
 6
  
 
  PROVISION
HOLDING, INC.
 CONDENSED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE NINE MONTHS ENDED MARCH 31, 2009
 (UNAUDITED)
 
 NOTE
1                                ORGANIZATION
AND BASIS OF PRESENTATION
 
 Basis
of Presentation
 
 Preparation
of Interim Condensed Consolidated Financial Statements
  These
interim condensed consolidated financial statements for the periods ended March
31, 2009 and 2008 have been prepared by the Company's management, without audit
in accordance with accounting principles generally accepted in the United States
of America and pursuant to the rules and regulations of the United States
Securities and Exchange Commission ("SEC"). In the opinion of management, these
interim condensed consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments, unless otherwise noted)
necessary to present fairly the Company's financial position, results of
operations and cash flows for the fiscal periods presented. Certain information
and note disclosures normally included in annual financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted in these interim financial statements
pursuant to the SEC's rules and regulations, although the Company's management
believes that the disclosures are adequate to make the information presented not
misleading. The financial position, results of operations and cash flows for the
interim periods disclosed herein are not necessarily indicative of future
financial results. These interim condensed consolidated financial statements
should be read in conjunction with the annual financial statements and the notes
thereto included in the Company's most recent Annual Report on Form 10K for the
fiscal year ended June 30, 2008.
 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 $2,100,000 in
the current period and has negative working capital of approximately $2,200,000.
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.
 
 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.
 
 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 March 31, 2009, the Company had debt instruments outstanding that can
potentially be converted into 2,655,636 shares of common stock.
 
   7
 
 Recent
Accounting Pronouncements
 
 In the
first quarter of fiscal 2009, the Company adopted Statement of Financial
Accounting Standards No. 157, Fair Value Measurements, (“SFAS No. 157”) for all
financial assets and financial liabilities and for all non-financial assets and
non-financial liabilities recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and enhances fair value
measurement disclosure. The adoption of SFAS No. 157 did not have a significant
impact on our consolidated financial statements, and the resulting fair values
calculated under SFAS No. 157 after adoption were not significantly different
than the fair values that would have been calculated under previous
guidance.
 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.
 
 In
October 2008, the Financial Accounting Standards Board (“FASB”) issued Financial
Staff Position 157-3, Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active, (“FSP 157-3”). FSP 157-3 clarifies the
application of SFAS No. 157 in a market that is not active, and addresses
application issues such as the use of internal assumptions when relevant
observable data does not exist, the use of observable market information when
the market is not active, and the use of market quotes when assessing the
relevance of observable and unobservable data. FSP 157-3 is effective for all
periods presented in accordance with SFAS No. 157. The adoption of FSP 157-3 did
not have a significant impact on our consolidated financial statements or the
fair values of our financial assets and liabilities.
 In
December 2008, the FASB issued Financial Staff Position (“FSP”) Financial
Accounting Standard No. 140-4 and FASB Interpretation 46(R)-8, Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities (“FSP FAS 140-4” and “FIN 46(R)-8”). The document
increases disclosure requirements for public companies and is effective for
reporting periods (interim and annual) that end after December 15, 2008. FSP FAS
140-4 and FIN 46(R)-8 became effective for us on December 31, 2008. The adoption
of FSP FAS 140-4 and FIN 46(R)-8 did not have a significant impact on our
consolidated financial statements.
 
 NOTE
2                                INVENTORY
 
 Inventory
consists of the following:
 
 March
      31, 2009Raw
      materials
                    
                    $
                    138,591Work
      in process
                    
                    
                    87,305Finished
      goods
                    
                    
                    -Total
                    
                    $
                    225,896
 
 NOTE
3                                EQUIPMENT,
net
 
 Equipment
consists of the following:
 
 March
      31, 2009Furniture
      and fixtures
                                      
                                      $
                                      17,018Computer
      equipment
                                      
                                      
                                      30,579Equipment
                                      
                                      
                                      166,602Demo
      units
                                      
                                      
                                      72,2713DEO
      Kiosks
                                      
                                      
                                      438,912725,382Less
      accumulated depreciation
                                      
                                      
                                      (225,777
                                      )Total
                                      
                                      $
                                      499,605
   8
  
 NOTE
4                                INTANGIBLES,
net of accumulated amortization
 
