AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 2000

REGISTRATION NO.


U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PROVIDENTIAL HOLDINGS, INC.

(PREVIOUSLY KNOWN AS JR CONSULTING, INC.)

(Name of Small Business Issuer in its Charter)

            NEVADA                        523120                   13-3121128
  (State or jurisdiction of          (Primary Standard          (I.R.S. Employer
incorporation or organization)          Industrial            Identification No.)
                                Classification Code Number)

8700 WARNER AVENUE, FOUNTAIN VALLEY, CALIFORNIA 92708; (714) 596-0244

(Address and telephone number of Registrant's principal executive offices and
principal place of business)

HENRY D. FAHMAN, 8700 WARNER AVENUE, FOUNTAIN VALLEY, CALIFORNIA 92708;

(714) 596-0244;

(Name, address, and telephone number of agent for service)

Copies to:

SHIVBIR S. GREWAL, ESQ.
TONY BAYARD DE VOLO, ESQ.
STRADLING YOCCA CARLSON & RAUTH
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000

Approximate date of proposed sale to the public: from time to time after this
registration statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If the delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. / /

If any of the securities being registered on this registration statement are to be offered on a delayed on continuous basis pursuant to Rule 415 under the delivery of the Securities Act, check the following box. /X/

CALCULATION OF REGISTRATION FEE

                                                          PROPOSED MAXIMUM     PROPOSED MAXIMUM
      TITLE OF EACH CLASS OF           AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING        AMOUNT OF
   SECURITIES TO BE REGISTERED         REGISTERED(1)           UNIT(2)               PRICE          REGISTRATION FEE
Common Stock......................      60,000,000             $0.375             $22,500,000            $5,945

(1) Pursuant to rule 416, such additional amounts to prevent dilution from stock splits or similar transactions.

(2) Calculated in accordance with rule 457(c): the average of the bid and ask price as of September 27, 2000.

The company hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the company shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine.




                SUBJECT TO COMPLETION, DATED:             , 2000

PROSPECTUS

                          PROVIDENTIAL HOLDINGS, INC.
                               60,000,000 SHARES
                                 COMMON STOCK *

Providential Holdings, Inc., a Nevada corporation (trading on the Over the Counter Bulletin Board under the symbol "PRVH", the "company"), is hereby registering its shares of common stock to be sold on a delayed basis under a shelf registration under Rule 415 under the Securities Act of 1933. A total of 60,000,000 shares of common stock are to be registered, as follows (maximum amounts): (a) 4,054,206 shares for selling shareholders; (b) 15,000,000 shares to cover the conversion of certain bridge notes (including related repricing warrants issued to such note holders entitling them to purchase shares of common stock and that provide that any decrease in the trading price of the common stock will entitle the note holders to purchase an increased number of shares at $.01 per share, effectively lowering the conversion price of the bridge notes price than that which existed on the closing date); (c) 350,000 shares to cover the exercise of warrants issued in connection with the bridge financing; and
(d) 40,595,794 shares for sales to the public for cash, possible future acquisitions by the company of other companies and/or assets, and consulting services for the company. The cash sale price of the shares will be modified, from time to time, by amendment to this prospectus, in accordance with changes in the market price of the company's common stock.

The shares offered hereby are highly speculative and involve a high degree of risk to public investors and should be purchased only by persons who can afford to lose their entire investment (See "Risk Factors" on page 3).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE U.S. SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                                        UNDERWRITING
                                                        DISCOUNTS AND
                                     PRICE TO PUBLIC   COMMISSIONS(2)    PROCEEDS TO ISSUER(3)
                                     ---------------   ---------------   ---------------------
PER SHARE                                  $(1)              $0                   $(1)
TOTAL MAXIMUM                              $(1)              $0                   $(1)


(1) The price per share, the maximum amount to be raised under this offering and the proceeds to the issuer will be dependent on the market price at the time that the shares are sold for cash.

(2) No commissions will be paid in connection with the sale of the shares on this delayed basis.

(3) The Proceeds to the company is before the payment of certain expenses in connection with this offering. See "Use of Proceeds."

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THE REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

* Pursuant to SEC Rule 416, there will be a change in the amount of securities being issued to prevent dilution resulting from stock splits, stock dividends, or similar transaction.


TABLE OF CONTENTS

PROSPECTUS SUMMARY..........................................    1
RISK FACTORS................................................    3
USE OF PROCEEDS.............................................    8
DETERMINATION OF OFFERING PRICE.............................    8
SELLING SHAREHOLDERS........................................    9
PLAN OF DISTRIBUTION........................................   10
LEGAL PROCEEDINGS...........................................   14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
  PERSONS...................................................   17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT................................................   20
DESCRIPTION OF SECURITIES...................................   21
INTEREST OF NAMED EXPERTS AND COUNSEL.......................   23
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
  SECURITIES ACT LIABILITIES................................   24
ORGANIZATION WITHIN LAST FIVE YEARS.........................   29
DESCRIPTION OF BUSINESS.....................................   29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS.................................   39
DESCRIPTION OF PROPERTY.....................................   42
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............   43
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....   43
EXECUTIVE COMPENSATION......................................   44
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
  AND FINANCIAL DISCLOSURE..................................   44
AVAILABLE INFORMATION.......................................   45


PROSPECTUS SUMMARY

The following summary is qualified in its entirety by detailed information appearing elsewhere in this prospectus. Each prospective investor is urged to read this prospectus in its entirety.

THE COMPANY.

(A) BACKGROUND.

JR Consulting, Inc ("JR Consulting") was originally incorporated under the laws of the State of Nevada on June 8, 1982. From its inception through September 7, 1995, the company generated nominal revenues and, prior to September 7, 1995, the company did not actively engage in business for at least one fiscal year.

Providential Securities, Inc. was incorporated in 1992, as a California corporation, engaged in the securities brokerage business. This firm entered into a Corporate Combination Agreement with JR Consulting, effective on January 14, 2000, whereby the company agreed to acquire all of the issued and outstanding shares of stock of Providential Securities, Inc. as of the closing date of the combination agreement, thereby making Providential Securities, Inc. a wholly-owned subsidiary of the company, in exchange for 20,000,000 shares of JR Consulting, which number of JR Consulting's shares assumed the effectuation of a 1-for-2 reverse stock split. The JR Consulting shares were restricted against resale pursuant to the provisions of federal and state securities laws. Providential Securities, Inc.'s shareholders of record as of the closing date owned approximately 74.9% of JR Consulting's common stock.

On January 12, 20000, the company changed its name from JR Consulting, Inc. to Providential Securities, Inc., and then on February 9, 2000, the name of the company was again changed to Providential Holdings, Inc.

(B) BUSINESS.

Providential Securities, Inc. is a California corporation and has been engaged in the securities brokerage business and has been offering a wide spectrum of investment products and services. These products include stocks, bonds, mutual funds, tax-advantaged investments, financial and retirement planning, day trading, options strategies, annuities, and life insurance.

Providential Clearing Inc. is a California corporation formed on February 11, 2000. The company has entered into a Partnership Purchase Agreement to acquire Holt + Collins, a self-clearing broker-dealer based in San Francisco, California. Upon the consummation of the proposed acquisition, Holt + Collins will bear the name of Providential Clearing, Inc., and continue to be engaged in the business of providing clearing services for Holt + Collins and certain selected fully-disclosed broker-dealers.

The company also holds equity stakes in other entities:

Providential Technology Inc. is a California corporation formed on February 11, 2000 in which the company also owns a minority equity position. Providential Technology's professed main objective is to be the leading provider of Internet finance solutions to both traditional and emerging Internet financial service providers. Providential Technology's software product offerings will include new financial services functions, such as online banking. Providential Technology's products and services adhere to existing industry standards and have been designed to meet the openness and scalability required of Internet solutions.

The company also owns a minority equity stake in postyourhome.com, an online real estate brokerage service. Postyourhome.com eliminates the need for buyers and sellers of residential, income and land properties to use a real estate broker by providing online education and support services to

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both sides of the purchase transaction. By cutting out the middleman, buyers and sellers save up to 6% of the property's value that is normally charged by brokers. Postyourhome.com has created a venue through which a broad range of service providers, from lending institutions to insurance providers to construction companies can directly market and acquire customers who seek their services.

THE OFFERING.

Shares of common stock of the company will be sold on a delayed basis under a shelf registration under Rule 415 under the Securities Act of 1933. A total of 60,000,000 shares of common stock are to be registered, as follows (maximum amounts):

- 4,054,206 shares for selling shareholders.

- 15,000,000 shares to cover the conversion of bridge notes (including repricing warrants issued such that any decrease in the trading price of the stock will entitle the note holders to reset the exercise price to a lower price than that which existed on the closing date).

- 350,000 shares to cover the exercise of warrants issued in connection with bridge financing.

- 40,595,794 shares for the following purposes:

a. sales to the public for cash.

b. possible future acquisitions by the company of other companies and/or assets.

c. consulting services for the company.

The cash sale price of the shares will be modified, from time to time, by amendment to this prospectus, in accordance with changes in the market price of the company's common stock.

There can be no assurance that all of these shares will be issued or that any of them will be sold for cash. The gross proceeds to the company will depend on the amount actually sold for cash and the sales price per share. Some commissions or other fees may be paid, directly or indirectly, by the company, or any of its principals, to any person, broker-dealer, firm in connection with solicitation of sales of the shares. These securities are offered by the company subject to approval of certain legal matters by counsel.

LIQUIDITY OF INVESTMENT.

Although the shares will be "free trading," there has been only a limited public market for the shares. Therefore, an investor may not be able to sell his or her shares when he or she wishes; therefore, an investor may consider his or her investment to be long-term.

RISK FACTORS.

An investment in the company involves risks due in part to a limited previous financial and operating history of the company, as well as competition in the securities industry. Also, certain potential conflicts of interest may arise due to the relationship of the company to its management and others.

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RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE A HIGH DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS AMONG OTHER THINGS, AS WELL AS ALL OTHER INFORMATION SET FORTH IN THIS PROSPECTUS.

HISTORY OF LOSSES; ACCUMULATED DEFICIT; WORKING CAPITAL DEFICIENCY.

The company has incurred net losses of $1,310,000 and $603,000 for the fiscal years 1999 and 1998, respectively, and 604,000 for the nine months ended March 31, 2000. The company also had an accumulated deficit of $5,260,000 through June 30, 1999. The likelihood of the success of the company must be considered in the light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the expansion of a business and the competitive environment in which the company operates. Unanticipated delays, expenses and other problems such as setbacks in product development, and market acceptance are frequently encountered in connection with the expansion of a business. As a result of the fixed nature of many of the company's expenses, the company may be unable to adjust spending in a timely manner to compensate for any unexpected delays in the development and marketing of the company's products or any capital raising or revenue shortfall. Any such delays or shortfalls will have an immediate adverse impact on the company's business, operations and financial condition.

There is only a limited operating history upon which to base an assumption that the company will be able to achieve its business plans. In addition, the company has only limited assets. As a result, there can be no assurance that the company will generate significant revenues in the future; and there can be no assurance that the company will operate at a profitable level. If the company is unable to obtain customers and generate sufficient revenues so that it can profitably operate, the company's business will not succeed.

SIGNIFICANT WORKING CAPITAL REQUIREMENTS.

The working capital requirements associated with the plan of business of the company will continue to be significant. The company anticipates, based on currently proposed assumptions relating to its operations (including with respect to costs and expenditures and projected cash flow from operations), that it cannot generate sufficient cash flow to continue its operations for an indefinite period at the current level without requiring additional financing. The company will need to raise additional capital in the next six months, through debt or equity, to fully implement its sales and marketing strategy and grow. In addition, the company currently plans one or more acquisitions over the next twelve months and will need financing of at least $2,000,000 in order to pay for these anticipated acquisitions and to sustain the company. In the event that the company's plans change or its assumptions change or prove to be inaccurate or if cash flow from operations proves to be insufficient to fund operations (due to unanticipated expenses, technical difficulties, problem or otherwise), the company would be required to seek additional financing sooner than currently anticipated or may be required to significantly curtail or cease its operations.

COMPANY ONLY HAS LIMITED ASSETS.

The company has only limited assets. As a result, there can be no assurance that the company will generate significant revenues in the future; and there can be no assurance that the company will operate at a profitable level. If the company is unable to obtain customers and generate sufficient revenues so that it can profitably operate, the company's business will not succeed.

UNCERTAINTY OF PROTECTION OF TRADE SECRETS AND TRADEMARKS COULD ADVERSELY IMPACT THE COMPANY'S BUSINESS.

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The company relies on trade secret protection for its unpatented proprietary technology. However, trade secrets are difficult to protect. There can be no assurance that other companies will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the company's trade secrets, that such trade secrets will not be disclosed or that the company can effectively protect its rights to unpatented trade secrets. The company pursues a policy of having its employees and consultants execute non-disclosure agreements upon commencement of employment or consulting relationships with the company, which agreements provide that all confidential information developed or made known to the individual during the course of employment shall be kept confidential except in specified circumstances. There can be no assurance, however, that these agreements will provide meaningful protection for the company's trade secrets or other proprietary information.

REGULATIONS AND COMPETITION IN THE BROKERAGE INDUSTRY.

In reference to securities brokerage services provided by Providential Securities, or its successor, compliance to any and all regulatory rules and regulations is absolutely mandatory. In addition, other broker-dealers may meet or undercut the company's fee structure or introduce services to prevent this company from attaining the market share to achieve the projected revenue targets. This company's ability to meet price competition may depend on its ability to operate at costs equal to, or lower than, its competitors or potential competitors. The success of this company will ultimately depend on management's ability to respond quickly and effectively to events and circumstances. There is a risk that competitors who undercut this company's fee structure or increase their service could adversely affect this company's ability to reach its financial projections. In addition, in a bearish market environment, investors and traders may be less inclined to actively participate in the market.

RISKS ASSOCIATED WITH CLEARING OPERATION.

Since Providential Clearing will make loans to customers collateralized by these customers' securities, Providential Clearing will incur the risk of a market downturn or decline, which could reduce the value of the customers' underlying collateral securities below the customers' loan amount(s). Being aware of the downside, management has decided to monitor credit exposure to ensure that appropriate actions are taken in a timely manner. The main objective in all scenarios, is to mitigate and minimize Providential Clearing's exposure to these risks. By monitoring the adequacy of collateral from individual customers and correspondents, Providential Clearing further mitigates its exposure.

Providential Clearing is subject to the margin rules established by the Board of Governors of the Federal Reserve System and the National Association of Securities Dealers, Inc. Acting as a clearing agent in the securities business requires both working capital and capital for regulatory requirements.

SUCCESS OF COMPANY DEPENDENT ON MANAGEMENT.

The company's success is dependent upon the hiring of key administrative personnel. None of the company's officers, directors, and key employees have an employment agreement with the company; therefore, there can be no assurance that these personnel will remain employed by the company. Should any of these individuals cease to be affiliated with the company for any reason before qualified replacements could be found, there could be material adverse effects on the company's business and prospects; this could occur if Henry Fahman, the company's Chief Executive Officer, is forced to resign from the broker-dealer subsidiary, due to the currently pending investigation of the company by the National Association of Securities Dealers, Inc. In addition, management has no experience in managing companies in the same business as the company.

In addition, all decisions with respect to the management of the company will be made exclusively by the officers and directors of the company. Investors will only have rights associated with minority

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ownership interest rights to make decision which effect the company. The success of the company, to a large extent, will depend on the quality of the directors and officers of the company. Accordingly, no person should invest in the shares unless he is willing to entrust all aspects of the management of the company to the officers and directors.

CONTROL OF THE COMPANY BY OFFICERS AND DIRECTORS.

The company's officers and directors beneficially own approximately 61% of the outstanding shares of the company's common stock. As a result, such persons, acting together, have the ability to exercise significant influence over all matters requiring stockholder approval. Accordingly, it could be difficult for the investors hereunder to effectuate control over the affairs of the company. Therefore, it should be assumed that the officers, directors, and principal common shareholders who control the majority of voting rights will be able, by virtue of their stock holdings, to control the affairs and policies of the company.

LIMITATIONS ON LIABILITY, AND INDEMNIFICATION, OF DIRECTORS AND OFFICERS.

The company's bylaws include provisions to the effect that the company may, to the maximum extent permitted from time to time under applicable law, indemnify any director, officer, or employee to the extent that such indemnification and advancement of expense is permitted under such law, as it may from time to time be in effect. In addition, the Nevada Revised Statutes provide for permissive indemnification of officers and directors and the company may provide indemnification under such provisions. Any limitation on the liability of any director, or indemnification of directors, officer, or employees, could result in substantial expenditures being made by the company in covering any liability of such persons or in indemnifying them. In addition, the provisions of a certain Purchase and Security Agreement executed in relation to the bridge note financing provide for indemnification of investors thereunder by the company; any such indemnification could also result in expenditures by the company.

POTENTIAL CONFLICTS OF INTEREST INVOLVING MANAGEMENT.

Currently, the officers and directors of the company devote 100% of their time to the business of the company. However, conflicts of interest may arise in the area of corporate opportunities which cannot be resolved through arm's length negotiations. All of the potential conflicts of interest will be resolved only through exercise by the directors of such judgment as is consistent with their fiduciary duties to the company. It is the intention of management, so as to minimize any potential conflicts of interest, to present first to the board of directors to the company any proposed investments for its evaluation.

INFLUENCE OF OTHER EXTERNAL FACTORS ON PROSPECTS FOR COMPANY.

The industry of the company in general is a speculative venture necessarily involving some substantial risk. There is no certainty that the expenditures to be made by the company will result in a commercially profitable business. The marketability of its products will be affected by numerous factors beyond the control of the company. These factors include market fluctuations, and the general state of the economy (including the rate of inflation, and local economic conditions), which can affect companies' spending. Factors which leave less money in the hands of potential customers of the company will likely have an adverse effect on the company. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the company not receiving an adequate return on invested capital.

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ABSENCE OF CASH DIVIDENDS

The Board of Directors does not anticipate paying cash dividends on the shares for the foreseeable future and intends to retain any future earnings to finance the growth of the company's business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements, and the general operating and financial condition of the company, and will be subject to legal limitations on the payment of dividends out of paid-in capital.

LIMITED PUBLIC MARKET FOR COMPANY'S SECURITIES.

Prior to this offering, there has been only a limited public market for the shares of common stock being offered. There can be no assurance that an active trading market will develop or that purchasers of the shares will be able to resell their securities at prices equal to or greater than the respective initial public offering prices. The market price of the shares may be affected significantly by factors such as announcements by the company or its competitors, variations in the company's results of operations, and market conditions in the retail, electron commerce, and internet industries in general. The market price may also be affected by movements in prices of stock in general. As a result of these factors, purchasers of the shares offered may not be able to liquidate an investment in the shares readily, or at all.

