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 September 30, 2008





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 





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
November 19, 2008, the issuer had 24,446,353 outstanding shares of common
stock.








TABLE
OF CONTENTS





PageItem
      1.
                Financial
      Statements




Condensed
      Consolidated Balance Sheets as of September 30, 2008 (unaudited) and June
      30, 2008
            3Condensed
      Consolidated Statements of Operations for the three months ended September
      30, 2008 and 2007
            4Consolidated
      Statements of Cash Flows for the nine months ended September 30, 2008 and
      2007.
            5Notes
      to Consolidated Financial Statements
            7Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
            11Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risk
            18Item
      4T.
            Controls
      and Procedures
            18


PART II


Item
      1.
            Legal
      Proceedings
            19Item
      1A.
            Risk
      Factors
            19Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            19Item
      3.
            Defaults
      Upon Senior Securities
            19Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            19Item
      5.
            Other
      Information
            19Item
      6.
            Exhibits
            1919SIGNATURES
            20


2


PROVISION
HOLDING, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS





September
      30, 2008
                  (Unaudited)
                
                
                June
      30, 2008ASSETSCURRENT
      ASSETSCash
                
                $
                253,333
                
                
                $
                287,641Accounts
      receivable
                
                
                19,884
                
                
                
                -Inventory
                
                
                305,458
                
                
                
                322,793Investments
                
                
                3,000
                
                
                
                6,000TOTAL
      CURRENT ASSETS
                
                
                581,675
                
                
                
                616,434EQUIPMENT, net of
      accumulated depreciation
                
                
                542,794
                
                
                
                541,568PREPAID
      FINANCING COSTS
                
                
                151,946
                
                
                
                125,464INTANGIBLES, net of
      accumulated amortization
                
                
                140,238
                
                
                
                137,556TOTAL
      ASSETS
                
                $
                1,416,653
                
                
                $
                1,421,022LIABILITIES
      AND STOCKHOLDERS’ DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                
                $
                271,867
                
                
                $
                299,152Accrued
      interest
                
                
                370,261
                
                
                
                325,495Loss
      contingency payable
                
                
                592,312
                
                
                
                592,312Current
      portion of long-term debt
                
                
                641,196
                
                
                
                401,821TOTAL
      CURRENT LIABILITIES
                
                
                1,875,636
                
                
                
                1,618,780NOTES PAYABLE,net of
      debt discount and current portion
                
                
                187,636
                
                
                
                220,438TOTAL
      LIABILITIES
                
                
                2,063,272
                
                
                
                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 – 24,446,353
                
                
                24,446
                
                
                
                24,446Additional
      paid-in capital
                
                
                11,600,307
                
                
                
                11,317,575Less  receivable
      for stock
                
                
                (50,000
                )
                
                
                (50,000
                )Accumulated
      deficit
                
                
                (12,221,372
                )
                
                
                (11,710,217
                )TOTAL
      STOCKHOLDERS’ DEFICIT
                
                
                (646,619
                )
                
                
                (418,196
                )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                
                $
                1,416,653
                
                
                $
                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 MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(UNAUDITED)








2008
                  
                  
                  2007REVENUES
                  
                  $
                  266,327
                  
                  
                  $
                  204,211COST
      OF REVENUES
                  
                  
                  129,323
                  
                  
                  
                  106,804GROSS
      PROFIT
                  
                  
                  137,004
                  
                  
                  
                  97,407EXPENSESGeneral
      and administrative
                  
                  
                  440,301
                  
                  
                  
                  1,020,438Research
      and development
                  
                  
                  33,971
                  
                  
                  
                  38,887TOTAL
      EXPENSES
                  
                  
                  474,272
                  
                  
                  
                  1,059,325(LOSS)
      FROM OPERATIONS
                  
                  
                  (337,268
                  )
                  
                  
                  (961,918
                  )OTHER
      INCOME (EXPENSE)Unrealized
      loss on securities
                  
                  
                  (3,000
                  )
                  
                  
                  -Interest
      expense
                  
                  
                  (170,887
                  )
                  
                  
                  (83,217
                  )TOTAL
      OTHER INCOME (EXPENSE)
                  
                  
                  (173,887
                  )
                  
                  
                  (83,217
                  )(LOSS)
      BEFORE INCOME TAXES
                  
                  
                  (511,155
                  )
                  
                  
                  (1,045,135
                  )Income
      tax expense
                  
                  
                  -
                  
                  
                  
                  -NET
      (LOSS)
                  
                  $
                  (511,155
                  )
                  