 Intangibles
consist of the following:
 
 March
      31, 2009Patents
      in process
                          
                          $
                          122,286Patents
      issued
                          
                          
                          58,037180,323Less
      accumulated amortization
                          
                          
                          (9,333
                          )Total
                          
                          $
                          170,990
 
 
 NOTE
5                                NOTES
PAYABLE
 
 Notes
payable consist of the following:
 
 March
      31, 2009Convertible
      notes payable, annual interest rate of 10%, due dates range from May 2010
      to December 2010 convertible into common stock at a rate of $0.75 to $1.50
      per share.
                          
                          $
                          2,070,000Convertible
      note payable, annual interest rates range from 8% to 4%, convertible into
      common stock at a rate of $1 per share.  Note matured on March
      8, 2009 and is currently being renegotiated.
                          
                          
                          750,000Note
      payable, annual interest rate of 12%.
                          
                          
                          20,000Note
      payable, annual interest rate of 15%.
                          
                          
                          50,000Note
      payable, annual interest rate of 5%.
                          
                          
                          50,000Unamortized
      debt discount
                          
                          
                          (1,702,162
                          )1,237,838Less
      current portion
                          
                          
                          (870,000
                          )Notes
      payable, net of current portion
                          
                          $
                          367,838
 
 During
the nine months ended March 31, 2009, $465,000 of convertible debt was issued
with 309,894 warrants which expire within two years of the date of issue,
through December 2010, with exercise prices of $1.00 to $1.50 per
share.
 
 During
the nine months ended March 31, 2009, $70,000 of debt was issued with 120,000
warrants which expire within three years of the date of issue, through March
2012, with exercise prices of $0.10 per share
   NOTE 6                      EMPLOYEE
OPTIONS
 
 During
the nine months ended March 31, 2009, no new options were granted to employees
or consultants.  Employee options outstanding as of March 31, 2009
were 870,851.
    9
 
  ITEM
      2.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
  Forward-Looking
Statements
  Some of
the statements contained in this Form 10-Q that are not historical facts are
“forward-looking statements” which can be identified by the use of terminology
such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,”
“intends,” or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Form 10-Q, reflect our current beliefs with respect to future events and involve
known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events. Factors that may cause actual results, our performance or
achievements, or industry results, to differ materially from those contemplated
by such forward-looking statements include without limitation:
  ·
              Our
      ability to attract and retain management, and to integrate and maintain
      technical information and management information
  systems;
  ·
              Our
      ability to raise capital when needed and on acceptable terms and
      conditions;
  ·
              The
      intensity of competition; and
  ·
              General
      economic conditions.
  All
written and oral forward-looking statements made in connection with this Form
10-Q that are attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
  Business
Overview
  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 and Provision are 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.
   10
  We are
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.
  One of
our new products is known as the “HL40 Diamond”, an extraordinary 3D holographic
video display system, to the retailing and advertising industries is smaller and
lighter than its predecessor, the HL40C.   Used to promote all
type of products and services, the HL40D is a powerful tool to break through the
clutter of traditional in store advertising and merchandising.  Our
other powerful 3D products can be used for a wide variety of interactive
applications including order-taking and information retrieval.
  Significant
Events and Trends
  Our
floating image display technologies have multiple market applications across a
broad spectrum of industries.  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.
  Launching
our first products into grocery stores, we have developed a new patent pending
application. Known as the “3DEO Rewards Center” or “3DEO”, this 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.
 
 In
December 2008, we signed an agreement with ADCENTRICITY Inc. to sell advertising
on its revolutionary 3D digital signage network.  ADCENTRICITIY's
advertisers will be able to feature their messaging on Provision's extraordinary
network in a variety of forms, including 3D holographic videos and digital
coupons.
 
 We are
still 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.
 