NO ASSURANCE OF CONTINUED PUBLIC TRADING MARKET; RISK OF LOW PRICED SECURITIES.

There has been only a limited public market for the common stock of the company. The common stock of the company is currently quoted on the Over the Counter Bulletin Board. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the market value of the company's securities. In addition, the common stock is subject to the low-priced security or so called "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure in connection with any trades involving a stock defined as a penny stock (generally, according to recent regulations adopted by the U.S. Securities and Exchange Commission, any equity security that has a market price of less than $5.00 per share, subject to certain exceptions), including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith. The regulations governing low-priced or penny stocks sometimes limit the ability of broker-dealers to sell the company's common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market.

EFFECTS OF FAILURE TO MAINTAIN MARKET MAKERS.

If the company is unable to maintain a National Association of Securities Dealers, Inc. member broker/dealers as market makers, the liquidity of the common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market. There can be no assurance the company will be able to maintain such market makers.

OFFERING PRICE.

The offering price of the shares will be determined in relation to the then current market price of the shares on the Over the Counter Bulletin Board. Because of market fluctuations, there can be no assurance that the shares will maintain market values commensurate with the offering price.

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"SHELF" OFFERING.

The shares are offered directly by the company on a delayed basis. No assurance can be given that any or all of the shares will be issued. No broker-dealer has been retained as an underwriter and no broker-dealer is under any obligation to purchase any of the shares. In addition, the officers and directors of the company, collectively, have limited experience in the offer and sale of securities on behalf of the company.

DILUTION COULD ADVERSELY AFFECT VALUE OF STOCK AND PERCENTAGE OF STOCK OWNED.

The company has stock options outstanding, issued on July 10, 2000, that could result in the issuance of 14,000,000 shares of common stock between July 1, 2001 and December 31, 2002. To the extent such shares are issued, the percentage of common stock held by existing company common stockholders will be reduced. Under certain circumstances the exercise of any or all of the stock options might result in further dilution of the net tangible book value of the existing company stockholders' shares. For the life of the stock options, the holders thereof are given, at nominal cost, the opportunity to profit from a rise in the market price of the common stock, if any. The holders of the stock options may be expected to exercise them at a time when the company may, in all likelihood, be able to obtain needed capital on more favorable terms.

In addition, there can be no assurance that sales of common stock under this offering, including the conversion of the bridge notes, will not result in dilution to existing company common shareholders. Also, any sales of stock in the future in any other offering (which sales may be made at the discretion of the company's board of directors) may also result in such dilution.

USE OF PROCEEDS NOT SPECIFIC.

The proceeds of this offering have been allocated only generally. Proceeds from the offering have been allocated generally to legal and accounting, and working capital. Accordingly, investors will entrust their funds with management in whose judgment investors may depend, with only limited information about management's specific intentions with respect to a significant amount of the proceeds of this offering.

SHARES ELIGIBLE FOR FUTURE SALE

All of the 14,989,822 shares of common stock that are currently held, directly or indirectly, by management have been issued in reliance on the private placement exemption under the securities act of 1933. Such shares will not be available for sale in the open market without separate registration except in reliance upon rule 144 under the Securities Act of 1933. In general, under rule 144 a person (or persons whose shares are aggregated) who has beneficially owned shares acquired in a non-public transaction for at least one year, including persons who may be deemed affiliates of the company (as that term is defined under that rule) would be entitled to sell within any three-month period a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock, or the average weekly reported trading volume during the four calendar weeks preceding such sale, provided that certain current public information is then available. If a substantial number of the shares owned by these shareholders were sold pursuant to rule 144 or a registered offering, the market price of the common stock could be adversely affected.

POTENTIAL STATUS AS A PSEUDO CALIFORNIA CORPORATION.

Section 2115 of the California General Corporation Law subjects certain foreign corporations doing business in California to various substantive provisions of the California General Corporation Law in the event that the average of its property, payroll and sales is more than 50% in California and more than one-half of its outstanding voting securities are held of record by persons residing in the

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State of California. Currently, the company does meet the criteria of
Section 2115, and will therefore be subject to these provisions.

Some of the substantive provisions include laws relating to annual election of directors, removal of directors without cause, removal of directors by court proceedings, indemnification of officers and directors, directors standard of care and liability of directors for unlawful distributions. The aforesaid
Section does not apply to any corporation which, among other things, has outstanding securities designated as qualified for trading as a national market security on NASDAQ if such corporation has at least eight hundred holders of its equity securities as of the record date of its most recent annual meeting of shareholders. It is currently anticipated that the company will be subject to
Section 2115 of the California General Corporation Law which, in addition to other areas of the law, will subject the company to Section 708 of the California General Corporation Law which mandates that shareholders have the right of cumulative voting at the election of directors (as opposed to Nevada law which does not require it).

USE OF PROCEEDS

The amount of proceeds from this offering will depend on the offering price per share and the number of shares sold for cash. When the initial offering price is determined, this prospectus will be amended to so indicate so that the amount of proceeds from this offering can be estimated. The proceeds of the offering, less the expenses of the offering, will be used to provide working capital for the company. The following table sets forth the use of proceeds from this offering (the blank number will be completed upon the amendment of this prospectus with the initial offering price):

USE OF PROCEEDS                                          MAXIMUM OFFERING
---------------                                     --------------------------
                                                      AMOUNT        PERCENT
                                                    -----------   ------------
Transfer Agent Fee................................  $     1,000   less than 1%
Printing Costs....................................  $    10,000   less than 1%
Legal Fees........................................  $    25,000   less than 1%
Accounting Fees...................................  $     5,000   less than 1%
Working Capital...................................  $21,523,000      99.8%
                                                    ===========
  Total...........................................  $21,564,000

Management anticipates expending these funds for the purposes indicated above. To the extent that expenditures are less than projected, the resulting balances will be retained and used for general working capital purposes or allocated according to the discretion of the Board of Directors. Conversely, to the extent that such expenditures require the utilization of funds in excess of the amounts anticipated, supplemental amounts may be drawn from other sources, including, but not limited to, general working capital and/or external financing. The net proceeds of this offering that are not expended immediately may be deposited in interest or non-interest bearing accounts, or invested in government obligations, certificates of deposit, commercial paper, money market mutual funds, or similar investments.

DETERMINATION OF OFFERING PRICE

The cash-offering price of the shares will be determined, from time to time, based on the current market price of the shares on the Over the Counter Bulletin Board.

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SELLING SHAREHOLDERS

COMMON STOCK OFFERING.

Pursuant to the Corporate Combination Agreement between Providential Securities, Inc. and the company (formerly JR Consulting, Inc.) dated January 14, 2000, whereby former common shareholders of Providential Securities, Inc. are entitled to register twenty percent (20%) of their holdings when and if the company effects a registration of its common shares within one year of the Closing date of the merger between Providential Securities, Inc. and the company. The following shareholders under that stipulation are registering their shares for resale under this offering:

                                                                                               PERCENTAGE OF
                                                                                   SHARES        OWNERSHIP
                                                     SHARES      SHARES BEING   BENEFICIALLY    (FOR 1% OR
                                                  BENEFICIALLY    OFFERED BY       OWNED          GREATER
                          RELATIONSHIP TO THE     OWNED PRIOR      SELLING         AFTER         OWNERSHIP
SELLING SHAREHOLDERS            COMPANY           TO OFFERING    SHAREHOLDER      OFFERING         ONLY)
--------------------     ----------------------   ------------   ------------   ------------   -------------
Khai Q. Nguyen.........                                 8,525          1,705          6,820        *
Hanh Tran, M.D.........                                51,151         10,230         40,920        *
Jonathan Le............                                 4,263            852          3,410        *
Kieu's Children
  Trust................                                28,417          5,683         22,733        *
Huan Q.V. Vu...........                                 9,471          1,894          7,577        *
Hau Duc Vuong..........                                 9,471          1,894          7,577        *
Cau Xuan Pham, M.D.....                                 2,842            568          2,274        *
Quan Nguyen, M.D.......                                 5,683          1,136          4,547        *
Henry D. Fahman........  Chairman                   5,853,246      1,170,649      4,682,597       17.1  %
Nhi T. Le..............  Director                   5,571,541      1,114,308      4,457,233       16.3  %
Hung H. Nguyen.........  Former Employee            2,368,097        473,619      1,894,478        6.9  %
Theodore D. Fahman.....  Current Employee           1,195,889        239,178        956,711        3.5  %
Timothy D. Fahman......  Current Employee           1,195,889        239,178        956,711        3.5  %
Tina T. Phan...........  Secretary                  1,195,889        239,178        956,711        3.5  %
Myan T. Doan...........                             1,195,889        239,178        956,711        3.5  %
Don & Janine Tran......                               118,404         23,681         94,723        *
Synaca, Ltd............                             1,184,049        236,810        947,239        3.47 %
Dietrich &
  Associates...........  Former Outside Counsel       189,448         37,889        151,559        *
U.S. Automotive........                                35,521          7,104         28,417        *
Ammar Kubba............                                23,681          4,736         18,975        *
Toni Gales.............                                23,681          4,736         18,975        *
Total..................                                            4,054,206     16,216,898


* Represents less than 1% ownership

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PLAN OF DISTRIBUTION

BRIDGE NOTE FINANCING.

The company has entered into a contract for the sale of convertible promissory notes in order to raise capital for the company's operations and acquisition of certain corporate opportunities, $1,750,000 of which $1,350,000 was sold on March 28, 2000 and $400,000 sold on April 21, 2000, as follows:

                                                        AMOUNT OF NOTES PURCHASED
NAME OF NOTE HOLDER                                      ELIGIBLE FOR CONVERSION
-------------------                                     -------------------------
SovCap Equity Partners, Ltd...........................         $1,150,000
EIG Capital Investments, Ltd..........................         $  500,000
Arab Commerce Bank Ltd................................         $  100,000

These notes are essentially demand notes that have a six-month term and bear interest at 8% annually, unless the notes are in default, in which instance the interest rate will increase to 12% annually. Further, the notes bear a redemption premium, based upon the date of redemption equal to: 5% if within the first 60 days; 10% if within the second 60 days; 15% if within the third 60 day-period, and 20% if redeemed after 181 days. After the 180th day, only the holders can elect to convert--no right of the company to force conversion after that time. On the second anniversary, any remaining notes will automatically convert into common stock (if a registration statement is in effect). Upon conversion, in addition to the principal amount plus interest, the company would also owe a 20% per annum rate of return on the redemption amount. Under the Purchase and Security Agreement associated with the bridge financing, notwithstanding any rights of conversion or exercise contained in the bridge notes, the repricing warrants or purchaser warrants, the holder agrees not to convert or exercise any bridge notes, repricing warrants or purchaser warrants in excess of that number which, upon giving effect to such conversion or exercise, would cause the aggregate number of shares of common stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the common stock following such conversion.

The notes may be paid by tender of common stock of the company, with the conversion rate for the issuance of the common stock equal to the "closing price" on the date of the initial purchase of the notes, which is the average of the closing bid price for the five previous trading days. Repricing warrants have also been issued in contemporaneous amounts, such that any decrease in the trading price of the stock will entitle the note holders to reset the exercise price to a lower price than that which existed on the closing date. The note purchasers are also entitled to a separate set of warrants, equal to 20% of the total purchase amounts of the notes acquired, allowing for an exercise price of 110% of the closing price and having a 5-year term.

In accepting subscriptions for these convertible notes, the company has agreed to file a registration statement with respect to the company's common stock issuable upon conversion of the notes and any exercise of the warrants, with the initial filing to occur within 60 days of the "first closing", which occurred on March 28, 2000. A 2% per month penalty will accrue if the registration statement is not declared effective on or prior to the 181st day following the first closing. The holders have the right to require repayment in cash if no registration statement is in effect on the 181st day. Since this registration statement was not filed within the first 60 days of the first closing, nor has it been declared effective within 181 days after the first closing, the note holders have the right to the 2% penalty and repayment in cash.

Under the Purchase and Security Agreement, each purchaser agrees not to purchase, sell, make any short sale of, pledge, grant any option for the purchase or sale of or otherwise trade any of the company's common stock prior to the conversion of the bridge notes (other than a purchase of common stock from the company pursuant to the exercise of the repricing warrant), without the prior written consent of the company.

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Under the Purchase and Security Agreement, the company has agreed to certain affirmative and negative covenants, including:

- Right of inspection of books and records of the company by the investor.

- Agreement by the company to indemnify each investor and each officer, director, employee, and agent thereof from and against any and all actions, suits, claims, as so forth in connection with the transaction.

- Prohibition against the company in assuming or incurring, or at any time becoming liable for, any debt (as defined under the agreement), except the bridge notes, debt outstanding on the date of the agreement to the extent reflected on the most recent balance sheet of the company or incurred in the ordinary course of business thereafter, and purchase money security interests not to exceed $250,000 per year.

- Prohibition against the company in purchasing or acquiring or investing in, or agreeing to purchase or acquire or invest in the business, property, or assets of, or any securities of, any other company or business; however, the company may invest its excess cash (as defined in the agreement) in certain investments.

- Prohibition against the company in selling or transferring any of its properties to anyone with the intention of taking back a lease of the same property or leasing other property for substantially the same use as the property being sold or transferred; however, the company may continue and extend its existing leasing arrangements and may lease fixtures, equipment, and real estate in the ordinary course of business of the company.

- Prohibition against the company in selling, transferring, or disposing of any property except for sales of obsolete equipment having a book value at the time of sale of not more than $100,000 in the aggregate in any fiscal year.

- Prohibition against the company, without the written consent of the investors, organizing, or transferring any assets to, any subsidiary, provided that if consent of the investors is obtained and any subsidiaries are organized, or assets transferred, the company will not permit such subsidiaries to enter into any transaction or agreement which would violate any of the provisions described here if such provisions are applicable to such subsidiary.

- Prohibition against the company causing or effecting any change in or addition to the primary business of the company that has not been approved by the investor, such that more than 10% of the consolidated net revenues of the company are derived from a business other than the business in which the company was engaged on the date of the agreement as reflected in the most recent applicable Securities and Exchange Commission document filed prior to the closing.

Henry Fahman, Chief Executive Officer of the company, has personally guaranteed the bridge notes by signing a Guaranty Agreement. In addition, Mr. Fahman has personally pledged his common stock of the company to secure the repayment of these notes.

The placement agent for these notes was Sovereign Capital Advisors, LLC ("Sovereign") which received a cash fee of $227,500 and a 3% warrants to purchase an aggregate of 87,500 share of common stock of the company. The exercise price on these warrants was 110% of the market price of the company's common stock on the date on which a note or series of notes was placed. As part of the placement agreement between Sovereign and the company, Sovereign has the right of first refusal to act as placement agent for any future private financings of the company, whether of equity securities, convertible debt securities or securities or instruments convertible into or exchangeable for debt or equity securities of the company or similar transactions for a period of one year following the final closing of the offering.

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REGISTRATION UNDER THIS OFFERING.

Shares of common stock of the company will be sold on a delayed basis under a shelf registration under Rule 415 under the Securities Act of 1933. A total of 60,000,000 shares of common stock are to be registered, as follows (maximum amounts):

- 4,054,206 shares for selling shareholders.

- 15,000,000 shares to cover the conversion of the bridge notes (including repricing warrants).

- 350,000 shares to cover the exercise of warrants issued in connection with the bridge financing.

- 40,595,794 shares for the following purposes:

a. sales to the public for cash.

b. possible future acquisitions by the company of other companies and/or assets.

c. consulting services for the company.

The cash sale price of the shares will be modified, from time to time, by amendment to this prospectus, in accordance with changes in the market price of the company's common stock.

There can be no assurance that all of these shares will be issued or that any of them will be sold for cash. The gross proceeds to the company will depend on the amount actually sold for cash and the sales price per share. No commissions or other fees will be paid, directly or indirectly, by the company, or any of its principals, to any person or firm in connection with solicitation of sales of the shares. These securities are offered by the company subject to prior approval of certain legal matters by counsel.

SELLING SHAREHOLDERS.

(A) MANNER OF SALES; BROKER-DEALER COMPENSATION.

The selling shareholders, or any successors in interest to the selling shareholders, may sell their shares of common stock in one or more of the following methods:

- ordinary brokers' transactions;

- transactions involving cross or block trades or otherwise on the Bulletin Board;

- purchases by brokers, dealers or underwriters as principal and resale by these purchasers for their own accounts pursuant to this prospectus;

- "at the market" to or through market makers or into an existing market for the company's common stock;

- in other ways not involving market makers or established trading markets, including direct sales to purchases or sales effected through agents;

- through transactions in options, swaps or other derivatives (whether exchange-listed or otherwise);

- in privately negotiated transactions;

- to cover short sales; or

- any combination of the foregoing.

The selling shareholders also may sell their shares in reliance upon Rule 144 under the Securities Act at such times as they are eligible to do so. The company has been advised by the selling shareholders that they have not made any arrangements for the distribution of the shares of common

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stock. Brokers, dealers or underwriters who effect sales for the selling shareholders may arrange for other brokers, dealers or underwriters to participate. Brokers, dealers or underwriters engaged by the selling shareholders will receive commissions or discounts from the selling shareholders in amounts to be negotiated prior to the sale. These brokers, dealers or underwriters may act as agent or as principals.

From time to time, one or more of the selling shareholders may pledge, hypothecate or grant a security interest in some or all of the shares of common stock being offered for sale, and the pledgees, secured parties or persons to whom these securities have been pledged shall, upon foreclosure in the event of default, be considered a selling shareholder hereunder. In addition, a selling shareholders may, from time to time, sell short their common stock. In these instances, this prospectus may be delivered in connection with these short sales and the shares of the common stock may be used to cover these short sales.

From time to time one or more of the selling shareholders may transfer, pledge, donate or assign shares of their common stock to lenders or others and each of these persons will be considered a selling shareholder for purposes of this prospectus. The number of shares of the company's common stock beneficially owned by those selling shareholders who so transfer, pledge, donate or assign shares of their common stock will decrease as and when they take these actions. The plan of distribution for the company's common stock by the selling shareholders set forth herein will otherwise remain unchanged, except that the transferees, pledgees, donees or other successors will be considered selling shareholders hereunder.

Subject to the limitations discussed above, a selling shareholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of the company's common stock in the course of hedging the positions they assume with these selling shareholders, including in connection with distributions of the common stock by these broker-dealers. A selling shareholder may also enter into option or other transactions with broker-dealers that involve the delivery of the company's common stock to the broker-dealers, who may then resell or otherwise transfer these shares. A selling shareholder also may loan or pledge the company's common stock to a broker-dealer, and the broker-dealer may sell the common stock so loaned or upon a default may sell or otherwise transfer the pledged common stock.

(B) FILING OF A POST-EFFECTIVE AMENDMENT IN CERTAIN INSTANCES.