                  $
                  (1,045,135
                  )NET
      (LOSS) PER COMMON SHAREBasic
      and diluted
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.05
                  )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
 4


PROVISION
HOLDING, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(UNAUDITED)








2008
                          
                          
                          2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
                          
                          $
                          (511,155
                          )
                          
                          $
                          (1,045,135
                          )Adjustments
      to reconcile net (loss) to net cash(used)
      by operating activities:Non-cash
      compensation
                          
                          
                          36,313
                          
                          
                          
                          604,310Depreciation
      expense
                          
                          
                          38,546
                          
                          
                          
                          4,420Amortization
                          
                          
                          624
                          
                          
                          
                          486Unrealized
      loss on securities
                          
                          
                          3,000
                          
                          
                          
                          -Amortization
      of debt discount
                          
                          
                          85,992
                          
                          
                          
                          74,203Changes
      in operating assets and liabilities:Accounts
      receivable
                          
                          
                          (19,884
                          )
                          
                          
                          705Inventory
                          
                          
                          17,335
                          
                          
                          
                          (34,088
                          )Prepaid
      financing costs
                          
                          
                          27,068
                          
                          
                          
                          -Accounts
      payable and accrued liabilities
                          
                          
                          (27,285
                          )
                          
                          
                          (128,592
                          )Accrued
      interest
                          
                          
                          44,766
                          
                          
                          
                          -NET
      CASH (USED) BY OPERATING ACTIVITIES
                          
                          
                          (304,680
                          )
                          
                          
                          (523,691
                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of equipment
                          
                          
                          (39,772
                          )
                          
                          
                          (16,229
                          )Patents
                          
                          
                          (3,306
                          )
                          
                          
                          -NET
      CASH (USED) PROVIDED BY INVESTING ACTIVITES
                          
                          
                          (43,078
                          )
                          
                          
                          (16,229
                          )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from note payable, net of fees
                          
                          
                          313,450
                          
                          
                          
                          226,750Prepayments
      of notes payable
                          
                          
                          -
                          
                          
                          
                          (160,585
                          )NET
      CASH PROVIDED BY FINANCING ACTIVITES
                          
                          
                          313,450
                          
                          
                          
                          66,165NET
      INCREASE (DECREASE) IN CASHAND
      CASH EQUIVALENTS
                          
                          
                          (34,308
                          )
                          
                          
                          (473,755
                          )CASH
      AND CASH EQUIVALENTSAT
      THE BEGINNING OFTHE
      PERIOD
                          
                          
                          287,641
                          
                          
                          
                          1,229,978CASH
      AND CASH EQUIVALENTSAT
      THE END OF THE PERIOD
                          
                          $
                          253,333
                          
                          
                          $
                          756,223




The
accompanying notes are an integral part of the financial statements
 5
  PROVISION
HOLDING, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED


FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (as restated)


(UNAUDITED)





2008
            
            
            2007SUPPLEMENTAL
      DISCLOSURE OFCASH
      FLOW INFORMATIONInterest
      paid
            
            $
            12,500
            
            
            $
            9,014Taxes
      paid
            
            $
            -
            
            
            $
            -









6


PROVISION
HOLDING, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


NOTE
1                                ORGANIZATION
AND BASIS OF PRESENTATION





Basis
of Presentation





The
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial statements pursuant to
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments, (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three months
ended September 30, 2008 are not necessarily indicative of operating results
that may be expected for the year ending June 30, 2009.





Accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the accounting for and recognition of
assets, liabilities, stockholders’ equity, revenue and expenses. Estimates and
assumptions are made because certain information is dependent on future events.
Actual results could differ from those estimates.





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 $511,000 in the
current period and has negative working capital of approximately $1,300,000.
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 September 30, 2008, the Company had cconvertible debt, stock options, and
warrants that can potentially be converted into 5,700,000 shares of common
stock.




7




PROVISION
HOLDING, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





Reclassification





Certain
reclassifications have been made to conform the prior period amounts to the
September 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.





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.




8




PROVISION
HOLDING, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





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:





September
      30, 2008Raw
      materials
            
            $
            148,678Work
      in process
            
            
            102,980Finished
      goods
            
            
            53,800Total
            
            $
            305,458











NOTE
3                                EQUIPMENT,
net





Equipment
consists of the following:





September
      30, 2008Furniture
      and fixtures
            
            $
            17,018Computer
      equipment
            
            
            27,079Equipment
            
            
            166,602Demo
      units
            
            
            60,0403DEO
      Kiosks
            
            
            447,670718,409Less
      accumulated depreciation
            
            
            (175,615
            )Total
            
            $
            542,794




9




PROVISION
HOLDING, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




NOTE
4                                NOTES
PAYABLE





Notes
payable consist of the following:





September
      30, 2008Convertible
      notes payable, annual interest rate of 10%, due dates range from May 2010
      to September 2010 convertible into common stock at a rate of $0.75 to
      $1.50 per share.
            