 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.
    11
  
 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.
  Results of Operation – Three Months
Ended March 31, 2009 as Compared to the Three Months Ended March 31,
2008:
  Select
      Financial InformationMarch
      31, 2009
                    
                    
                    March
      31, 2008Total
      Assets
                    
                    $
                    1,025,580
                    
                    
                    $
                    2,301,756Total
      Liabilities
                    
                    $
                    2,787,928
                    
                    
                    $
                    2,807,254Total
      Stockholders’ Deficit
                    
                    $
                    1,762,348
                    
                    
                    $
                    505,498Revenues
                    
                    $
                    65,275
                    
                    
                    $
                    38,963Cost
      of Revenues
                    
                    
                    33,366
                    
                    
                    
                    22,411Gross
      Profit
                    
                    
                    31,909
                    
                    
                    
                    16,552Expenses
                    
                    
                    492,085
                    
                    
                    
                    476,170Loss
      from Operations
                    
                    
                    (460,176
                    )
                    
                    
                    (459,618
                    )Other
      Income (Expense)
                    
                    
                    (179,178
                    )
                    
                    
                    (197,007
                    )Net
      Loss
                    
                    $
                    (639,354
                    )
                    
                    $
                    (658,225
                    )Net
      Loss per Common Share
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.03
                    )
  Revenue
and Cost of Revenue
  Revenues
for the three months ended March 31, 2009 increased 68% to $65,275 from $38,963
for the three months ended March 31, 2008.  Included in revenues for
the three months ended March 31, 2009 is $58,525 from the sale of our product
coming from international distributors and the beginning shipment of our Studio
One purchase agreement as well as $6,750 in advertising revenues. These
international product sales came in from countries including Japan and
Europe.  The Company has announced additional sales to its Japanese
distributor supporting the test of the Company’s products by Unisys, as well as
recent shipments to the U.K. to its distributor who is working with
Samsung.  Advertising sales are expected to increase as the Company
continues its roll out of its 3D Reward Center in the large top demographic
markets of Los Angeles (#2) and New York (#1). We have entered into several
agreements with media buying agencies and ad agencies to assist in the selling
of 3D holographic ads and coupon promotions; expecting to continue the growth of
ad sales on a quarter by quarter basis.
 
 Our cost
of revenues were $33,366 for the three months ended March 31, 2009 as compared
to $22,411 for the three months ended March 31, 2008.  This increase
of $10,955 or 49% is a direct result of our increased revenues.
 
 We had a
gross profit percentage of 49% for the three months ended March 31, 2009
compared to a gross profit percentage of 42% for the three months ended March
31, 2008.  The increase in gross margin percentage was a result of a
change in our sales mixture to higher margin items, increase in some sales
prices to certain regional, retail customers, along with our additional
advertising revenues.  As discussed above, we expect advertising
revenues to increase in the coming quarters as the Company begins to roll out
its 3D Reward Center in the large top demographic markets of Los Angeles (#2)
and New York (#1).
 12
   Expenses
  General
and administrative expenses for the three months ended March 31, 2009 were
$442,228 as compared to $476,170 for the three months ended March 31,
2008.  General and administrative expenses include fees paid for
accounting services in connection with audits and filing requirements, legal
services, marketing expenses for marketing campaigns, tradeshows, and travel,
and payroll (including payroll taxes) for administration, sales and production
staff.
 
 During
the three months ended March 31, 2009 our legal fees decreased $24,924 to
$10,439 from $35,363 during the three months ended March 31,
2008.  This decrease is the result of the completion of our merger in
February 2008 and less need for legal services during 2009.  We also
experienced a decrease in our marketing expense of $18,285 to $13,347 for the
three months ended March 31, 2009 from $31,621 during the three months ended
March 31, 2008.  The decrease in our marketing expenses was due to our
attendance at fewer trade shows during the three months ended March 31,
2009.  Additionally, our salaries and wages decreased $98,198to
$117,233 during the three months ended March 31, 2009 from $215,431 during the
three months ended March 31, 2008.  This decrease is due to our
employee base decreasing to seven employees from nine employees.  We
don’t currently have plans to replace the departed employees until sales and
gross profits increase.  These decreases in expenses were partially
offset by an increase of $92,500 in non-cash compensation to $142,500 during the
three months ended March 31, 2009 from $50,000 during the three months ended
March 31, 2008.  During the three months ended March 31, 2009 we
issued 1,500,000 shares of common stock valued at $142,500 to a consultant for
services rendered.
 