If any selling shareholders notifies the company that he, she, or it has entered into a material arrangement (other than a customary brokerage account agreement) with a broker or dealer for the sale of shares of common stock under this prospectus through a block trade, purchase by a broker or dealer or similar transaction, the company will file a post-effective amendment to the registration statement for this offering. The post-effective amendment will disclose:

1. The name of each broker-dealer involved in the transaction.

2. The number of shares of common stock involved.

3. The price at which those shares of common stock were sold.

4. The commissions paid or discounts or concessions allowed to the broker-dealer(s).

5. If applicable, that these broker-dealer(s) did not conduct any investigation to verify the information contained or incorporated by reference in this prospectus, as supplemented.

6. Any other facts material to the transaction.

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(C) CERTAIN PERSONS MAY BE DEEMED TO BE UNDERWRITERS.

The selling shareholders and any broker-dealers who execute sales for them may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, because of the number of shares of common stock to be sold or resold by these persons or entities or the manner of sale of these shares, or both. If a selling shareholder or any broker-dealer or other holders were determined to be underwriters, any discounts, concessions or commissions received by them or by brokers or dealers acting on their behalf, then any profits received by them on the resale of their shares of common stock might be deemed to be underwriting discounts and commissions under the Securities Act.

(D) REGULATION M.

The company has informed the selling shareholders that Regulation M promulgated under the Securities Exchange Act of 1934 may be applicable to them with respect to any purchase or sale the company's common stock. In general, Rule 102 under Regulation M prohibits any person connected with a distribution of the company's common stock from directly or indirectly bidding for, or purchasing for any account in which it has a beneficial interest, any of the common stock or any right to purchase such stock, for a period of one business day before and after completion of its participation in the distribution.

During any distribution period, Regulation M prohibits the selling shareholders and any other persons engaged in the distribution from engaging in any stabilizing bid or from purchasing the company's common stock except for the purpose of preventing or retarding a decline in the open market price of the common stock. None of these persons may effect any stabilizing transaction to facilitate any offering at the market. As the selling shareholders will be reoffering and reselling the company's common stock at the market, Regulation M will prohibit them from effecting any stabilizing transaction in contravention of Regulation M with respect to this stock.

OPPORTUNITY TO MAKE INQUIRIES.

The company will make available to each offeree, prior to any sale of the shares, the opportunity to ask questions and receive answers from the company concerning any aspect of the investment and to obtain any additional information contained in this prospectus, to the extent that the company possesses such information or can acquire it without unreasonable effort or expense.

EXECUTION OF DOCUMENTS.

Each person desiring to be issued shares must complete, execute, acknowledge, and delivered to the company certain documents. By executing these documents, the subscriber is agreeing that such subscriber will be, a shareholder in the company and will be otherwise bound by the articles of incorporation and the bylaws of the company.

LEGAL PROCEEDINGS

Other than as set forth below, the company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the company has been threatened.

SEC INJUNCTION.

In April 1997, the company consented to the entry against it of a permanent injunction obtained by the Securities and Exchange Commission for the company's failure to file reports on a timely basis. Up to April 1997, the company had not timely filed with the SEC the annual report on Form 10-KSB for the year ended June 30, 1996, the interim reports on Form 10-QSB for the quarters ended

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September 30, and December 31, 1996. The company has since filed each of the reports mentioned in the civil action.

Subsequent to the consent of the injunction, the company failed to file timely the annual reports on Form 10-KSB for the years ended June 30, 1997, June 30, 1998, and June 30, 1999; and interim reports on Form 10-QSB for the quarters ended March 31, 1997, September 30, 1997, December 31, 1997, September 30, 1998, December 31, 1998, March 31, 1999, September 30, 1999, December 31, 1999, and March 31, 2000. Management believes that its violation of the SEC injunction will not have a material adverse effect on the financial position of the company. The company has taken certain corrective actions to ensure that it files these reports on a timely basis in the future.

NASD INVESTIGATION.

After the completion of a recent routine audit of Providential Securities, Inc. ("Providential Securities"), the National Association of Securities Dealers, Inc. alleged that this company violated certain provisions of the NASD's Conduct Rules and rules of the Securities and Exchange Commission, as follows:

- That in connection with a private placement, Providential Securities, acting through Henry Fahman, made a number of misrepresentations or omissions in soliciting investments from public customers through its private placement memorandum. By making such misrepresentations, Providential and Henry Fahman violated SEC Rule 10b-5 and Conduct Rule 2120.

- That Providential's use of the private placement funds for the company's own operational purposes (other than those represented in the private placement memorandum) amounted to conversion or improper use of those funds thus violating the Conduct Rules 2110 and 2330.

- That Providential, acting through Henry Fahman, violated SEC Rule 15c2-4, SEC Rule 10b-9, and Conduct Rule 2110 00 (a) by not utilizing an escrow account for the investment funds received, (b) by not retaining the private placement funds until the minimum requirement was met, and (c) by not refunding these funds to the customers when the minimum was not met, or not met in a timely manner.

- That by receiving and controlling funds from public customers in connection with the private placement, Providential became obligated to comply with the full provisions of SEC Rule 15c3-3 (during the period of January through at least March, 1999, Providential, through Henry Fahman, and Providential's financial and operations principal, Theodore Fahman, failed to compute the reserve requirements, and set aside appropriate reserves for customer protection.

- That Providential, acting through Henry Fahman, in violation of Conduct Rule 3010(a) and Membership and Registration Rule 1018, has been operating three non-registered supervisory jurisdiction branch offices, and that while Providential's membership agreement limits the firm's branch activities to two branches, there are at least nine branch operations, thereby violating Conduct Rule 2110 and Membership and Registration Rule 1014.

- That both Providential and Henry Fahman have also violated Membership and Registration Rule 1030 for failing to enforce Membership and Registration Rule 1031(a) by allowing four individuals with deficiency in registration process to conduct a securities business during much of 1998 and 1999.

- That Providential and Henry Fahman failed to comply with Membership and Registration Rule 1030 by failing to enforce Rule 1032(f) by allowing five individuals to act in the capacity of equity trader with deficiency in registration process as Limited Representative-Equity Traders.

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- That Providential and Henry Fahman also violated Membership and Registration Rule 1120 and Conduct Rule 2110 by permitting a broker to conduct business and earn commissions, while his status was "inactive" as a result of his failing to complete his continuing education requirements.

A proposed settlement of this action, not yet approved by the NASD, would result in the following actions:

- Providential shall be censured, fined $115,000.00 and shall offer rescission to those public customers who participated in the Providential Private Placement. Providential shall provide proof in form satisfactory to NASDR District 2 staff of its offer of rescission to the customers who participated in the Providential Private Placement.

- A potential ban from employment in the securities industry for Henry Fahman.

The company is awaiting a response from the NASD with regard to this proposed settlement.

PENDING ARBITRATIONS.

The following arbitration matters are either pending or in the preliminary stages against Providential Securities (the company intends to defend each of the matters vigorously and may enter into a settlement where appropriate based on the specific allegations involved and the potential cost to defend the matter):

(A) TRUONG VS. PROVIDENTIAL SECURITIES, INC.

Claimant alleges that a company called Choice Investments day traded his account through Providential's Oregon office. Claimant alleges that an unauthorized sell order was made. It appears that Choice Investments is primarily liable for this claim.

Damages of $50,000 are sought.

(B) CLARK VS. PROVIDENTIAL SECURITIES, INC.

Claimant took Providential Securities day trading class, and thereafter commenced day trading with funds of $25,000. One particular investment decreased in value, and the claimant decided to hold onto the stock rather than stop her losses. At this point, claimant sought employment from Providential Securities and was turned down. She sought a loan of "seed money" and was informed such loan was illegal. Eventually, the stock she was holding increased in value. When claimant eventually closed her account her balance was $43,000.

Claimant nevertheless filed for arbitration claiming that the day trading class was taught by an unqualified person, that Providential Securities management took the computer mouse out of her hand and executed trades for her, and that Providential Securities management was front loading their own personal accounts at the expense of their day traders. She claims that the company changed clearing firms without informing her. Claimant also makes several other claims of misrepresentation by Providential Securities.

There is no specific claim for damages.

(C) MAVERICK VS. PROVIDENTIAL SECURITIES, INC.

Claimants allege that they are novice, inexperienced investors who took Providential Securities' day trading course, began day trading and lost money. They alleged misrepresentation and excessive commissions. Evidence uncovered in discovery indicates that the claimants are in reality savy, sophisticated investors who trade several million dollar plus accounts. The company is seeking a new outside defense counsel to replace Keesal, Young & Logan.

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Compensatory damages of $500,000 are sought, plus punitive damages.

(D) TAM VS. PROVIDENTIAL SECURITIES, INC.

Claimant has 14 specific incidents of claim involving improper margin calls, temporary computer system glitches, inability to promptly execute trades, lost orders, etc.

Damages of $150,000 are sought.

(E) TRAN VS. PROVIDENTIAL SECURITIES, INC. AND TAE GOO MOON

This matter involves a complex factual situation that stems from the actions of Mr. Huan Van Cao, who had trading authority for Mr. Tran's day trading account. Mr. Cao is not a licensed broker/dealer. Mr. Moon believed that he was a registered agent of Go Trading, when in-fact the registration had never been filed with NASD. Mr. Moon was a registered broker of Providential Securities, although he also did business with Go Trading. Mr. Moon had a business relationship with claimant Tran and respondent Cao through Go Trading, outside of the parameters of his relationship with Providential Securities and prior to the time that Providential Securities inherited the account. Subsequently, Go Trading went out of business.

Mr. Moon has his own counsel who is working together with counsel for Providential Securities to share the cost of outside profit and loss expert brought in to analyze the claims.

Damages of $274,000 are sought.

(F) VUONG VS. PROVIDENTIAL SECURITIES, INC.

This matter is in pre-arbitration stage. Claimant alleges unauthorized sales in his account. The company takes the position that claimant failed to promptly cover a margin call, thus several of his stocks were sold to cover the margin call. Claimant is threatening NASD arbitration.

Damages are not clearly stated and consist primarily of claims for loss profit, resulting from his inability to reap market upswings while his money was tied up.

(G) HURL VS. PROVIDENTIAL SECURITIES, INC.

Claimant traded on margin through Choice Investments at Providential Securities' Portland, Oregon office. Claimant alleges that his sell order of 1,000 shares of Excite.com placed on the day after he bought the stock never occurred. Upon discovery that the sell did not occur, he placed a second sell order to occur six days after the buy. The company alleges the first sell order did occur just as claimant ordered.

Damages of $25,000 are sought, consisting of $11,500 in compensatory damages and $13,500 in punitive damages.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The names, ages, and respective positions of the directors, officers, and key employees of the company are set forth below. The directors named below will serve until the next annual meeting of the company's shareholders or until their successors are duly elected and have qualified. Directors will be elected for a one-year term at the annual shareholders' meeting. Officers will hold their positions at the will of the board of directors, absent any employment agreement, of which none currently exist or are contemplated. There are no arrangements, agreements, or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the company's affairs.

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DIRECTORS AND OFFICERS.

HENRY D. FAHMAN, CHIEF EXECUTIVE OFFICER/CHAIRMAN OF THE BOARD.

As co-founder, Chairman and CEO of the company, Mr. Fahman, age 47, has overseen management of Providential Securities since its inception in 1992. He has managed all aspects of growth and strategic implementation. Holding principal licenses in general securities, options, municipal securities, commodities futures and life insurance, Mr. Fahman has an extensive background in the field of finance and investment management. Prior to founding the company, he served as a Resettlement Coordinator for the United Nations High Commissioner for Refugees and worked for several securities brokerage firms including A.G. Edwards & Sons and The Investment Center. Mr. Fahman attended the University of Saigon College of Law and later received a B.S., magna cum laude, in business administration, with emphases in finance and economic analysis and policy from the University of California at Berkeley in 1987. He also attended Executive Education at Harvard Business School. Currently he serves as a Member of the Board of Trustees of Union College of California.

TINA T. PHAN, SECRETARY/VICE PRESIDENT OF OPERATIONS, PROVIDENTIAL SECURITIES/DIRECTOR.

As vice president of operations of the company, Ms. Phan, age 33, is responsible for overseeing Providential Securities' daily operations since 1995. Holding principal licenses in general securities, options, and finance and operations, Mrs. Phan has a B.S. in business administration and management information systems from Cal State University in Los Angeles. Previous to joining Providential Securities' management team, Mrs. Phan was employed by the World Relief Corporation.

DAVID BANERJEE, CHIEF FINANCIAL OFFICER

Mr. Banerjee, age 46, has been Chief Financial Officer of Providential Holdings, Inc. since September 2000. Mr. Banerjee has been President and Chief Executive Officer of RND Resources of Encino, California, a leading accounting and compliance consulting firm for banks and financial services firms dealing with the Federal Reserve, Securities and Exchange Commission, National Association of Securities Dealers, Department of Insurance, National Futures Association and various State and Foreign Governmental regulators. RND provides accounting, back office, registration, and compliance services to over 300 broker/dealer firms. From 1986 to 1989 Mr. Banerjee was Senior Vice President at Liberty Financial Services, responsible for the fiscal and compliance health of this diversified asset management company with over $47 billion under management. Its subsidiaries include Stein Roe and Farham, Keyport Life Insurance, the Colonial Group and Liberty Asset Management. From 1982 to 1986 he was Senior Vice President of First Interstate Bank, responsible for the primary dealer arm including government and agency securities, federal funds desk, commercial paper, municipal dealer desk, mortgage banking and the futures commission merchant subsidiary for all derivative transaction. First Interstate was one of two primary government dealers on the West Coast. From 1980 to 1982 he was Senior Bank Consultant for Computer Associates, responsible for the development of application based solutions (IBM OS/VSI, CMS and CICS) utilizing assembler, Fortran and COBOL languages for International Banks and securities firms such as World Bank, IBRD, Bank of Boston, BONY, Irving Trust, Chemical Bank, J.P. Morgan, Salomon Brothers and was responsible for the first commercial asset liability management software for banks. He is a graduate of the Indian Institute Technology with a Bachelor of Science in Engineering, of Calcutta University with a Master's in Business Administration, of the American Graduate School of International Management with a Master's in International Management and has a Graduateship in Operations Research. He is a Certified Public Accountant (CPA) and holds NASD Licenses 24, 27, 7, 63; Insurance Broker; and is also Chairman of the California Committee For The Securities Industry (CPA Society). RND is expected to assist S & S and any other newly acquired firms with ongoing compliance and accounting needs.

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TIMOTHY D. FAHMAN, VICE PRESIDENT OF MARKETING

Mr. Fahman, age 32, is responsible for designing and implementing marketing programs for the company's subsidiaries to reach their respective target markets. Mr. Fahman previously worked as a District Manager with Curtis Circulations Company, a national magazine distributor that represents such titles as Newsweek, US News and World Report, Consumer Report and Business Week from 1991 to 1996. He holds a B.S. in business administration, finance and marketing from the University of California at Berkeley.

NHI T. LE, CORPORATE STRATEGIST/DIRECTOR.

Mr. Le, age 44, has been extensively involved in international finance and investments in Asia and Europe since 1989. Prior to co-founding Providential Securities, Mr. Le's U.S.-based experience included working at the Bank of America and at Arthur Andersen. In Asia, he worked at Credit Lyonnais Securities in Hong Kong, and served as the Country Head for Deutsche Morgan Grenfell (Deutsche Bank Group) in Vietnam. Mr. Le holds a M.S. in management and information systems from the University of Denver, as well as a B.S. in business administration and marketing from Indiana University.

KEY EMPLOYEE(S).

TAI PHAM
PROVIDENTIAL TECHNOLOGY, INC., CEO

Mr. Pham, age 39, is the co-founder and CEO of Providential Technology. He is the founder of Paragon Solutions, Inc. for which he served from its inception in 1995 until April 2000 as its Chief Executive Officer. Paragon Solutions is a global IT service provider with over 250 employees worldwide; the majority of the technical resources are in Vietnam and India. Paragon also developed two state-of-the-art software development centers in Vietnam and India. Mr. Pham's background in management, technical and business operations spans sixteen years in the telecommunications and IT industries, encompassing wireline and wireless communications system and network design, computer networking, marketing, strategic planning and business system solutions consultation. During his tenure at AT&T Bell Labs from 1984 to 1992, Mr. Pham held positions as software engineer, project leader, project manager, system architect and system engineer on several major corporate projects. Between 1992 and 1994, Mr. Pham also started a small system integration company to provide complete hardware and software solutions for small and medium businesses.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of shares of the company's common stock as of September 27, 2000 (27,322,869 issued and outstanding) by (i) all shareholders known to the company to be beneficial owners of more than 5% of the outstanding common stock; and
(ii) all directors and executive officers of the company, and as a group:

                                        NAME AND ADDRESS OF         AMOUNT OF BENEFICIAL   PERCENT OF
TITLE OF CLASS                          BENEFICIAL OWNER(1)             OWNERSHIP(2)         CLASS
--------------                    --------------------------------  --------------------   ----------
Common Stock....................  Henry D. Fahman,                        5,853,246(3)        21.40%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Nhi T. Le,                              5,571,541           20.39%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Hung H. Nguyen,                         2,368,097            8.67%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Theodore D. Fahman,                     1,195,889            4.38%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Timothy D. Fahman                       1,195,889            4.38%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Tina T. Phan(4)                         1,195,889            4.38%
                                  8700 Warner Ave.,
                                  Fountain Valley, California
                                  92708
Common Stock....................  Shares of all directors and            17,380,551           63.55%
                                  executive officers as a group
                                  (5 persons)


(1) Each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them.

(2) Certain of these shares have been pledged to secure certain obligations of the company.

(3) Included within this total is 25,000 shares of convertible preferred shares of Providential Securities, Inc. which may be converted at any time prior to January 14, 2002 under the terms of a convertible promissory note issued by the company.

(4) Tina Phan is the wife of Henry Fahman.

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DESCRIPTION OF SECURITIES

GENERAL DESCRIPTION.

The securities being offered are shares of common stock. The company's Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock, with a par value of $0.04. The holders of the shares:

(a) have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by the board of directors of the company;

(b) are entitled to share ratably in all of the assets of the company available for distribution upon winding up of the affairs of the company; and

(c) are entitled to one cumulative vote per share on all matters on which shareholders may vote at all meetings of shareholders.

These securities do not have any of the following rights:

(c) special voting rights;

(d) preference as to dividends or interest;

(e) preemptive rights to purchase in new issues of shares;

(f) preference upon liquidation; or

(g) any other special rights or preferences.

In addition, the shares are not convertible into any other security. There are no restrictions on dividends under any loan other financing arrangements or otherwise. As of September 27, 2000, the company had 27,322,869 shares of common stock issued and outstanding.