            $
            1,972,000Convertible
      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.
            
            
            750,000Unamortized
      debt discount
            
            
            (1,893,168
            )828,832Less
      current portion
            
            
            (641,196
            )Notes
      payable, net of current portion
            
            $
            187,636











NOTE
5                      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 judgement was in the amount of
$3,337,000. No gain provision has been reflected in the accompanying financial
statements because of doubtful collections.





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.


10


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 8-K 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 8-K, 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
8-K 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.




11




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 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.




12




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.





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 Operations




Revenue
and Cost of Revenue




Revenues
for the three months ended September 30, 2008 increased 30% to $266,327 from
$204,211 for the three months ended September 30, 2007.  Included in
revenues for the three months ended September 30, 2008 is $3,100 of advertising
revenues generated by our internal sales efforts on our 3DEO kiosk program
inside Fred Meyer stores where we sell 3D holographic advertising and coupons,
and $263,227 from the sale of our product coming from international distributors
and the beginning shipment of our Studio One purchase agreement. We expect
advertising revenues to continue to increase slowly through the remainder of
this year.  While a few advertisers continue to test the success of
our 3DEO kiosk program in the Portland market, all of the industry’s advertising
budgets for 2008 were completed in 2007, prior to the market launch of our 3DEO
kiosk program.  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.




13




We had a
gross margin percentage of 51% for the three months ended September 30, 2008
compared to a gross margin percentage of 48% for the three months ended
September 30, 2007.  The decrease in gross margin percentage was a
result of reducing the sales price on certain older models.  This
discount sale on our older product is expected to continue through the middle of
fiscal 2009.




Expenses




General
and administrative expenses for the three months ended September 30, 2008
decreased 57% to $440,301 from $1,020,438 for the three months ended September
30, 2007.  The decrease was the result of $604,310 of non-cash stock
compensation recognized during the three months ended September 30,
2007.  This decrease was partially offset by 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.




Interest
Expense




Interest
expense increased 105% to $170,887 during the three months ended September 30,
2008 from $83,217 during the three months ended September 30,
2007.  The increase in interest expense in directly related to our
increased borrowings along with debt discount amortization on convertible
debt.




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 $253,333 at September 30, 2008 compared to cash of $287,641 at June 30,
2008.   Our working capital deficit increased to $1,293,961 at
September 30, 2008 from a deficit of $1,002,346 at June 30, 2008. The primary
reason for the increase in the working capital deficit was the amortization of
approximately $240,000 of debt discount.




During
the three months ended September 30, 2008, we used $304,680 of cash for
operating activities versus $523,691 during the three months ended September 30,
2007.  The primary difference was the reduction of liabilities and
purchases of inventory in 2007 and the increase in accrued interest during 2008
on the increased debt.




Cash used
in investing activities during the three months ended September 30, 2008 and
2007 was $43,078 and $16,229, respectively.  During the three months
ended September 30, 2008, we used $39,772 to purchase additional equipment to
support our infrastructure. During the three months ended September 30, 2007 we
used $16,229 to purchase equipment.




Cash
provided by financing activities during the three months ended September 30,
2008 was $313,450 as a result of the proceeds from notes payable ($367,000), net
of fees ($53,550) Cash provided by financing activities during the three months
ended September 30, 2007 was $66,165 as a result of the proceeds from notes
payable, net of fees, in the amount of $226,750 offset by the repayment of notes
payable totaling $160,585.




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.




14




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
AssetsWe 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
ConcernThese 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 $511,000 in the current period and has negative working capital of
approximately $1,300,000. 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.




15




Accounting for Stock Option Based
CompensationEffective 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 three months ended September 30,
2008.




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.




16




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.




17


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
September 30, 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.




18


PART
II





ITEM
      1.
            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 judgement as in the amount of
$3,337,000. No gain provision has been reflected in the accompanying financial
statements because of doubtful collections.





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.







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.





19





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.November
      19, 2008
            By:
            /s/ Curt
      ThorntonCurt
      ThorntonChief
      Executive Officer (Principal Executive Officer) and Chief Financial
      Officer (Principal Financial Officer and Accounting Officer) and
      Director











20