 During
the three months ended March 31, 2009 we recorded $49,797 of research and
development expenses.  We did not have any research and development
expenses during the three months ended March 31, 2008.  Research and
development expenses relate to the salary paid to two key employees who conduct
ongoing technical engineering tasks for product improvements, cost reductions,
new product development, and the like. We expect research and development
expenses to increase slightly as the Company has begun to develop the first
phases of its consumer oriented product line, as recently announced, with the
design of a custom molded enclosure.
 
 Other
Income (Expense)
  Interest
expense decreased 14% to $179,178 during the three months ended March 31, 2009
from $209,287 during the three months ended March 31, 2008.  The
decrease in interest expense in directly related to reduction in the
amortization of the debt discount.
 
 During
the three months ended March 31, 2008 we recorded $12,280 of debt forgiveness
related to our line of credit that was renegotiated with the bank.
 Net
Loss
  As a
result of the aforementioned, our net loss decreased 3% or $18,871 to $639,354
during the three months ended March 31, 2009 from $658,225 during the three
months ended March 31, 2009.
 
 Results of Operation – Nine Months
Ended March 31, 2009 as Compared to the Nine Months Ended March 31,
2008
  Select
      Financial InformationMarch
      31, 2009
                    
                    
                    March
      31, 2008Total
      Assets
                    
                    $
                    1,025,580
                    
                    
                    $
                    2,301,756Total
      Liabilities
                    
                    $
                    2,787,928
                    
                    
                    $
                    2,807,254Total
      Stockholders’ Deficit
                    
                    $
                    1,762,348
                    
                    
                    $
                    505,498Revenues
                    
                    $
                    407,392
                    
                    
                    $
                    461,245Cost
      of Revenues
                    
                    
                    204,842
                    
                    
                    
                    294,921Gross
      Profit
                    
                    
                    202,550
                    
                    
                    
                    166,324Expenses
                    
                    
                    1,735,965
                    
                    
                    
                    1,242,196Loss
      from Operations
                    
                    
                    (1,533,415
                    )
                    
                    
                    (1,075,872
                    )Other
      Income (Expense)
                    
                    
                    (556,915
                    )
                    
                    
                    (200,536
                    )Net
      Loss
                    
                    $
                    (2,090,330
                    )
                    
                    $
                    (1,278,008
                    )Net
      Loss per Common Share
                    
                    $
                    (0.08
                    )
                    
                    $
                    (0.06
                    )
   13
   Revenue
and Cost of Revenue
  Revenues
for the nine months ended March 31, 2009 decreased 12% to $407,392 from $461,245
for the nine months ended March 31, 2008.  Included in revenues for
the nine months ended March 31, 2009 is $373,642 from the sale of our product
coming from international distributors and the beginning shipment of our Studio
One purchase agreement as well as $33,850 in advertising revenues. These
international product sales came in from countries including Japan and
Europe.  The Company has announced additional sales to its Japanese
distributor supporting the test of the Company’s products by Unisys, as well as
recent shipments to the U.K. to its distributor who is working with
Samsung.  Advertising sales are expected to increase as the Company
continues its roll out of its 3D Reward Center in the large top demographic
markets of Los Angeles (#2) and New York (#1).We have entered into several
agreements with media buying agencies and ad agencies to assist in the selling
of 3D holographic ads and coupon promotions; expecting to continue the growth of
ad sales on a quarter by quarter basis.
 
 Our cost
of revenues were $204,842 for the nine months ended March 31, 2009 as compared
to $294,921 for the nine months ended March 31, 2008.  This increase
of $90,079 or 31% is a direct result of our decreased revenues as well as the
increase in advertising revenue which carries no cost of revenue.
 