CONVERTIBLE PREFERRED SHARES.

In December 1998, Providential Securities sold it preferred stock at the price of $5.00 per share to a total of 22 individuals and firms. This offering resulted in the sale of a total of 103,000 shares for a total consideration of $515,000. Under the terms of the Corporate Combination Agreement between the company and Providential Securities, all of the holders of the preferred stock are entitled to either convert their shares into shares of common stock of the company on the basis of one share of common stock for each share of preferred stock, or be issued a convertible promissory note from the company, in the amount of their original investment in the issued preferred stock, with a right to convert the note into shares of common stock at the conversion price of $5.00 per share within two years from the date of closing of the purchase and sale of the preferred stock. The shareholders have elected to

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exchange their shares of preferred stock for such convertible promissory notes and the company has issued a convertible promissory note in favor of each of these shareholders, as follows:

                                                           SHARES
                                                        BENEFICIALLY   SUBSCRIPTION
PREFERRED SHAREHOLDERS                                     OWNED          AMOUNT
----------------------                                  ------------   ------------
Glass Family Trust....................................     10,000        $ 50,000
Charles Vinton........................................     20,000        $100,000
John Dukes............................................      2,000        $ 10,000
Rosalie Ramos.........................................      3,000        $ 15,000
Dana Tribula..........................................      4,000        $ 20,000
Marie de Klerk........................................      2,000        $ 10,000
Robert Quinn..........................................      2,000        $ 10,000
Amy Dukes.............................................      2,000        $ 10,000
Linda Doyle...........................................      2,000        $ 10,000
Elite Investments.....................................      2,000        $ 10,000
Harold & Linda Rose...................................      2,000        $ 10,000
Stephen Graef.........................................      2,000        $ 10,000
James Barringer.......................................      2,000        $ 10,000
Monty Dickinson.......................................      2,000        $ 10,000
Ronald Raes...........................................      5,000        $ 25,000
David Tribula.........................................      4,000        $ 20,000
Gregory Sutherland....................................      2,000        $ 10,000
James Fishenden.......................................      2,000        $ 10,000
Hilaro & Rosalie Ramos................................      4,000        $ 20,000
Maura O'Neil..........................................      2,000        $ 10,000
Marie Vincent Llamzon.................................      2,000        $ 10,000
Henry Fahman..........................................     25,000        $125,000
                                                          -------        --------
    Total.............................................    103,000        $515,000
                                                          =======        ========

CUMULATIVE VOTING.

Although the company is incorporated in nevada, which does not require cumulative voting, the company is required under california law to provide such voting based on its status as a pseudo california corporation. Therefore, the holders of shares of common stock of the company do have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, cannot elect all of the directors to be elected, if the minority shareholders so choose. In such event, the holders of the remaining shares will be able to elect at least one of the company's directors.

DIVIDENDS.

The company does not currently intend to pay cash dividends. The company's proposed dividend policy is to make distributions of its revenues to its shareholders when the company's board of directors deems such distributions appropriate. Because the company does not intend to make cash distributions, potential shareholders would need to sell their shares to realize a return on their investment. There can be no assurances of the projected values of the shares, nor can there be any guarantees of the success of the company.

A distribution of revenues will be made only when, in the judgment of the company's board of directors, it is in the best interest of the company's shareholders to do so. The board of directors will review, among other things, the investment quality and marketability of the securities considered for distribution; the impact of a distribution of the investee's securities on its customers, joint venture associates, management contracts, other investors, financial institutions, and the company's internal

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management, plus the tax consequences and the market effects of an initial or broader distribution of such securities.

POSSIBLE ANTI-TAKEOVER EFFECTS OF AUTHORIZED BUT UNISSUED STOCK.

The company's current authorized but unissued capital stock consists of 72,677,140 shares of common stock. One effect of the existence of authorized but unissued capital stock may be to enable the board of directors to make it more difficult or to discourage an attempt to obtain control of the company by means of a merger, tender offer, proxy contest, or otherwise, and thereby to protect the continuity of the company's management. If, in the due exercise of its fiduciary obligations, for example, the board of directors were to determine that a takeover proposal was not in the company's best interests, such shares could be issued by the board of directors without shareholders approval in one or more private placements or other transactions that might prevent, or render more difficult or costly, completion of the takeover transaction by diluting the voting or other rights of the proposed acquiror or insurgent shareholders or shareholders group, by creating a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent Board of Directors, by effecting an acquisition that might complicate or preclude the takeover.

TRANSFER AGENT.

The company has engaged the services of Jersey Transfer & Trust Co., 201 Bloomfield Avenue, Verona, New Jersey 07044, to act as transfer agent and registrar.

INTEREST OF NAMED EXPERTS AND COUNSEL

No named expert or counsel was hired on a contingent basis, will receive a direct or indirect interest in the small business issuer, or was a promoter, underwriter, voting trustee, director, officer, or employee of the company.

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DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

INDEMNIFICATION.

(A) BYLAWS.

The company's articles of incorporation do not have provisions dealing with indemnification. The bylaws of the company provide the following with respect to indemnification:

Every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the company or is or was serving at the request of the company or for its benefit as a director or officer of another company, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the general company law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the company as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the company. Such right of indemnification is a contract right which may be enforced in any manner desired by such person. Such right of indemnification is not exclusive of any other right which such directors, officers or representatives may have.

The board of directors may cause the company to purchase and maintain insurance on behalf of any director or officer of the company, or any person who is or was serving at the request of the company as a director or officer of another company, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the company would have the power to indemnify such person.

The board of directors may from time to time adopt further bylaws with respect to indemnification and may amend its current bylaws to provide at all times the fullest indemnification permitted by the general corporation law of the State of Nevada.

As the company is incorporated in the State of Nevada, the provisions of the Nevada Revised Statutes with regard to indemnification apply to the company. However, the indemnification provisions under the California Corporations Code apply to any action which arises in California since the company is considered to be a pseudo California corporation under Section 2115 of this Code. Both sets of statutes are presented below:

(B) NEVADA REVISED STATUTES.

NRS 78.7502 DISCRETIONARY AND MANDATORY INDEMNIFICATION OF OFFICERS,

DIRECTORS, EMPLOYEES AND AGENTS: GENERAL PROVISIONS.

(1) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees,

24

judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his or her conduct was unlawful.

(2) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals the reform, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

(3) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2 above, or in defense of any claim, issue or matter therein, the corporation shall indemnify such person against expenses, including attorneys' fees, actually and reasonably incurred by such person in connection with the defense.

NRS 78.751 AUTHORIZATION REQUIRED FOR DISCRETIONARY INDEMNIFICATION; ADVANCEMENT OF EXPENSES; LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.

(1) Any discretionary indemnification under NRS 78.7502 unless ordered by a court or advanced pursuant to subsection 2, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(i) By the shareholders;

(ii) By majority vote of the board of directors a quorum consisting of directors who were not parties to the action, suit or proceeding;

(iii) If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or

(iv) If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

(2) The Articles of Incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the

25

director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the corporation. These above provisions do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law.

(3) The indemnification and advancement of expenses authorized in NRS 78.7502 or ordered by a court pursuant to this section:

(i) Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to or for the advancement of expenses made pursuant to subsection 2 above, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.

(ii) Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person.

NRS 78.752 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF

DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.

(1) A corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.

(2) The other financial arrangements made by the corporation pursuant to subsection 1 may include the following:

(i) The creation of a trust fund.

(ii) The establishment of a program of self-insurance.

(iii) The securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation.

(iv) The establishment of a letter of credit, guaranty or surety.

No financial arrangement made pursuant to this subsection may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.

(3) Any insurance or other financial arrangement made on behalf of a person pursuant to this section may be provided by the corporation or any other person approved by the board of directors, even if all or part of the other person's stock or other securities is owned by the corporation.

(4) In the absence of fraud:

(i) The decision of the board of directors as to the propriety of the terms and conditions of any insurance or other financial arrangement made pursuant to this section and the choice of the person to provide the insurance or other financial arrangement is conclusive; and

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(ii) The insurance or other financial arrangement:

(A) Is not void or voidable; and

(B) Does not subject any director approving it to personal liability for his action, even if a director approving the insurance or other financial arrangement is a beneficiary of the insurance or other financial arrangement.

(5) A corporation or its subsidiary which provides self-insurance for itself or for another affiliated corporation pursuant to this section is not subject to the provisions of Title 57 of NRS.

(C) CALIFORNIA CORPORATIONS CODE, SECTION 317.

(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful.

(c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was an agent of the corporation, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of the action if the person acted in good faith, in a manner the person believed to be in the best interests of the corporation and its shareholders.

No indemnification shall be made under this subdivision for any of the following:

(1) In respect of any claim, issue or matter as to which the person shall have been adjudged to be liable to the corporation in the performance of that person's duty to the corporation and its shareholders, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses and then only to the extent that the court shall determine.

(2) Of amounts paid in settling or otherwise disposing of a pending action without court approval.

(3) Of expenses incurred in defending a pending action which is settled or otherwise disposed of without court approval.

(d) To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.

(e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subdivision (b) or (c), by any of the following:

(1) A majority vote of a quorum consisting of directors who are not parties to such proceeding.

27

(2) If such a quorum of directors is not obtainable, by independent legal counsel in a written opinion.

(3) Approval of the shareholders (Section 153), with the shares owned by the person to be indemnified not being entitled to vote thereon.

(4) The court in which the proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the corporation.

(f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay that amount if it shall be determined ultimately that the agent is not entitled to be indemnified as authorized in this section. The provisions of subdivision (a) of Section 315 do not apply to advances made pursuant to this subdivision.

(g) The indemnification authorized by this section shall not be deemed exclusive of any additional rights to indemnification for breach of duty to the corporation and its shareholders while acting in the capacity of a director or officer of the corporation to the extent the additional rights to indemnification are authorized in an article provision adopted pursuant to paragraph (11) of subdivision (a) of Section 204. The indemnification provided by this section for acts, omissions, or transactions while acting in the capacity of, or while serving as, a director or officer of the corporation but not involving breach of duty to the corporation and its shareholders shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, to the extent the additional rights to indemnification are authorized in the articles of the corporation. An article provision authorizing indemnification "in excess of that otherwise permitted by
Section 317" or "to the fullest extent permissible under California law" or the substantial equivalent thereof shall be construed to be both a provision for additional indemnification for breach of duty to the corporation and its shareholders as referred to in, and with the limitations required by, paragraph (11) of subdivision (a) of Section 204 and a provision for additional indemnification as referred to in the second sentence of this subdivision. The rights to indemnity hereunder shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of the person. Nothing contained in this section shall affect any right to indemnification to which persons other than the directors and officers may be entitled by contract or otherwise.

(h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (4) of subdivision (e), in any circumstance where it appears:

(1) That it would be inconsistent with a provision of the articles, bylaws, a resolution of the shareholders, or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification.

(2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

(i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in that capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against that liability under this section. The fact that a

28

corporation owns all or a portion of the shares of the company issuing a policy of insurance shall not render this subdivision inapplicable if either of the following conditions are satisfied:

(1) if the articles authorize indemnification in excess of that authorized in this section and the insurance provided by this subdivision is limited as indemnification is required to be limited by paragraph (11) of subdivision (a) of Section 204; or

(2) (A) the company issuing the insurance policy is organized, licensed, and operated in a manner that complies with the insurance laws and regulations applicable to its jurisdiction of organization, (B) the company issuing the policy provides procedures for processing claims that do not permit that company to be subject to the direct control of the corporation that purchased that policy, and (C) the policy issued provides for some manner of risk sharing between the issuer and purchaser of the policy, on one hand, and some unaffiliated person or persons, on the other, such as by providing for more than one unaffiliated owner of the company issuing the policy or by providing that a portion of the coverage furnished will be obtained from some unaffiliated insurer or reinsurer.

UNDERTAKING.

The company undertakes the following:

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the company has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

ORGANIZATION WITHIN LAST FIVE YEARS

The names of the officers and directors as disclosed elsewhere in this Form SB-2. None of these individuals, as promoters, have received anything of value from the company.

DESCRIPTION OF BUSINESS

COMPANY HISTORY.

The company was originally incorporated under the laws of the State of Nevada as JR Consulting, Inc. on June 8, 1982. From its inception through September 7, 1995, the company generated nominal revenues and, prior to September 7, 1995, the company did not actively engage in business for at least one fiscal year.

(A) DIVA DELAWARE AND SUBSIDIARIES.

On December 29, 1997, the company formed Que Management Inc., which was incorporated under the laws of the State of New York. On April 3,1998, the company formed Diva Entertainment, Inc., a Florida corporation and holding company ("Diva-Florida"). The company obtained all the shares of Prima Eastwest Model Management, Inc., a California corporation, through an exchange agreement entered into in February 1996. During the fiscal year ended June 30, 1998, Diva-Florida issued 4,500,000 shares of common stock to the company in exchange for 100% of the outstanding common stock of Que and Prima Eastwest. The shares issued were valued at the historical cost of the company's investment in Prima Eastwestand Que.

Effective April 1, 1999, the company entered into a series of transactions pursuant to which it became the controlling shareholder of Diva Entertainment, Inc., a Delaware corporation formerly known as Quasar Projects Company ("Diva-Delaware"), and made Diva-Florida (a 95.3% owned

29

subsidiary) a subsidiary of Diva-Delaware. In connection with the reorganization, the company received 4,225,000 shares of Diva-Delaware's common stock, representing 76.8% of the outstanding common stock of Diva-Delaware, in exchange for the company's 95.3% equity interest in Diva-Florida.

Also in connection with the reorganization, the company agreed to convert $3,000,000 of debt owed to it by Diva-Florida into 3,000 shares of Series B Redeemable Convertible Stock of the company. In addition, the company entered into an option agreement with Diva-Delaware, allowing the company to maintain its ownership percentage of the outstanding common stock of Diva-Delaware in a range between 65% and 92%, exclusive of any conversions of the Series B Redeemable Convertible Preferred Stock into shares of common stock of Diva-Delaware. The merger was contingent upon the Diva-Delaware selling 350 shares of Series A Convertible Preferred Stock at $2,000 per share to private investors. As of the effective date of the merger, 375 shares of Series A Convertible Stock were sold to investors, resulting in approximately $750,000 of gross proceeds to Diva-Delaware.

Until their divestiture effective as of June 30, 2000 (for no consideration to former shareholders of the company), the company owned, operated and managed modeling agencies through Que Management and Prima Eastwest.

(B) BENATONE LIMITED.

The company formerly owned a subsidiary Benatone Limited, which was engaged in the manufacture and sale of screwless rewireable electrical plugs and the assembly of small electrical accessories for third party manufacturers in the United Kingdom. Effective June 30, 1999, the company sold its shares of Benatone Limited.

(C) PROVIDENTIAL SECURITIES, INC.

Providential Securities, Inc. was incorporated in 1992, as a California corporation, and is engaged in the securities brokerage business. This firm entered into a corporate combination agreement with the company when its name was still JR Consulting, Inc. effective January 14, 2000, whereby the company agreed to acquire all of the issued and outstanding shares of capital stock of Providential Securities as of the closing date of the agreement in exchange for 20,000,000 shares of JR Consulting, which number of JR Consulting shares assumed the effectuation of a 2-for-1 reverse stock split. The JR Consulting shares were restricted against resale pursuant to the provisions of federal and state securities laws. Providential Securities' shareholders of record as of the effective date owned approximately 82% of JR Consulting common stock, and the transaction was subject to regulatory approval.

On January 12, 2000, the company changed its name from JR Consulting to Providential Securities, Inc., and then on February 9, 2000, the name of the company was again changed to Providential Holdings, Inc.

CURRENT STATUS OF COMPANY.

The company operates two wholly owned principal subsidiaries and holds equity stakes in other entities:

(A) WHOLLY OWNED SUBSIDIARIES.

Providential Securities, Inc. has been engaged in the securities brokerage business since 1992 and has been offering a wide spectrum of investment products and services. These products include stocks, bonds, mutual funds, tax-advantaged investments, financial and retirement planning, day trading, options strategies, annuities, and life insurance. During its most recent (July-August, 2000) NASD examination, NASD declared a net capital deficiency violation pursuant to Conduct Rules Sections 17(a)3 and 17(a)4. The deficiency resulted from a difference in professional opinions between

30

the company and NASD of a classification of expenses between the parent organization, Providential Holdings, Inc., and Providential Securities, Inc. Consequently, until further notice, based upon regulatory requirements, Providential Securities, Inc. trading operations have been limited to liquidation of stock position(s), and all other operations have been suspended. The customers and the registered representatives of Providential Securities have been given the option to transfer their account(s) to other brokerage firms. Based upon the above-mentioned circumstances, the management is considering a broker-dealer application withdrawal and may acquire another broker-dealer in the future. Subsequently, Providential Securities, Inc. is planning to transform its identity to concentrate on investment banking and investment advisory services. Further, Providential Holdings, Inc. is in the process of locating complimentary joint venture partner(s).

Providential Clearing Inc. is a California corporation formed on February 11, 2000. The company has entered into a Partnership Purchase Agreement, dated as of September 22, 2000, among the company and the partner of Holt + Collins, a self-clearing broker-dealer based in San Francisco, California, to effectuate the purchase of all of the partnership interests and assets of Holt + Collins. Upon the consummation of the proposed acquisition, Holt + Collins will bear the name of Providential Clearing, Inc., and continue to be engaged in the business of providing clearing services for Holt + Collins and certain selected fully disclosed broker-dealers.

(B) MINORITY INTERESTS.

Providential Technology Inc. is a California corporation formed on February 11, 2000. The company owns a minority equity position in this firm. Providential Technology's primary business objective is to be the leading provider of Internet finance solutions to both traditional and emerging Internet financial service providers. Providential Technology's software product offerings will include new financial services functions, such as online banking. Providential Technology's products and services adhere to existing industry standards and have been designed to meet the openness and scalability required of Internet solutions.

The company also owns a minority equity stake in postyourhome.com, an online real estate brokerage service. Postyourhome.com eliminates the need for buyers and sellers of residential, income and land properties to use a real estate broker by providing online education and support services to both sides of the purchase transaction. By cutting out the middleman, buyers and sellers save up to 6% of the property's value that is normally charged by brokers. Postyourhome.com have also created a venue through which a broad range of service providers, from lending institutions to insurance providers, to construction companies can directly market to and acquire customers who seek their services.

GENERAL STATEMENT.

The company believes that in today's market environment financial products and services that save time and improve efficiency of business, while necessary, are by themselves insufficient. The company and its subsidiaries are currently engaged in the development of a diverse range of financial tools, products and the related software that will provide businesses in the financial service industry with the ability to simplify a broad range of complex financial transactions.

Management believes that its investment in the development of a diverse range of products, services for the financial services industry will fill specific niche market demands that are not currently being met and allow the company to grow. Today's model of rapid pace Internet driven financial services mandates that financial services firms change their way of doing business to deliver modern and timely products and services. Moreover, the investment community has long been demanding that the transaction costs of financial services and products be reduced. The growth of the Internet, not surprisingly, has added to the general trend in the financial sector to meet that demand.

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To meet that demand, the company has recently formed a management team to focus on developing and creating such a network of diversified products and services as well as coordinating its subsidiaries' products and services. In addition, the management team is and will continue to be highly focused on:

I. securing funding to implement its vision;

II. ensuring proper compliance with all regulatory authorities;

III. ensuring all intellectual property rights have been protected.

The company's products and services are and will become superior to that of its competitors, primarily because its competitors are not focusing on diversifying their products and services or developing their own technologies. Rather, such competitors have invested in products and services that have traditionally failed to meet expectation of investors. The company's goal is to make the products and services of its competitors obsolete.

The company will secure and hold all patents and other intellectual property rights related to its innovations. Management anticipates that the ownership of these patents and other intellectual property rights will help establish certain market barriers for which its competitors will not easily overcome.

The company's marketing strategy is to promote its state-of-the-art technology and its diversification of its products and services that add significant value for its customers by reducing costs and improving quality.

STRATEGY.

The latest trend in today's financial market, in addition to reducing transaction costs, has been to minimize the complexity of financial transactions. The company's software aims at making all customer transactions simple and virtually error free by eliminating the complexities endemic within securities transactions.

While the company strives through diversification of its products and services to be more than a "one product" company like many of its competitors, the management team nevertheless believes in taking a cautious approach to diversification to control the company's growth and expansion. Management believes that this controlled growth approach will produce sustainable long-term expansion and diversification of the company's products and services.

(A) PROPRIETARY TECHNOLOGY.

Providential Technology provides online Internet trading. The company is planning to upgrade Providential Technology's system architecture to increase service efficiency. Eliminating the human factor by providing thorough order-to-settlement solutions, virtually guarantees that all facets of processing securities transactions are automated. This includes customer management, order routing and execution, and settlement reporting and accounting. Transaction data and information is simultaneously available to the customer, the sales and trading office, and management.

This core securities processing system will perform all of the critical details of securities processing including integrated customer support for trading and sales. The system will also provide on-line communications with exchanges and depositories, facilitate the movement of funds, and spot and eventually automatically correct potential transaction errors. By simply using their own Internet Web browser, customers will be able to route orders to a variety of marketplaces including listed exchanges, third market firms, and internal trading desks. The execution of the order and real-time posting will occur throughout the entire system. Sophisticated real-time audits will ensure that orders contain the proper and required information to prevent errors.

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The existing proven technology is already in use by some of the most technologically advanced firms and banks. The database for all accounts is maintained on fault-tolerant servers to ensure non-stop system availability. The data center includes a complete, power generator, backup with 24 hour a day support. Technical consultants provide a range of support services to ensure reliable functionality and peak performance at all times.

The company is confident that its patents and other intellectual property rights associated with its new technology will provide some market protection against potential competitors, thus giving the company a competitive advantage in the industry.

(B) GOVERNMENT REGULATORY BODIES.

The company must adhere to the regulations and mandates of the following U.S. government regulatory bodies/agencies:

(g) National Association of Securities Dealers, Inc. (NASD) http://www.nasd.com

(h) Securities Investor Protection Corporation (SIPC) http://www.sipc.org

(i) Municipal Securities Rulemaking Board (MSRB) http://www.msrb.org

(j) U.S. Securities and Exchange Commission (SEC) http://www.sec.gov

(k) California Department of Corporations (DOC) http://www.corp.ca.gov/

(l) Depository Trust Company (DTC) http://www.dtc.org/

(m) National Securities Clearing Corporation (NSCC) http://www.nscc.com/

Any changes to the company's products and/or services that depart from the established norm will require approval from one or more of the above-mentioned government agencies.

The management team's regulatory experience will ensure that any required approvals are properly obtained and obtained in a timely manner. The company will involve these agencies early in the development and production process to ensure that its products and services will be developed in compliance with all regulatory mandates.

MARKET ANALYSIS.

(A) PROVIDENTIAL SECURITIES, INC.

Providential Securities, Inc. has been engaged in the securities brokerage business and has been offering a wide spectrum of investment products and services. However, based upon the latest regulatory requirements, this subsidiary is considering withdrawing as a broker-dealer and management is considering shifting the focus of Providential Securities to investment banking and investment advisory services.

SPECIFICALLY, MANAGEMENT IS EVALUATING THE FOLLOWING OPTIONS:

1) Forming and expanding its network of strategic alliances with financial companies to increase its marketing.

2) Expanding marketing efforts on the Internet.

3) Acquiring profitable businesses and establishing joint ventures.

4) Offering on-line market services.

5) Increasing corporate finance and investment banking activities utilizing domestic and international alliances.

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(B) PROVIDENTIAL CLEARING.

The company has entered into a Partnership Purchase Agreement, dated as of September 22, 2000, to acquire the business of Holt + Collins, a partnership of Daniel E. Collins, Walter J. Bankovitch, Samuel Rankin, Jr. and Robert J. Solon, engaged in the securities business as a self-clearing broker-dealer since 1928 out of San Francisco, California.

The following are the principle terms of this transaction:

1. At, or shortly after, the closing, which occured September 22, 2000, the company will pay a purchase price of $1,500,000 plus the net worth of Holt + Collins as of the closing date, in cash, in exchange for all of the partnership interests in Holt + Collins. Net worth is defined as total assets of Holt + Collins minus total liabilities as determined in accordance with generally accepted accounting principles.

2. The company will assume and be responsible for all disclosed contingent and non-contingent liabilities of the partnership that exist on closing date, including, but not limited to the lease of the premises located at 188 Embarcadero, Suite 760, San Francisco, California.

3. On, or shortly after, the time of closing, the company together with partners Daniel E. Collins and Walter J. Bankovitch, will form a new limited partnership with the company as the sole general partner to manage the business. Eventually, the partnership will be incorporated.

Upon the consummation of the proposed acquisition, Holt + Collins will bear the name of Providential Clearing, Inc., and continue to be engaged in the business of providing clearing services for Holt + Collins and certain selected fully disclosed broker-dealers.

A large majority of NASD member broker-dealers are fully disclosed; they introduce their customers to, and clear their trades through, other clearing firms. These introducing firms need the service of clearing houses capable of providing quality system solutions in timely and cost-effective manner. Clearing costs can typically assume a 20-30% (or greater) of an average full disclosed broker-dealer's revenues.

Once Providential Clearing is established as a clearing facility, utilizing the new trading software developed by Providential Technology (discussed below) will position the company to pass on the clearing cost savings to selected broker-dealers.

(C) PROVIDENTIAL TECHNOLOGY, INC.

Providential Technology Inc., a corporation in which the company has a 6% equity interest. Providential Technology's professed main objective is to be the leading provider of Internet finance solutions to both traditional and emerging Internet financial service providers. To achieve that objective, management of the company intends to pursue the following strategies:

1) Pursue both institutional and retail markets.

2) Utilize offshore resources and opportunities.

3) Capitalize on domestic and overseas alliances.

4) Increase international sales.

As the Internet adoption rate accelerates overseas, Providential Technology speculates that international financial services will rapidly follow the transformation seen in the United States. It is also believed that significant international market demand will exist for Internet finance solutions as financial institutions in Europe and Asia, in particular, move to deliver services on the Internet. Providential Technology anticipates devoting significant resources toward developing international markets, both through direct sales channels and indirect sales partners.

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Providential Technology will target large, industry-leading financial institutions and financial portals by increasing sales and marketing efforts, and by developing and targeting other markets including small to mid-size financial institutions, insurance companies, brokerages and consumer finance companies.

The current financial software platform supports retail brokerage transactions. The planned expansion of Providential Technology's software product offerings will include new functions to facilitate financial services, such as online banking. Providential Technology's products and services adhere, and will continue to adhere, to existing industry standards and have been, and will continue to be, designed to meet the openness and scalability requirements of Internet solutions. Management will continue its ongoing collaborative effort with other companies as the company develops new technologies and will continue to promote and encourage the adoption of universal standards that can foster and simplify the exchange of financial information through the Internet.

Providential Technology expects to continue investing in research and development as it evolves its Internet product offerings to meet the needs of its customers. Providential Technology intends to leverage its existing strong relationships with leading systems integrators and value-added resellers to extend its market reach and provide its customer base with more comprehensive, customized solutions. Additionally, the company will continue to expand and build additional relationships with key systems integrators and value-added resellers. The company also believes that forging relationships with key technology vendors is critical to delivering a comprehensive solution to financial service providers. Consequently, the company plans to develop additional relationships with key technology vendors to expand the scope of its functionality, co-marketing and distribution efforts.

Market research done by the company indicates that the brokerage market is growing rapidly. Total revenues for this industry amounted to $95.897 billion in 1997, representing a 22.73% growth over $78.131 billion in total revenues for 1996. The industry is expected to exceed $125 billion by the year 2003.

The fastest growing sector within the securities brokerage market is online, Internet-based trading segment. According to a recent industry study, this year 3 million new customers will sign up with a broker to trade on the Internet. They will join the 3.4 million traders who are already buying and selling stocks on the Web. By 2002, their numbers will swell to 15.2 million.

COMPETITION.

(A) PROVIDENTIAL CLEARING.

Well-known clearing firms in the U.S. include companies such as Bear Stearns, CSC (Paine-Webber), Broadcorp (Merrill Lynch), B.T. Alex Brown, Cowen, Southwest Securities, U.S. Clearing, and on the west coast, is the seasoned and well-managed Wedbush Morgan.

Providential Clearing's competitive advantage is partly based on Providential Technology's technological expertise, which is developing new high-tech execution platforms for U.S. and key non-U.S. markets.

(B) PROVIDENTIAL TECHNOLOGY.

The market for online brokerage services over the Internet is rapidly evolving and intensely competitive. Providential Technology expects this competition to further intensify in the future. In the United States, the company encounters direct competition from other independent online brokerage firms, as well as traditional discount brokerage firms providing online and/or touch-tone telephone services. These competitors include A.B. Watley Group, Ameritrade, Charles Schwab, DLJ Direct, E*Trade, JB Oxford, National Discount Brokers, TD Waterhouse and WIT Capital.

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Additionally, the company is also encountering competition from established full-commission brokerage firms, including Morgan Stanley Dean Witter and Prudential Securities, mutual fund sponsors and other financial organizations, some of which are actively expanding their online capabilities. During the past year, Merrill Lynch and American Express, for example, introduced online discount brokerage services. The company may also face increased competition from various companies seeking to attract consumer financial assets, including commercial banks and other financial institutions, insurance companies and providers of online financial and information services, as these companies expand their product lines. Lastly, the company also faces increasing competition in international markets, from both international competitors and U.S.-based brokerage firms, which have established or acquired international operations or entered into partnerships with international brokerage firms. Several of the largest domestic online brokerage firms are aggressively expanding into international markets.

Providential Technology holds firm to the belief that the primary competitive factors affecting the market for online financial services are the following:

- Timeliness of execution.

- Depth, breadth and quality of Web services and page content.

- Ease of use and look and feel of Internet user interface.

- Customer service and support.

- Cost.

- Brand loyalty.

- Financial strength and innovation.

MARKETING PLAN.

The company's marketing strategy is to enhance, support and promote its state-of-the-art products and services and demonstrate to customers that the company's products increase user productivity by automating financial services that significantly reduces the need for human intermediaries and results in lower labor costs. Significant selling points include the following:

1. Significantly reducing online trading costs.

2. Delivering higher quality, technologically innovative products and services than its competitors.

3. Reducing transaction time and complexity.

To achieve market awareness and increase customer response, the company will launch an extensive, concerted advertising and promotion campaign. The wide-scale, aggressive promotion of this campaign virtually assures adequate market penetration. The enlistment of an experienced advertising agency and public relations firm will provide the necessary assistance for the company to achieve its sales goals. The company plans to advertise on television, on prominent Internet Web sites, and in major financial magazines, newspapers, and trade publications.

ADVERTISING AND PROMOTION.

The company recognizes that a key element to its success will be to aggressively promote of its products and services and its company's image. Key media objectives include:

1. Gaining awareness of the company and its subsidiaries among customers, industry groups, and vendors.

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2. Establishing the company and its subsidiaries as a cost-effective, professional, competent, and innovative organizations.

3. Maximizing efficiency in selecting and scheduling published advertisements.

The company intends to utilize the following media methods to read out to its customers:

(b) CNBC.

(c) Prominent Internet Web sites.

(d) Investor Business Daily.

(e) Barron's Magazine.

(f) The Wall Street Journal.

(g) Local business channels and networks.

(h) Newspapers.

(i) Ethnic Radio and televisions channels in selected international markets.

(j) Ethnic newspapers in selected international markets.

(k) Referrals.

(l) Seminars.

(m) Industry Conferences.

To accomplish our sales and positioning goals, we require an extremely capable advertising agency and public relations firm and the company is in the process of evaluating a suitable firm. By advertising in major trade magazines, journals and other forums as indicated above, the company will position itself as an up-and-coming force in the industry. Upon completion of any additional funding that may be required, an agency shall be selected and, with their assistance, a comprehensive advertising and promotion plan will be drafted. Advertising will be done independently and cooperatively where applicable in markets across North America and selected international markets.

Significant promotional objectives include the following:

- Positioning the company as a financial market industry leader.

- Increasing awareness of company brand name among potential individual and business customers, industry groups, and vendors.

- Using market research to compile data and create immediate and long-term marketing plans.

- Creating product-advertising programs promoting the superiority of performance of the company's products and services and the resulting savings to customers (customer testimonials).

- Coordinating sales literature, marketing programs, industry exhibitions and direct promotions in order to insure the corporate image is well established and maintained.

- Establishing the company image as a professional, reliable, and highly positioned organization in the financial industry.

- Maximizing efficiency in selection and scheduling of published ads.

The company intends to develop an advertising campaign built around the products and services of its subsidiaries as being the most cutting edge, easy to use, innovation and high-performance in the market, beginning with a "who we are" statement and supporting it with ads that reinforce the company message. The company will consistently and frequently promote this message throughout the

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year. In addition to standard advertising practices, the company intends to gain considerable recognition through trade publications and press releases.

During the next 12 months, the company will invest substantially in promotional material. The company may budget on a continuing basis its marketing and advertising investment to be in the range of around three (3%) to five (5%) percent of total sales (industry standard is 4%).

The company intends to accomplish each of the following to allow it to achieve its marketing objectives:

1. Increase sales and marketing efforts.

2. Keep the company capitalized in order to recruit additional management personnel and staff.

3. Upgrade and expand it computer and information management facilities.

4. Upgrade Internet-based execution platforms for equities and options securities.

5. Increase online market timing services.

6. Consummate the closing of the acquisition of Holt + Collins, and successfully launch Providential Clearing, Inc. by December 31, 2000.

7. Provide the necessary working capital for other corporate purposes and/or endeavors as required by Providential Holdings, Inc.

FINANCIAL SUMMARY

The company's business plan set forth above depends on important assumptions including the following:

I. Funding to purchase Holt + Collins will be available according to schedule.

II. Approval of the Holt + Collins acquisition plan by the NASD and other regulatory agencies.

III. Completion of development of Providential Technology's new software for customer use on schedule and within budget.

IV. A strong, sustainable economy, with no major recession.

V. No unforeseen technological developments that would render Providential Technology's current software development project(s) obsolete in the short run.

VI. Funding for the company's marketing and promotional campaign will be available according to schedule.

VII. A strong and successful marketing and promotional campaign will yield expected or better results.

VIII. The dynamic working relationship among the company's subsidiaries will develop into a powerful synergy.

IX. The establishment and implementation of viable customer service policies and procedures.

EMPLOYEES.

The company together with is subsidiaries have approximately twenty-five employees. Providential Securities has six employees engaged in administrative functions and fifteen employees for sales.

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

The following discussion should be read in conjunction with the financial statements of the company and notes thereto contained elsewhere in this prospectus. Since Providential Securities, Inc., a California corporation, was the primary operating subsidiary acquired by JR Consulting, Inc., (later changed to Providential Holdings, Inc.) the financial statements for Providential Securities, Inc. for the fiscal years ended December 31, 1999 and 1998 are provided in this prospectus and are discussed in this section.

RESULTS OF OPERATIONS.

(A) FIVE AND ELEVEN MONTHS ENDED MAY 31, 2000 AND 1999.

Revenues for the company increased by $733,412 from $2,818,684 for the five months ended May 31, 1999 (which only reflected the accounts of Providential Securities, Inc.) to $3,552,096 for the quarter ended May 31, 2000 (which included the accounts of Providential Holdings, Inc., Providential Securities, Inc. and Diva Entertainment, Inc.). This is an increase of 26.02%. Also, the revenue increased by 4.50% from $6,192,684 for the five months ended May 31, 1999 to $6,484,096 for the five months ended May 31, 2000 due to additional marketing efforts.

Selling, general and administrative expenses of the company increased by 112.1% from $2,913,427 for the five months ended May 31, 1999 to $6,178,850 for the five months ended May 31, 2000. Major portions of the increase can be attributable to the rise in marketing costs associated with the introduction of new products and services, the placement costs for the convertible promissory notes and the addition of employees. Also, these expenses increased by 31.9% for the eleven months ended May 31, 2000 compared with the corresponding period in the previous year ($9,038,850 compared with $6,152,427).

The net loss for the five months ended May 31, 2000 is $2,154,420, or $0.08 per share compared with $95,542) for the corresponding period in 1999. For the fiscal eleven months ended May 31, 2000, the company had a net loss of $2,082,420 or equivalent to $0.08 per share compared with a net profit of $39,457 for the corresponding period in the previous year.

(B) FISCAL YEARS ENDED JUNE 30, 1999 AND 1998.

On June 30, 1999, the company had a working capital deficit of $1,236,000 and its business is particularly capital intensive. The operating companies must pay their modeling talent soon after services are rendered. While the accounts receivable for these operating companies are generally due in 30 days, they are usually collected within 60 to 120 days.

The company expects that the working capital cash requirements over the next 12 months will be generated from operations and the balance of a private equity offering. However, the company anticipates opening modeling agencies in additional areas in the future, but assuming the company does not open additional modeling agencies in the next 12 months, the capital expenditures are anticipated to be $25,000. Such expenditures will be primarily for office equipment. The company expects these capital expenditures to be financed through working capital.