 We had a
gross profit percentage of 50% for the nine months ended March 31, 2009 compared
to a gross profit percentage of 36% for the nine months ended March 31,
2008.  The increase in gross margin percentage was a result of a
change in our sales mixture to higher margin items same language as above in red
along with our additional advertising revenues.  As discussed above,
we expect advertising revenues to increase in the coming quarters.
  Expenses
  General
and administrative expenses for the nine months ended March 31, 2009 were
$1,603,321 as compared to $1,242,196 for the nine months ended March 31,
2008.
 During
the nine months ended March 31, 2009 our legal fees decreased $37,425 to $45,072
from $82,497 during the nine months ended March 31, 2008.  This
decrease is the result of the completion of our merger in February 2008 and less
need for legal services during 2009.  We also experienced a decrease
in our marketing expense of $64,415 to $66,665 for the nine months ended March
31, 2009 from $131,080 during the nine months ended March 31,
2008.  The decrease in our marketing expenses was due to our decision
to not reorder approximately $60,000 of marketing materials that were ordered
and used during the nine months ended March 31, 2008.  Additionally,
our salaries and wages decreased $157,725 to $282,952 during the nine months
ended March 31, 2009 from $440,677 during the nine months ended March 31,
2008.  This decrease is due to our employee base decreasing to seven
employees from nine employees.  We don’t currently have plans to
replace the departed employees until sales and gross profits
increase.  These decreases in expenses were partially offset by an
increase of $413,375 in non-cash compensation to $463,375 during the nine months
ended March 31, 2009 from $50,000 during the nine months ended March 31,
2008.  Non-cash compensation relates to the value of common stock,
warrants and options issued in exchange for services rendered.  While
we cannot guarantee it, we do not expect our non-cash compensation to continue
this level of increase in the near future.  We also experienced an
increase of $83,653 in our accounting fees to $165,230 during the nine months
ended March 31, 2009 from $81,577 during the nine months ended March 31,
2008.  This increase in accounting fees is directly related to our
financial statement audit for the year ended June 30, 2008 as well as the
requirement for quarterly reviewed financial statements to fulfill our filing
requirements with the Securities and Exchange Commission.  Our
consulting expenses also increased $23,300 to $25,247 during the nine months
ended March 31, 2009 from $1,947 during the nine months ended March 31, 2008 as
we hired a consultant to assist with investor relations.
 
 During
the nine months ended March 31, 2009 we recorded $132,644 of  research
and development expenses.  Research and development expenses relate to
the salary paid to two key employees who conduct ongoing technical engineering
tasks for product improvements, cost reductions, new product development, and
the like.    These two employees’ salaries were reclassified
to R&D in July 2008 therefore there is no related expense during the nine
months ended March 31, 2008.
 
 Other
Income (Expense)
  Interest
expense increased 156% to $559,640 during the nine months ended March 31, 2009
from $218,983 during the nine months ended March 31, 2008.  The
increase is directly related to the increase in the weighted average interest
rate on our term debt to 8.4% from 7.8%, an increase in our term debt to
$2,940,000 from $1,760,505 and an increase in the amortization of the debt
discount to interest expense.
  14
 
 During
the nine months ended March 31, 2009 we recorded $3,000 unrealized loss of
securities as we revalued the carrying value of our investment in corporate
stock held as well as a $5,725 gain on the disposal of a fixed
asset.
 
 During
the nine months ended March 31, 2008 we recorded $12,280 of debt forgiveness
related to our line of credit that was renegotiated with the bank and a note
payable balance being forgiven.
 
 Net
Loss
  As a
result of the aforementioned, our net loss increased 64% or $812,322 to
$2,090,330 during the nine months ended March 31, 2009 from $1,278,008 during
the nine months ended March 31, 2009.
 
 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 $2,424 at March 31, 2009 compared to cash of $287,641 at June 30,
2008.  Our working capital deficit increased to $2,188,770 at March
31, 2009 from a deficit of $1,002,346 at June 30, 2008. The reason for the
increase in the working capital deficit was the decrease in our cash and
inventory of approximately $285,000 and $97,000, respectively, along with the
increase in our accrued interest and unearned revenue of approximately $161,000
and $63,000respectively and the amortization of approximately $313,000 of debt
discount.
 During
the nine months ended March 31, 2009, we used $723,342 of cash for operating
activities versus $1,498,218 during the nine months ended March 31,
2008.  The primary difference was the reduction of liabilities and
purchases of inventory in 2009 and the increase in accrued interest during 2008
on the increased debt.
 