In February through April 1999, Diva Entertainment, Inc. in Delaware (Diva-Delaware) conducted a private offering of 750 shares of Series A Convertible Preferred Stock. Diva-Delaware received $750,000 of the offering proceeds in cash and received a subscription for the remaining $750,000 which is payable when the registration statement for Diva-Delaware incorporating the audited financial statements for Fiscal 1999 is filed. Diva-Delaware anticipates filing an amendment to that registration statement incorporating these financial statements soon. The proceeds will be used to finance capital expenditures and applied to working capital. Except as described by the foregoing, the company has no

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commitments for additional funding and no assurance can be given that it will obtain additional funding.

The fiscal year ended June 30, 1998 was one of consolidation at Prima Eastwest Model Management, Inc. ("Prima") and development of the newly formed Que Management Inc. ("Que"). These efforts had a measure of success as shown by the results of the company, with Prima making a small operating profit and revenues of Que achieving management targets, however, the full potential of these subsidiaries has not yet been realized. Such potential is expected to be realized over the forthcoming years, but there is no assurance that their full potential will ever be realized. The fiscal year ended June 30, 1999 was one of continued consolidation with an emphasis on expansion at Que. Also, Benatone Limited was shut down and sold because management decided it was not a viable business given the operating environment, and there appeared to be no synergy between Benatone and the other operations of the company.

The company incurred a loss from continuing operations of $1,246,000 for fiscal 1999 compared with a loss from continuing operations of $356,000 for fiscal 1998. The company's sales from continuing operations continued to expand and were $1,814,000 in Fiscal 1999 as compared to $1,466,000 in fiscal 1998. However, selling, general and administrative expenses increased at an even faster rate and were $2,894,000 in Fiscal 1999 as compared to $2,119,000 in fiscal 1998.

The significant increase in the company's net loss from continuing operations was primarily due to the uncollectability of a $48,000 receivable, litigation expense of $90,000 and the settlement of some previously outstanding issues in fiscal 1999. By contrast, in fiscal 1998, the overall performance of the continuing operations was improved primarily due to the $217,000 gain on the sale of the photographic studio.

Benatone incurred a loss of $89,000 in fiscal 1999, the year of its discontinued operations, compared with a loss of $247,000 in fiscal 1998. The impact of this loss was further reduced in fiscal 1999 by the gain of $25,000 on the sale of Benatone.

Prima continued to be successful in reducing its costs, although this hurt sales somewhat, but resulted in an operating profit for Prima. During the year, Prima moved its office causing disruption to its office which also produced some loss of sales. Management is making every effort to recover those sales in subsequent periods. By working very closely with Que in New York, management expects further improvement in sales during the forthcoming years, although there is no assurance that this will happen.

Que began operations on January 5, 1998 and the company has forecasted losses for the first few years of its operations. However the results of Que are encouraging as sales are significantly better than forecasted and many of the initial expenses will not be repeating. Furthermore, Que has already begun working and cooperating closely with Prima to the benefit of both companies.

(C) FISCAL YEARS ENDED DECEMBER 31, 1999 AND 1998.

Providential Securities, Inc. incurred a loss from continuing operations of $544,010 for fiscal 1999 compared with a profit from continuing operations of $154,940 for fiscal 1998. Providential Securities, Inc.'s sales from continuing operations continued to expand and were $6,138,462 in fiscal 1999 as compared to $3,680,030 in fiscal 1998. However, selling, general and administrative expenses increased at an even faster rate and were $6,418,032 in fiscal 1999 as compared to $3,547,417 in fiscal 1998.

(D) THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999.

As of March 31, 2000, the company had a working capital deficit of $811,909 compared to a deficit of $1,457,573 at December 31, 1999, an increase in working capital of $645,664. The increase in

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working capital was due to the company reducing its reliance on short term borrowings to meet current obligations during the first three months of 2000 as compared to the same period in 1999 and an increase in Inventory and Work-In-Progress.

Revenues for the company increased by $1,076,177 from $1,565,235 for the fiscal quarter ended March 31, 1999 (which only reflected the accounts of Providential Securities, Inc.) to $2,641,412 for the quarter ended March 31, 2000 (which included the accounts of Providential Holdings, Inc., Providential Securities, Inc. and Diva Entertainment, Inc.). This is an increase of 68.75%. Also, the revenue increased by 39.90% from $3,983,299 for the nine months ended March 31, 1999, to $5,572,676 for the nine months ended March 31, 2000 due to better marketing efforts.

Selling, general and administrative expenses of the company increased by 112.7% from $1,682,533 for the quarter ended March 31, 1999 to $3,580,184 for the quarter ended March 31, 2000. Major portions of the increase can be attributable to the rise in marketing costs associated with the introduction of new products and services, the placement costs for the convertible promissory notes and the addition of employees. Also, these expenses increased by 62.54% for the nine months ended March 31, 2000 compared with the corresponding period in the previous year ($3,962,148 compared with $6,440,216).

The net loss for the fiscal quarter ended March 31, 2000 is ($676,146) or ($0.025) per share compared with ($117,298) for the corresponding period in 1999. For the fiscal nine months ended March 31, 2000 the company had a net loss of ($604,914) or equivalent to ($0.23) per share compared with a net profit of $21,151 for the corresponding period in the previous year.

As a result of the company's operating losses during the three months ended March 31, 2000 and 1999, the company generated cash flow deficits of $662,136 in 2000 as compared to a deficit of $536,837 in 1999 from operating activities. The company met its cash requirements during the first three months of 2000 through loan proceeds of $1,614,820 from private sources.

While the company has raised capital to meet its working capital and financing needs in the past, additional financing is required in order to meet the company's current and projected cash flow deficits from operations. The company is seeking financing in the form of equity in order to provide the necessary working capital. The company currently has no commitments for financing. There are no assurances the company will be successful in raising the funds required.

The company has issued shares of its common stock from time to time in the past to satisfy certain obligations, and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the company.

TRENDS AND UNCERTAINTIES.

(1) PRIMA.

Prima continues to seek to expand and increase its customer base and operating revenues. In doing so it is probable that its administrative expenses and overhead are likely to increase in future periods. The continuation of obtaining additional types of business and markets is uncertain and the continued success of any of Prima's new marketing strategies for generating revenue is uncertain.

(2) QUE.

Que continues to seek to expand and increase its customer base and operating revenues. In doing so it is probable that its administrative expenses are likely to increase in future periods. The continuation of obtaining additional types of business and markets is uncertain and the continued success of any of Que's new marketing strategies for generating revenue is uncertain.

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LIQUIDITY AND CAPITAL RESOURCES.

(A) FOUR AND TEN MONTHS ENDED APRIL 30, 2000 AND 1999.

As of March 31, 2000, the company had a working capital deficit of $811,909 compared to a deficit of $1,457,573 at December 31, 1999, an increase in working capital of $645,664. The increase in working capital was due to the company reducing its reliance on short term borrowings to meet current obligations during the first three months of 2000 as compared to the same period in 1999 and an increase in Inventory and Work-In-Progress.

As a result of the company's operating losses during the three months ended March 31, 2000 and 1999, the company generated cash flow deficits of $662,136 in 2000 as compared to a deficit of $536,837 in 1999 from operating activities. The company met its cash requirements during the first three months of 2000 through loan proceeds of $1,614,820 from private sources.

While the company has raised capital to meet its working capital and financing needs in the past, additional financing is required in order to meet the company's current and projected cash flow deficits from operations. The company is seeking financing in the form of equity in order to provide the necessary working capital. The company currently has no commitments for financing. There are no assurances the company will be successful in raising the funds required.

The company has issued shares of its common stock from time to time in the past to satisfy certain obligations, and expects in the future to also acquire certain services, satisfy indebtedness and/or make acquisitions utilizing authorized shares of the capital stock of the company.

FORWARD LOOKING STATEMENTS.

This prospectus contains "forward looking statements" within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, including statements regarding, among other items, the company's business strategies, continued growth in the company's markets, projections, and anticipated trends in the company's business and the industry in which it operates. The words "believe," "expect," "anticipate," "intends," "forecast," "project," and similar expressions identify forward-looking statements. These forward-looking statements are based largely on the company's expectations and are subject to a number of risks and uncertainties, certain of which are beyond the company's control. The company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the company's products, competitive pricing pressures, changes in the market price of ingredients used in the company's products and the level of expenses incurred in the company's operations. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained herein will in fact transpire or prove to be accurate. The company disclaims any intent or obligation to update "forward looking statements."

DESCRIPTION OF PROPERTY

The following is an overview of the company's principal properties and equipment (not including its subsidiaries).

(i) OFFICE BUILDING. On January 8, 1998, the company purchased an office building in Fountain Valley, California containing approximately 20,000 square feet of usable office space. The company leases out approximately 6,700 square feet of the building to one tenant.

(ii) RESIDENTIAL PROPERTY. The company has purchased a condominium in Irvine, California for the use of accommodating business guests.

(iii) AUTOMOBILES. The company has purchased two automobiles for the management's personnel use.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the past two years, there have not been any transactions that have occurred between the company and its officers, directors, or five percent shareholders.

Certain of the officers and directors of the company are engaged in other businesses, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on a board of directors. As a result, certain conflicts of interest may arise between the company and its officers and directors. The company will attempt to resolve such conflicts of interest in favor of the company. The officers and directors of the company are accountable to it and its shareholders as fiduciaries, which requires that such officers and directors exercise good faith and integrity in handling the company's affairs. A shareholder may be able to institute legal action on behalf of the company or on behalf of itself and other similarly situated shareholders to recover damages or for other relief in cases of the resolution of conflicts is in any manner prejudicial to the company.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION.

On June 29, 1995, the company's common stock began trading on the Over the Counter Bulletin Board under the symbol "JRCI." On January 17, 2000 the company's ticker symbol changed to reflect the change in the name of the company, and subsequent to January 17, 2000 has been trading under the symbol "PRVH." The range of closing prices shown below is as reported by this market. The quotations shown reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

PER SHARE COMMON STOCK BID PRICES BY QUARTER
FOR THE FISCAL YEAR ENDED ON JUNE 30, 2000                      HIGH       LOW
--------------------------------------------                  --------   --------
Quarter Ended June 30, 2000.................................    2.06       0.62
Quarter Ended March 31, 2000................................    3.62       0.94
Quarter Ended December 31, 1999.............................    1.62       0.19
Quarter Ended September 30, 1999............................    0.25       0.19

PER SHARE COMMON STOCK BID PRICES BY QUARTER
FOR THE FISCAL YEAR ENDED ON JUNE 30, 2000                      HIGH       LOW
--------------------------------------------                  --------   --------
Quarter Ended June 30, 1999.................................    0.33       0.25
Quarter Ended March 31, 1999................................    0.94       0.25
Quarter Ended December 31, 1999.............................    0.44       0.12
Quarter Ended September 30, 1998............................    1.06       0.37

(B) HOLDERS OF COMMON EQUITY.

As of September 27, 2000, there were 1,190 shareholders of record of the company's common stock.

(C) DIVIDENDS.

The company has not declared or paid a cash dividend to shareholders since it became a "C" corporation. The Board of Directors presently intends to retain any earnings to finance company operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the company's earnings, capital requirements and other factors.

43

EXECUTIVE COMPENSATION

(a) The current officers and directors have not received any compensation to date. Any future compensation will be determined and approved by the board of directors as its deems appropriate and reasonable.

(b) There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the company in the event of retirement at normal retirement date as there is no existing plan provided for or contributed to by the company.

(c) No remuneration is proposed to be paid in the future directly or indirectly by the company to any officer or director since there is no existing plan that provides for such payment, including a stock option plan, other than as follows:

On July 10, 2000, the company issued the following stock options to the following officers, directors, and employees of the company (after approval by the board of directors):

OPTIONS GRANTS IN LAST FISCAL YEAR

                                               NUMBER OF
                                              SECURITIES    % OF TOTAL
                                              UNDERLYING      OPTIONS
                                                OPTIONS     GRANTED TO
                                              GRANTED IN     EMPLOYEES
                                               LAST THE     DURING THE    EXERCISE   EXERCISE    EXPIRATION
NAME                         POSITION         FISCAL YEAR   FISCAL YEAR    PRICE       DATE         DATE
----                   ---------------------  -----------   -----------   --------   ---------   ----------
Henry D. Fahman......  CEO and Chairman of     5,000,000       35.71%       $.50     7/01/2001   12/31/2002
                       the Board
Nhi T. Le............  Director, Vice          5,000,000       35.71%       $.50     7/01/2001   12/31/2002
                       President
Tina T. Phan.........  Director, Vice          2,000,000       14.28%       $.50     7/01/2001   12/31/2002
                       President of
                       Operations, Secretary
Theodore D. Fahman...  former CFO              1,000,000        7.15%       $.50     7/01/2001   12/31/2002
Timothy D. Fahman....  Vice President            500,000        3.58%       $.50     7/01/2001   12/31/2002
Hung H. Nguyen.......  Vice President            500,000        3.57%       $.50     7/01/2001   12/31/2002

The options contain no vesting provisions, but rather must be exercised by the end of 2002.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

(a) On September 4, 1998, the company's board of directors appointed Marcum & Kliegman LLP as the company's independent auditors for the fiscal years ended June 30, 1998 and June 30, 1999. This firm replaced Coopers & Lybrand, LLP, which audited the company's financial statements for the fiscal years ended June 30, 1997 and 1996.

Effective on July 28, 2000, Marcum & Kliegman LLP was dismissed. The decision to change accountants was approved by the board of directors.

During the company's fiscal years ended June 30, 1998 and 1999, and the subsequent interim period preceding such dismissal, there were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. In addition, there were no "reportable events" as described in Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B of the Securities Act of 1933 that occurred within those fiscal years and the subsequent interim period preceding the former accountants' dismissal.

(b) Effective on July 28, 2000, Kabani & Company, Inc. was engaged to serve as the new principal accountants to audit the company's financial statements. During the company's two most recent fiscal

44

years, and the subsequent interim period prior to engaging these accountants, neither the company nor someone on its behalf consulted the newly engaged accountants regarding any matter. In addition, there has been no disagreement with these accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

AVAILABLE INFORMATION

The company has filed with the U.S. Securities and Exchange Commission, Washington, D.C. 20549, a registration statement on Form SB-2 under the Securities Act of 1933 with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules filed with the registration statement. Certain items are omitted in accordance with the rules and regulations of the Commission. For further information with respect to the company and the common stock offered by this prospectus, reference is made to the registration statement and the exhibits and schedules filed with the registration statement. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.

A copy of the registration statement, and the exhibits and schedules filed with it, may be inspected without charge at the public reference facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and the Commission's regional offices located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York 10048, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the Commission. The public may obtain information on the operation of the public reference room by calling the Commission at 1 (800) SEC-0330. The Commission maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including the company. The address of the site is http://www.sec.gov. The registration statement, including all its exhibits and any amendments, has been filed electronically with the Commission.

45

PROVIDENTIAL HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                                              PAGE NUMBER
                                                              -----------
Providential Holdings, Inc.
------------------------------------------------------------

  UNAUDITED FINANCIALS FOR THE FIVE MONTH PERIOD ENDED
    MAY 31, 2000

  Consolidated Balance Sheet................................      F-2

  Consolidated Statement of Operations......................      F-3

  Consolidated Statement of Cash Flows......................      F-4

      Notes to Financial Statements.........................      F-5

Providential Securities, Inc.
------------------------------------------------------------

  AUDITED FINANCIALS FOR THE FISCAL YEARS ENDED
    DECEMBER 1999 AND DECEMBER 1998

  Independent Accountant's Report...........................     F-14

  Balance Sheet.............................................     F-15

  Statement of Income and Retained Earnings.................     F-17

  Statement of Changes in Ownership Equity..................     F-19

  Statement of Cash Flows...................................     F-20

  Notes to the Financial Statements.........................     F-22

  Supplementary Information.................................     F-28

F-1

FINANCIAL STATEMENTS

PROVIDENTIAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

                                                              MAY 31, 2000    MAY 31, 1999
                                                              -------------   -------------
Current Assets:
    Cash....................................................   $   362,795     $   580,304
    Accounts Receivable.....................................       140,022         154,592
    Inventoried Securities..................................            --            (727)
    Marketable Securities...................................     1,519,815         136,485
    Other Curent Assets.....................................     2,041,735          27,051
    Total Current Assets....................................     4,064,367         897,705

Fixed Assets, Net...........................................    28,827,333      28,415,835

Other Assets:...............................................    13,059,520          62,937
                                                               -----------     -----------

Total Assets................................................   $45,951,220     $29,376,477
                                                               ===========     ===========

Current Liabilities
    Accounts Payable........................................   $ 1,007,646     $    35,474
    Accrued Expenses........................................       452,556         157,438
    Other Current Liabilities...............................     1,316,637          18,651
    Total Current Liabilities...............................     2,776,839         211,563

Long Term Debt..............................................     3,121,566       1,469,969

Stockholders' Equity
    Common Stock, $.04 par value, 100,000,000 authorized,
      27,322,869 issued and outstanding.....................     1,183,823          19,971
    Convertible Preferred Stock, Class A....................     1,150,000
    Convertible Preferred Stock, Class B....................     3,000,000
    Convertible Preferred Stock, Class C....................       100,000

    Paid In Capital.........................................    41,111,500      27,312,700
    Retained Earnings.......................................    (6,492,508)        362,275
    Total Stockholders' Equity..............................    40,052,815      27,694,946
                                                               -----------     -----------

Total Liabilities and Stockholders' Equity..................   $45,951,220     $29,376,478
                                                               ===========     ===========

See Accompanying Notes to Unaudited Financial Statements

F-2

PROVIDENTIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE FIVE MONTHS ENDED MAY 31, 2000 AND 1999
(UNAUDITED)

                                                              MAY 31, 2000    MAY 31, 1999
                                                              -------------   -------------
Revenue.....................................................   $ 3,552,096     $2,818,684
Operating Expenses..........................................     6,178,850      2,913,427
Operating Profit (Loss).....................................    (2,626,754)       (94,743)
Other Income (Expense)......................................       502,000
Interest Expense............................................        28,066
Income (Loss) before tax....................................    (2,152,820)       (94,743)
Provision for income taxes..................................         1,600            800
                                                               -----------     ----------
Net Income (Loss)...........................................   $(2,154,420)    $  (95,543)
                                                               ===========     ==========
Weighted Average Common Stock...............................    26,937,269
Loss per common share.......................................   $     (0.08)

See Accompanying Notes to Unaudited Financial Statements

F-3

PROVIDENTIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FIVE MONTHS ENDED MAY 31, 2000 AND 1999
(UNAUDITED)

                                                             MAY 31, 2000   MAY 31, 1999
                                                             ------------   ------------
Cash Flows from operating activities:
  Net Income (Loss)........................................  $ (6,634,640)    $ (95,543)
  Add/deduct items not affecting cash
    Depreciation/Amortization Expense......................        71,171        32,997
    Decrease in Accounts Receivables.......................       447,833       (48,348)
    Decrease in Inventoried Securities.....................       315,066       191,215
    Increase in Marketable Securities......................    (1,398,495)
    Increase in Other Current Assets.......................    (1,052,086)
    Increase in Accounts Payable...........................       918,949        26,079
    Increase in Accrued Expenses...........................       242,955      (246,386)
    Increase in Other Current Liabilities..................       973,803       (41,846)

  Net Cash Flows used in operating activities..............    (6,115,444)     (181,832)
Cash Flows from investing activities:
    Purchase of equipment..................................      (343,050)     (413,442)
    Other..................................................      (252,661)      (13,104)
  Net Cash used in financing activities....................      (595,711)     (426,546)

Cash Flows from financing activities:
    Proceeds from issuing Equity Securities................    17,899,154
    Increase Subordinated Liabilities......................                     227,500
    Increase in Long Term Debt, net........................     1,629,202       (16,678)
    Increase Paid In Capital...............................                     545,000
    Increase in Goodwill, net..............................   (12,653,699)
  Net Cash from financing activities.......................     6,874,657       755,822

Net Increase in Cash.......................................       163,502       147,444
Cash Balance at 12/31/99...................................       199,293       432,860
                                                             ------------     ---------
Cash Balance at 5/31/00....................................  $    362,795     $ 580,304
                                                             ============     =========

See Accompanying Notes to Unaudited Financial Statements

F-4

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS

J R Consulting, Inc. ("JRCI" or the "Company"), a holding company, was incorporated in the State of Nevada on June 8, 1982. JRCI owned 100% of a United Kingdom company, Benatone Limited ("Benatone"), which was sold on June 30, 1999 (see Note 11). JRCI is the majority stockholder of Diva Entertainment, Inc., a Delaware corporation formerly known as Quasar Projects Company ("Diva-Delaware").

On December 29, 1997, JRCI formed Que Management Inc. ("Que"), a wholly owned subsidiary, which was incorporated in State of New York. On April 13, 1998, JRCI formed Diva Entertainment, Inc., a Florida corporation and holding company ("Diva-Florida").

During the fiscal year ended June 30, 1998, Diva-Florida issued 4,500,000 shares of common stock to JRCI in exchange for 100% of the outstanding common stock of Que and Prima Eastwest Model Management, Inc. ("Prima"), which was incorporated in the State of California on January 29, 1996. The shares issued were valued at the historical cost of JRCI's investment in Prima and Que.

Prima and Que are in the business of providing management services to models and talents in the entertainment industry, primarily in California and New York.

Benatone, owns 100% of Pivot Group Limited, Classlife Limited, Plugco Limited and Bifa Limited ("Benatone and Subsidiaries") which are incorporated in England and Wales. Benatone and Subsidiaries manufacture and hold patents in designs of screwless electrical plugs. Plugs are manufactured in low cost countries and sold wholesale in England. Benatone was sold on June 30, 1999 (see Note 11).

Effective January 14, 2000, the Boards of Directors and shareholders of JR Consulting, Inc. and Providential Securities, Inc. ("Providential") approved a Corporate Combination Agreement (the "Agreement") between the two companies, which, after waiver of pre-conditions, has been concluded. On January 12, 2000, the company changed its name from JR Consulting, Inc. to Providential Securities, Inc., and then again changed to Providential Holdings, Inc. with a trading symbol changed to "PRVH". Effective January 14, 2000, the Company declared a one-for-two reverse stock split of its common stock, resulting in approximately 26,690,629 total issued and outstanding shares of the Company.

Under the terms of the Agreement, JRCI has agreed to issue 40,000,000 pre-reverse-split shares of its restricted common stock to the former shareholders of Providential, as consideration for all of the issued and outstanding shares of Providential, resulting in a total of 53,381,258 (26,690,629 post-reverse-split) issued and outstanding shares of the Company, of which the Providential shareholders control approximately 74%.

BUSINESS COMBINATION

On April 28, 1999, but effective April 1, 1999, Diva-Delaware, a public shell company, acquired JRCI's 95% equity interest in Diva-Florida in exchange for 4,225,000 shares of Diva-Delaware's common stock (the "Acquisition"). This Acquisition, which has been treated as a capital transaction in substance, rather than a business combination, was deemed a "reverse acquisition" for accounting purposes. Accordingly, Diva-Florida was the accounting acquirer and the historical financial statements

F-5

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
prior to April 1, 1999 were those of Diva-Florida. The capital structure and earnings (losses) per share of Diva-Florida have been retroactively restated to reflect the Acquisition as if it occurred at the beginning of the period. In connection with the above Acquisition, Diva-Delaware changed its name from Quasar Projects Company to Diva Entertainment, Inc.

Diva-Delaware, Diva-Florida, Que and Prima are collectively referred as "Diva and Subsidiaries".

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of JRCI, Benatone and Subsidiaries, Diva and Subsidiaries, collectively referred to as the "Company". All significant inter-company transactions have been eliminated in consolidation.

The acquisition of Providential Securities, Inc. has been accounted for as a purchase and treated as a reverse acquisition since the former owners of Providential Securities controlled 100% of the total shares of Common Stock of the Company outstanding immediately following the acquisition on January 14, 2000. The historical results for the five months ended May 31, 2000 include both JRCI and Providential Securities while the historical results for the five months ended May 31, 1999 include only Providential Securities.

IMPAIRMENT OF LONG-LIVED ASSETS

Equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group assets.

FOREIGN CURRENCY TRANSLATION

The Company had owned a foreign subsidiary that had operated in the United Kingdom. The subsidiary's functional currency was the British pound. The consolidated financial statements of the foreign subsidiary had been translated using the current rate method in accordance with the Statement of Financial Accounting Standards No. 52, Foreign Currency Translation ("SFAS No. 52").

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Maintenance and repair costs are charged to expense as incurred; costs of major additions and betterments are capitalized. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in income.

DEPRECIATION AND AMORTIZATION

The cost of property and equipment is depreciated over the estimated useful lives of the related assets. The cost of leasehold improvements is amortized over the life of the lease or the estimated useful life of the improvements, whichever is less. Depreciation and amortization of property and equipment are computed on the straight-line and accelerated methods.

F-6

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET EARNINGS PER SHARE

The Company adopted the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 128"). SFAS No. 128 eliminates the presentation of primary and fully diluted earnings per share ("EPS") and requires presentation of basic and diluted EPS. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding at the end of the period. Common stock equivalents have been excluded from the calculation of weighted-average shares for purposes of calculating diluted earnings per share for 1999 and 1998, as such inclusion is anti-dilutive.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

STOCK-BASED COMPENSATION

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation". SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded (i) using the new fair value method or (ii) using the existing accounting rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related interpretations with pro forma disclosure of what net income and earnings per share would have been had the Company adopted the new fair value method. The Company adopted this standard in fiscal 1999 and the implementation of this standard did not have any impact on its financial statements.

ADVERTISING COSTS

Advertising costs are expensed as incurred.

INCOME TAXES

Deferred income tax assets and liabilities are computed annually for differences between the consolidated financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

RECLASSIFICATIONS

Certain accounts in the prior year consolidated financial statements have been reclassified for comparative purposes to conform with the presentation in the current year consolidated financial statements. These reclassifications have no effect on the previously reported income.

F-7

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statement of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130"), establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company adopted this standard in fiscal 1999 and the implementation of this standard did not have a material impact on its financial statements.

REPORTING OF SEGMENTS

Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS No. 131"), which supersedes Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise, establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. SFAS No. 131 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

PENSION AND OTHER BENEFITS

In February 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions and Other Post-retirement Benefits ("SFAS No. 132"), which standardizes the disclosure requirements for pensions and other post-retirement benefits. The Company adopted this standard in fiscal 1999 and the implementation of this standard did not have any impact on its financial statements.

ACCOUNTING DEVELOPMENTS

In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants ("ASEC of AICPA") issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", effective for fiscal years beginning after December 15, 1998. SOP No. 98-1 requires that certain costs of computer software developed or obtained for internal use be continued capitalized and amortized over the useful life of the related software. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

F-8

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In April 1998, the ASEC of AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-up Activities", and effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires the costs of start-up activities and organization costs to be expensed as incurred. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 1999, which has been deferred to June 30, 2000 by publishing of SFAS No. 137. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. This Statement requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. The accounting for changes in the fair value of a derivative instrument depends on its intended use and the resulting designation. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

NOTE 2--PROPERTY AND EQUIPMENT

Property and equipment consists of the following at May 31, 2000:

                                                                          ESTIMATED
                                                               AMOUNT    USEFUL LIFE
                                                              --------   -----------
Equipment and fixtures......................................   $  419    5-7 years
Building/Leasehold improvements.............................    1,781    5-25 years
                                                               ------
                                                                2,200
Less: accumulated depreciation and amortization.............      209
                                                               ------
Property and Equipment, net.................................   $1,991
                                                               ======

Depreciation and amortization expense for the years ended June 30, 1999 and 1998 was approximately $80 and $39, respectively.

NOTE 3--GOODWILL

The Company has goodwill resulting from a business combination with Prima and Providential. Goodwill is being amortized on the straight-line method over fifteen (15) years. The amortization expense for the five months ended May 31, 2000 amounted to approximately $351.

NOTE 4--INCOME TAXES

No provision has been made in the accompanying consolidated financial statements for income tax expense as a result of the current operating loss and net operating loss ("NOL") carryforwards.

Differences between income tax benefits computed at the Federal statutory rate (34%) and reported income taxes for 1999 and 1998 are primarily attributable to the valuation allowance for the NOL and other permanent differences.

F-9

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 4--INCOME TAXES (CONTINUED)
As of June 30, 1999 the Company's total deferred tax assets relate primarily to NOL carryforwards, and the tax effect of differences in financial and income tax reporting for amortization methods, and the related valuation allowance. Management concluded a full valuation allowance on the deferred tax assets was appropriate due to the Company's failure to file its federal and state tax returns.

As of June 30, 1999, the Company estimated the available NOL carryforwards are subject to certain limitations, which will expire on various dates through 2020. The amount and utilization of the NOL carryforwards cannot be determined at June 30, 1999 based upon the information available.

NOTE 5--COMMITMENTS AND CONTINGENCIES

LEASING ARRANGEMENTS

The Company leases its New York and Los Angeles offices through five-year non-cancelable lease agreements expiring in December 2002 and December 2003, respectively. In addition, the Company leases certain equipment under non-cancelable operating leases that expire in the year ending June 30, 2004.

Future minimum rental commitments under such noncancellable operating leases as of June 30, 1999 are as follows:

FOR THE YEAR
ENDING JUNE 30,                                        AMOUNT
---------------                                       --------
    2000............................................    $131
    2001............................................     133
    2002............................................     135
    2003............................................      98
    2004............................................      28
                                                        ----
      Total.........................................    $525
                                                        ====

Rent expense for the years ended June 30, 1999 and 1998 was $99 and $83, respectively.

CONTINGENCY

In December 1997, Prima entered into an Agreement with an unrelated third Party to sell certain assets and liabilities. Pursuant to this Agreement, Prima assigned the studio lease to the buyer. The future commitments under the lease at June 30, 1999 amounted to $784 through October 2007. Prima is contingently liable for these commitments in case the buyer is in defaults on such payments.

LITIGATION

Prima is named as a defendant in an action filed by a bank in February 1997. The bank is seeking to enforce the terms of certain promissory notes allegedly guaranteed by Prima and collateralized by substantially all assets of Prima. At the time of the commencement of the action, the balance was $503 together with interest thereon from January 30, 1997. On May 6, 1999, a judgement was entered against the defendants in this matter, including Prima. However, the judgement provides that to the

F-10

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 5--COMMITMENTS AND CONTINGENCIES (CONTINUED)
extent Prima is required to pay any sums to the bank, Prima is entitled to a judgement against Edward Stein, a co-defendant.

Since Prima cannot determine whether the co-defendant has sufficient assets to reimburse Prima for any potential loss, Prima has established a reserve of $503.

SEC INJUNCTION

In April 1997, the Company consented to the entry against it of a permanent injunction obtained by the SEC for the Company's failure to file reports on a timely basis. Up to April 1997, the Company had not filed timely with the SEC the annual report on Form 10-KSB for the year ended June 30, 1996, the interim reports on Form 10-QSB for the quarters ended September 30, and December 31, 1996. Subsequent to the consent of the injunction, the Company failed to file timely the interim report on Form 10-QSB for the quarter ended March 31, 1997; the annual report on Form 10-KSB for the years ended June 30, 1998 and 1997; and the interim reports on Form 10-QSB for the quarters ended September 30, December 31, 1997 and September 30, December 31, 1998 and March 31, 1999. The Company has since filed each of the reports mentioned in the civil action.

However, this Annual Report for the year ended June 30, 1999 is being filed late and the Company is still delinquent with the filing of its Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999. The Company intends to file this Quarterly Report within the next week. Management believes that its violation of the SEC injunction will not have a material adverse effect on the financial position of the Company.

NOTE 6--STOCKHOLDERS' EQUITY

PREFERRED STOCK OF SUBSIDIARY

SERIES A CONVERTIBLE PREFERRED STOCK

In May 1998, Diva-Florida commenced a private placement offering of its common stock, wherein it proposed to sell up to 500,000 shares of common stock at a price of $2.00 per share. As of June 30, 1998, 221,000 shares of common stock were sold for $442. These shares were subscribed and not yet formally issued at April 28, 1999. In connection with the Acquisition (see Note 1), the subscribers of the 200,000 Diva-Florida's shares converted their subscribed shares to 200 shares of Diva-Delaware's Series A Convertible Preferred Stock (the "Series A Preferred"). Diva-Florida returned $42 to the subscriber who held 21,000 subscribed shares of Diva-Florida's common stock. In connection with the conversion, Diva-Delaware authorized the designation of 1,721 shares of the Series A Preferred. The Company incurred $30 of placement agent fees in connection with this offering.

PREFERRED STOCK OF SUBSIDIARY

SERIES A CONVERTIBLE PREFERRED STOCK

Diva-Delaware immediately commenced a private placement offering of its Series A Preferred after the Acquisition (see Note 1), wherein it proposed to sell up to 750 shares of Series A Preferred at a price of $2,000 per share. At June 30, 1999, 375 shares of the Series A Preferred were sold for $750, which was received in cash and 375 shares were subscribed for $750. The balance is payable when

F-11

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 6--STOCKHOLDERS' EQUITY (CONTINUED)
Diva-Delaware files an amendment to the registration statement for the shares of its common stock underlying the Series A Preferred which amendment incorporates the audited financial statements for the fiscal year ended June 30, 1999. The Company incurred $30 of placement agent fees in connection with this offering.

The Series A Preferred holders are entitled to receive cumulative preferential dividends at $60 per share per annum, payable annually on each anniversary date of issuance. In the option of the Diva-Delaware, such dividend may be paid in cash or in shares of Diva-Delaware's common stock valued at the Conversion Rate, as defined. As of June 30, 1999, total cumulated dividends amounted to $9. In addition, the Series A Preferred are subject to certain conversion, redemption, and liquidation provisions, as defined in the Certificate of Designation.

SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK

In connection with the Acquisition (see Note 1), JRCI converted $3,000 of debt, owned to it by Diva-Florida and Subsidiaries, into 3,000 shares of Series B Redeemable Convertible Preferred Stock (the "Series B Preferred") of Diva-Delaware. In connection with the conversion, Diva-Delaware authorized the designation of 3,000 shares of Series B Preferred.

The Series B Preferred holders are entitled to receive cumulative preferential dividends at $30 per share per annum, payable annually on each anniversary date of issuance. In the option of the Diva-Delaware, such dividend may be paid in cash or in shares of Diva-Delaware's common stock valued at the Conversion Rate, as defined. As of June 30, 1999, total cumulated dividends amounted to $23. In addition, the Series B Preferred are subject to certain conversion, redemption, and liquidation provisions, as defined in the Certificate of Designation.

OPTION AGREEMENT

JRCI and Diva-Delaware also entered into an Option Agreement giving JRCI the option to purchase additional shares of Diva-Delaware's Common stock at its par value of $.001 per share in order for JRCI to maintain JRCI's ownership of the outstanding shares of Diva-Delaware's common stock at no less than 65%. The option expires when all of the shares of Diva-Delaware's Series A Preferred have been converted into shares of Diva-Delaware's common stock.

NOTE 7--MINORITY INTEREST

The minority interest is held by a small group of outside investors who own approximately 23% of Diva-Delaware. Since the minority interest is a debit balance on the consolidated balance sheet, the minority's interest in any future losses and gains are not being recorded until the aggregate of such prior losses and accumulated deficit equals the aggregate of future profits and losses.

NOTE 8--GOING CONCERN UNCERTAINTY

As shown in the accompanying financial statements, the Company incurred a net loss of $1,310 during the year ended June 30, 1999. As of June 30, 1999, the Company's current liabilities exceeded its current assets by $1,236, and its total liabilities exceeded its total assets by $805. These factors, as well as the uncertain conditions that the Company faces in its day-to-day operations, create an uncertainty as to the Company's ability to continue as a going concern. The financial statements do not

F-12

PROVIDENTIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 8--GOING CONCERN UNCERTAINTY (CONTINUED)
include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Management has taken action and is formulating additional plans to strengthen the Company's working capital position and generate sufficient cash to meet its operating needs through June 30, 2000 and beyond. No assurances can be made that the management will be successful in achieving its plan.

F-13

DANIEL J. HOLLAND, CPA
Member: California Society of CPA's American Institute of CPA's 1 Arcilla
Rancho Santa Margarita, CA 92688
FAX: (949) 888-8679

INDEPENDENT AUDITOR'S REPORT

Shareholders
Providential Securities, Inc.
Fountain Valley, California

I have audited the accompanying balance sheet of Providential Securities, Inc. as of December 31, 1999 and 1998 and the related statements of income and retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Providential Securities, Inc. as of December 31, 1999 and 1998 and its results of operations and cash flows for the years then ended, in conformity with generally accepted accounting principles.

My audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedules of Net Capital Requirement on pages 16 and 17 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

                                                      /s/ DANIEL J. HOLLAND
                                                      CERTIFIED PUBLIC
                                                      ACCOUNTANT

Rancho Santa Margarita, California
March 27, 2000

F-14

PROVIDENTIAL SECURITIES, INC.