 Cash used
in investing activities during the nine months ended March 31, 2009 and 2008 was
$78,625 and $8,025, respectively.  During the nine months ended March
31, 2009, we used $43,319 to purchase additional equipment to support our
infrastructure and $35,306 to secure additional patents. During the nine months
ended March 31, 2008 we used $8,025 to purchase equipment.
 
 Cash
provided by financing activities during the nine months ended March 31, 2009 was
$516,750 as a result of the proceeds from notes payable net of
fees.  Cash provided by financing activities during the nine months
ended March 31, 2008 was $466,546 as a result of the proceeds from notes
payable, net of fees, in the amount of $800,500 offset by the repayment of notes
payable totaling $333,954.
  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 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.
 
 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.
   15
  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 $2,100,000 in
the current period and has negative working capital of approximately $2,200,000.
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.
  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 nine months ended March 31,
2009.
 
 Recent
Accounting Pronouncements
  In the
first quarter of fiscal 2009, the Company adopted Statement of Financial
Accounting Standards No. 157, Fair Value Measurements, (“SFAS No. 157”) for all
financial assets and financial liabilities and for all non-financial assets and
non-financial liabilities recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and enhances fair value
measurement disclosure. The adoption of SFAS No. 157 did not have a significant
impact on our consolidated financial statements, and the resulting fair values
calculated under SFAS No. 157 after adoption were not significantly different
than the fair values that would have been calculated under previous
guidance.
   16
  
 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.
 
 In
October 2008, the Financial Accounting Standards Board (“FASB”) issued Financial
Staff Position 157-3, Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active, (“FSP 157-3”). FSP 157-3 clarifies the
application of SFAS No. 157 in a market that is not active, and addresses
application issues such as the use of internal assumptions when relevant
observable data does not exist, the use of observable market information when
the market is not active, and the use of market quotes when assessing the
relevance of observable and unobservable data. FSP 157-3 is effective for all
periods presented in accordance with SFAS No. 157. The adoption of FSP 157-3 did
not have a significant impact on our consolidated financial statements or the
fair values of our financial assets and liabilities.
 
 In
December 2008, the FASB issued Financial Staff Position (“FSP”) Financial
Accounting Standard No. 140-4 and FASB Interpretation 46(R)-8, Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities (“FSP FAS 140-4” and “FIN 46(R)-8”). The document
increases disclosure requirements for public companies and is effective for
reporting periods (interim and annual) that end after December 15, 2008. FSP FAS
140-4 and FIN 46(R)-8 became effective for us on December 31, 2008. The adoption
of FSP FAS 140-4 and FIN 46(R)-8 did not have a significant impact on our
consolidated financial statements.
 
  ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
  N/A
  ITEM
      4T.
              CONTROLS
      AND PROCEDURES.
  Evaluation of Disclosure Controls
and Procedures.  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.
 
 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.
 
 Changes in Internal Control Over
Financial Reporting.  During the most recent quarter ended
December 31, 2008, there has been no change in our internal control
over  financial  reporting  (as defined in
Rule  13a-15(f) and 15d-15(f) under the Exchange Act) ) that has
materially affected,  or is reasonably likely to materially affect,
our internal control over financial reporting.
   17
   PART
II
 
 ITEM
      1.
              LEGAL
      PROCEEDINGS.
  N/A
  ITEM
      1A.
              RISK
      FACTORS.
  N/A
  ITEM
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.
  N/A
  ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES.
  None
  ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
  None
  ITEM
      5.
              OTHER
      INFORMATION.
  None
  ITEM
      6.
              EXHIBITS.
  
 Exhibit
      Number
                    
                    Description31.1
                    
                    Certification
      by Chief Executive Officer and Chief Financial Officer required by Rule
      13a-14(a) or Rule 15d-14(a) of the Exchange Act.32.1
                    
                    Certification
      by Chief Executive Officer and Chief Financial Officer, required by Rule
      13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of
      Chapter 63 of Title 18 of the United States
  Code.
 
  
 18
 
 
  SIGNATURES
 
 Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
   PROVISION
      HOLDING, INC.May
      20, 2009
                  By:
                  /s/ Curt
      ThorntonCurt
      ThorntonChief
      Executive Officer (Principal Executive Officer) and Chief Financial
      Officer(Principal
      Financial Officer and Accounting Officer) and Director
        19