BALANCE SHEETS

AS OF DECEMBER 31, 1999 AND 1998

                                                                AS OF DECEMBER 31,
                                                             -------------------------
                                                                1999          1998
                                                             -----------   -----------
ASSETS
Current Assets:
  Cash in Bank.............................................  $   199,293   $   432,860
  Accounts Receivable......................................      587,855        91,398
  Inventoried Securities...................................      315,066       190,488
  Marketable Securities....................................      121,320       136,485
  Prepaid Expenses.........................................      226,500        27,051
  Prepaid Acquisition Costs................................      600,000            --
  Other Assets.............................................       39,946        14,846
  Advance to Shareholder...................................      123,203            --
                                                             -----------   -----------
    Total Current Assets...................................    2,213,183       893,128

Fixed Assets:
  Office Building..........................................    1,452,742     1,450,702
  Furniture & Fixtures.....................................       34,056        30,504
  Office Equipment.........................................      297,853       114,245
  Leasehold Improvements...................................           --        15,000
  Automobiles..............................................       81,103            --
  Residential Property.....................................      328,025            --
  Less: Accumulated Depreciation...........................     (184,229)      (80,060)
                                                             -----------   -----------
    Total Fixed Assets.....................................    2,009,550     1,530,391

Other Assets:
  Interest in Undeveloped Natural Resource (See
    Note 10)...............................................   26,500,000    26,500,000
  Escrow Deposit...........................................           --         5,000
  Deferred Tax Asset.......................................      136,127
  Deposits and Prepaid Rent................................       62,937        49,834
  Total Other Assets.......................................   26,699,064    26,554,834
                                                             -----------   -----------
                                                             $30,921,797   $28,978,353
                                                             ===========   ===========

F-15

PROVIDENTIAL SECURITIES, INC.

BALANCE SHEETS

AS OF DECEMBER 31, 1999 AND 1998

LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                AS OF DECEMBER 31,
                                                             -------------------------
                                                                1999          1998
                                                             -----------   -----------
Current Liabilities:
  Accounts Payable.........................................  $    88,697   $     9,395
  Current Portion-Notes Payable............................       24,838        14,002
  Accrued Salaries and Commissions.........................      209,601       212,746
  Advances from Shareholder................................           --        38,610
  Inventoried Short Positions..............................      299,345       176,615
  Security Deposits from Tenants...........................       18,651        19,487
  Payroll Taxes Payable....................................           --        16,865
                                                             -----------   -----------
    TOTAL CURRENT LIABILITIES..............................      641,132       487,720
Long Term Liabilities:
  Notes Payable............................................    1,492,364     1,245,145
                                                             -----------   -----------
  Total Long Term Liabilities..............................    1,492,364     1,245,145
                                                             -----------   -----------
    TOTAL LIABILITIES......................................    2,133,496     1,732,865
Stockholder's Equity
  Common Stock, no par value, 40,000,000 shares authorized,
  16,788,198 shares issued and outstanding.................       19,971        19,971
  Preferred Stock (Class A, Series I) $5.00 par value,
  10,000,000 shares authorized, 103,000 shares issued and
  outstanding..............................................      515,000
  Additional Paid in Capital...............................   28,111,198    26,767,700
  Retained Earnings........................................      142,132       457,817
                                                             -----------   -----------
    Total Stockholders' Equity.............................   28,788,301    27,245,488
                                                             -----------   -----------
                                                             $30,921,797   $28,978,353
                                                             ===========   ===========

F-16

PROVIDENTIAL SECURITIES, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                                 1999          1998
                                                              -----------   -----------
Revenue:
  Commissions & Fees........................................  $6,138,462    $3,680,030
  Principal Transactions....................................    (397,095)      (56,720)
  Other Income..............................................     132,655        79,047
                                                              ----------    ----------
    TOTAL REVENUE...........................................  $5,874,022    $3,702,357
                                                              ==========    ==========

Expenses:
  Automobile Expense........................................  $   10,548    $    4,578
  Accounting, Legal & Prof. Fees............................     264,983        56,026
  Bank and Finance Chares...................................       3,838         3,231
  Clearing Charges & Assessments............................   1,259,863       724,653
  Business Promotion & Advertising..........................      57,309         9,147
  Commissions...............................................   2,642,710     1,689,760
  Contract Labor............................................     170,684        59,948
  Charitable Contributions..................................      25,293        25,346
  Depreciation..............................................     104,169        53,259
  Equipment Lease...........................................     119,943        75,624
  Insurance & Bonding.......................................      39,502         9,320
  Interest..................................................     143,571       125,955
  Licenses, Permits and Registrations.......................      60,943        28,813
  Miscellaneous.............................................       8,651        25,761
  Office Expense............................................      79,044        79,964
  Repairs and maintenance...................................      27,123        27,491
  Penalties.................................................      10,739         7,325
  Pension Plan Contribution.................................          --            --
  Postage & Freight.........................................       9,770         6,156
  Quote Service and Market Fees.............................     738,641       188,119
  Rent......................................................      27,862        51,234
  Seminars and Training Material............................       1,000         7,050
  Salaries..................................................     340,415       133,159
  Payroll Taxes.............................................      31,067        12,799
  Property Tax..............................................      13,133         8,741
  Telephone.................................................     174,310        91,951
  Travel....................................................      26,150        15,431
  Utilities.................................................      26,771        26,576
                                                              ----------    ----------
    TOTAL EXPENSES..........................................  $6,418,032    $3,547,417
                                                              ==========    ==========
INCOME (LOSS) FROM OPERATIONS...............................  $ (544,010)   $  154,940

F-17

PROVIDENTIAL SECURITIES, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                                 1999          1998
                                                              -----------   ----------
INCOME (LOSS) FROM OPERATIONS
  (From the Previous Page)..................................   $(544,010)    $154,940

Other Income:
  Interest Income...........................................      90,557       26,323
  Rental Income.............................................      53,080       74,462
                                                               ---------     --------
NET INCOME (LOSS) BEFORE TAXES..............................    (400,373)     155,725

(Provision) Benefit for Taxes on Income.....................     135,327         (800)
                                                               ---------     --------
Net Income (Loss)...........................................    (265,046)     254,925
Retained Earnings--Beginning................................     457,817      202,892
Unrealized loss on Marketable Securities....................     (15,165)          --
Dividends Paid on Preferred Stock...........................     (35,474)          --
                                                               ---------     --------
Retained Earnings--Ending...................................   $ 142,132     $457,817
                                                               =========     ========

F-18

PROVIDENTIAL SECURITIES, INC.

STATEMENTS OF CHANGES IN OWNERSHIP EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                              YEAR ENDED DECEMBER 31,
                                                             -------------------------
                                                                1999          1998
                                                             -----------   -----------
Common Stock:
  Beginning Balance........................................  $    19,971   $    19,971
  Changes during the year..................................           --            --
                                                             -----------   -----------
  Ending Balance...........................................  $    19,971   $    19,971
                                                             -----------   -----------
Preferred Stock:
  Beginning Balance........................................  $        --   $        --
  Subscriptions Sold.......................................      515,000            --
                                                             -----------   -----------
  Ending Balance...........................................  $   515,000   $        --
                                                             ===========   ===========
Additional Paid in Capital:
  Beginning Balance........................................  $26,767,700   $   267,700
  Additional Paid in Capital Contributed during the year...    1,343,498    26,500,000
                                                             -----------   -----------
  Ending Balance...........................................  $28,111,198   $26,767,700
                                                             ===========   ===========
Retained Earnings:
  Beginning Balance........................................  $   457,817   $   202,892
  Adjustments:
  Dividends Paid on Preferred Stock........................      (35,474)           --
  Unrealized Loss on securities............................      (15,165)
  Profit (Loss) for the year...............................     (265,046)      254,925
                                                             -----------   -----------
  Ending Balance...........................................  $   142,132   $   457,817
                                                             ===========   ===========

Additional information: During the year ended December 31, 1998, the Company altered its capital stock structure. It authorized a total of 40 million shares of common stock with no par value. Further, it authorized two separate classes of preferred stock each with 10 million shares authorized and with par value set for each class at $5 per share.

F-19

PROVIDENTIAL SECURITIES, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                                  1999         1998
                                                              ------------   ---------
Cash flows from Operating Activities:
Net Income (Loss)...........................................  $  (265,046)   $254,925
Adjustments to reconcile net income to net cash provided by
  operations:
  Depreciation of Property and Equipment....................      104,169      53,260
  Increase in accounts receivable...........................     (496,457)    (25,029)
  Increase (Decrease) in deposits & Prepaid rent............       (8,103)     19,089
  Increase in prepaid expenses..............................     (199,449)    (19,238)
  Increase in Acquisition Costs.............................     (600,000)         --
  (Increase) Decrease in other assets.......................      (25,100)    (14,846)
  Increase in Inventoried Positions (net)...................       (1,848)    (13,873)
  Increase in Deferred Tax Asset............................     (136,127)         --
  Increase (Decrease) in Accounts Payable...................       79,302     (13,912)
  Increase (Decrease) in payroll Tax payable................      (16,865)      6,453
  Increase (Decrease) in accrued Salaries and commissions...       (3,145)    154,277
  Increase (Decrease) in other Liabilities..................         (836)     18,687
                                                              -----------    --------
    Total Adjustments.......................................   (1,304,459)    164,868
                                                              -----------    --------
Net Cash Provided (Used) by Operations......................   (1,569,505)    419,793

Cash Flows from Investing Activities:
  Purchase of fixed assets..................................     (294,725)   (250,882)
  Purchase of marketable securities--Net of unrealized
    loss....................................................           --          --
  Increase (Decrease) in advance from shareholder...........     (123,203)     55,666
  Increase (Decrease) in advance from shareholder...........      (38,610)     38,610
                                                              -----------    --------
  Net Cash Used in Investing Activities.....................     (456,538)   (156,606)
Cash Flows from Financing Activities:
  Reduction in principal on Mortgage Payable................  $   (30,548)       (853)
  Additional Paid in Capital................................    1,343,498          --
  Preferred Stock Offering..................................      515,000          --
  Shareholder Dividends and Distributions...................      (35,474)         --
                                                              -----------    --------
  Net Cash Provided (Used) in
    Financing Activities....................................    1,792,476        (853)
    Net Increase (Decrease) in Cash.........................     (233,567)    262,334
    Cash at Beginning of Year...............................      432,860     170,526
                                                              -----------    --------
    Cash at End of Year.....................................  $   199,293    $432,860
                                                              ===========    ========

SUPPLEMENTARY INFORMATION:

The Company expended $143,571 in 1999 and $125,955 in 1998 for interest and $800 in 1999 and $800 in 1998 for income taxes. The Company treats cash in banks and in certificates of deposit with maturities of 90 days or less as cash equivalents for purposes of this statement.

F-20

NON-CASH TRANSACTIONS (YEAR ENDED DECEMBER 31, 1999):

The Company incurred $288,603 of debt in order to finance the acquisition of an equal amount of residential property and automobile equipment.

The Company incurred $600,000 of capitalized acquisition costs in exchange for an equal amount of Additional Paid-in-Capital.

NON-CASH TRANSACTIONS (YEAR ENDED DECEMBER 31, 1998):

The Company incurred $1,260,000 of debt in order to finance the acquisition of an equal amount of buildings and improvements.

The Company acquired Undeveloped natural Resources in the amount of $26,500,000 in exchange for an equal amount of Additional Paid-in-Capital.

F-21

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 1999

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Providential Securities, Inc. ("the Company") was incorporated in the State of California on October 8, 1992. It operates a securities brokerage service in Fountain Valley, California with two licensed branch offices in Alhambra, CA and New York City, NY. The Company is also registered to offer securities in various other states as well. The principal market for the Company's services are individual investors that are located throughout the United States. The Company buys and sells securities for its customers through a number of different markets, utilizing a brokerage clearinghouse to transact the trades. The Company also instituted a Day-trading department during the year ended December 31, 1998 which enabled it to cater to its clientele that are more active in day-treading activity.

The financial statements of the Company have been prepared using the accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

ACCOUNTS RECEIVABLE

The Company does not provide for an allowance for doubtful account. Accounts receivable primarily represent the commissions earned during the previous month which are always paid by the company's clearing house prior to the end of the subsequent month.

PROPERTY AND EQUIPMENT

The Company records the purchase of property and equipment at its historical cost and depreciates these assets using the straight line method over the following estimated useful lives:

Furniture, equipment, and automobiles 5 years

Buildings and improvements 29 years

INCOME TAXES

Through the year ended December 31, 1998 the Company, with the consent of its stockholders, has elected to be taxed as an S-Corporation for federal and state income tax purposes. As a result, the individual stockholders are taxed personally on their proportionate share of the income and expense of the corporation. Consequently, no provision for corporate income tax had been made in the financial statements.

During the year ended December 31, 1999, the Company authorized and issued a preferred class of stock (see Note 10) which caused the subchapter S election to become invalid beginning in 1999. As a result, income taxes are now provided for the effects of transactions reported in the financial statements and consist of the future benefit resulting from the carryforward of the current year net operating loss (net operating losses cannot be carried back to years in which an S-election was in effect.) It is conservatively estimated that the current loss will yield future benefits at the rate of 25%

F-22

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
of the operating loss from the federal government and 9% from the state jurisdictions in which it operates (primarily California).

NOTE 2--ADVANCES DUE TO/FROM SHAREHOLDER

During the years ended December 31, 1999 and 1998, the Company advanced monies to, and was advanced monies from, certain of its shareholders. No interest receivable or payable was accrued on these advances during the years ended December 31, 1999 or 1998 as the monies are rarely outstanding for more than one month.

NOTE 3--MARKETABLE SECURITIES

The Company held certain marketable equity securities as of December 31, 1999 and 1998 as follows:

                                                                COST     MARKET VALUE
                                                              --------   ------------
As of December 31, 1999:
  Jockey Club--1,500 shares.................................  $  3,768     $      0
  Tri-Kal Intnl--15,165 shares..............................   141,241      121,320
                                                              --------     --------
    Total...................................................  $145,009     $121,320
                                                              ========     ========
As of December 31, 1998:
  Jockey Club--1,500 shares.................................  $  3,768     $      0
  Tri-Kal Intnl--15,165 shares..............................   141,241      136,485
                                                              --------     --------
    Total...................................................  $145,009     $136,485
                                                              ========     ========

These securities are traded on a bulleting board service and the market valuation is based upon the offering price determined by the securities' market maker. The Company records its marketable securities at the lower of its aggregate cost or market value. As of December 31, 1999 and 1998 the market value was lower than the aggregate cost and therefore the Company recorded the unrealized losses (the write down in the year ended December 31, 1998 had been recorded in a year prior to that.)

NOTE 4--OFFICE BUILDING

On January 8, 1998, the Company purchased an office building in Fountain Valley, California containing approximately 20,000 square feet of usable office space. The purchase price of the building, which includes the approximately .95 acres that it is situated upon was $1,400,000. The property is encumbered by a first trust deed mortgage that is explained in Note 7 to these financial statements.

The Company leases out approximately 6,000 square feet of the building to an unrelated tenant. The lease is set to expire in December, 2003 and calls for minimum monthly rent in the amount of $6,217.

F-23

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

NOTE 5--RESIDENTIAL PROPERTY

In January, 1999 the Company purchased a single family residential dwelling in Irvine, California in order to be able to provide temporary housing for investors, shareholders, and management members who are visiting the Company's headquarters, which are located in close proximity to the property. The property is encumbered by a first trust deed that is explained in Note 7 to these financial statements.

NOTE 6--INTEREST IN UNDEVELOPED NATURAL RESOURCE

On or about September 28, 1998, the Company entered into an agreement with a previously unrelated party whereby the Company issued 2,650,000 of its authorized common stock (representing 17.15% of the total issued at that time) in exchange for an interest in a parcel of undeveloped property in Coos Bay, Oregon. The property consists of approximately 80 acres of raw land which contains a magnitude of volume exceeding ten million tons of commercial quality industrial silica sand deposits. The Company commissioned an evaluation of the marketable value of the silica deposits and its was determined by an independent study that the aftermarket value of the extracted sand was between $53 million and $600 million.

The parties agreed to utilize one-half of the lowest valuation in order to maintain conservatism and to minimize the dilution of its outstanding shares of stock. The new shareholders previously had relations with the Company, one of whom was and still is a registered representative and the other was an original incorporator.

Prior testing and analysis have indicated that the deposit is suitable for many commercial applications. Management intends to conduct a feasibility study, and to begin the permitting process for future development. Initially, management plans to utilize the least capital intensive method of development to establish a positive cash flow from the property and thereafter rely upon the initial cash flows to fund future, more elaborate development processes. No time table has yet been set for this endeavor.

NOTE 7--MORTGAGES AND NOTES PAYABLE

The Company is indebted to two different banks for mortgages which secure the office building and residential properties referenced in Notes 4 and 5 respectively. The note was in the original amount of $1,260,000 for the office building and $227,500 for the residential property. The note for the office building is payable in adjustable fully amortized monthly installments of principal and interest over a period of twenty-five years. Interest accrues based upon the Low New York Prime Rate plus 1.75%. The rate commenced at 10% and as of December 31, 1999 the rate was at 10.0%. The outstanding principal, including accrued interest, as of December 31, 1999 was $1,232,796 and the current payment amount was $11,463.

The note for the residential property is payable in adjustable fully amortized monthly installments of principal and interest over a period of thirty years beginning in January, 1999. Interest can vary between its initial rate o 6.5% and a maximum of 12.25%. The rate as of December 31, 1999 was 8.04%, the outstanding principal was $227,229, and the current payment amount was $1,524.

The Company is also liable for two separate loans which secure two automobiles that have a net book value of $68,353 as of December 31, 1999. The outstanding balance of the loans as of

F-24

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

NOTE 7--MORTGAGES AND NOTES PAYABLE (CONTINUED)
December 31, 1999 was $57,177, and the loans are payable in monthly payments of principal and interest totaling $1,416. The loans are both scheduled to be paid in full during the year 2004.

Future maturities for the mortgages and notes payable are as follows:

Twelve months ended December 31,     2000        $   24,838
                                     2001            27,867
                                     2002            31,303
                                     2003            35,211
                                     2004            32,833
                                     Thereafter   1,365,150
                                                 ----------
Less: Current Portion                             1,517,202
                                                    (24,838)
                                                 ----------
Long Term Portion                                $1,492,364
                                                 ==========

NOTE 8--COMMITMENTS AND OBLIGATIONS

In November, 1997 the Company entered into a lease agreement for office space in Beaverton, Oregon which houses an offsite office. The lease expires in November, 2000. Minimum monthly rent after the first three months (which were rent free) is set at $2,495 for the balance of the lease term.

The Company is also obligated under nine separate computer equipment, communications equipment, vehicle and software leasing agreements. The leases have various expiration dates, none of which extend beyond the year 2002. The agreements also have various buy-out and renewal terms, however, they are all treated as operating leases. The current monthly rent payment on all of these leases totals $15,346 and during the year ended December 31, 1999 $166,316 was expended on these rental payments. The minimum annual lease payments during the course of these facilities and equipment leases are as follows:

                                           AMOUNT
                                         ----------
Year ending December 31,     2000        $  164,961
                             2001            39,813
                             2002             8,204
                                         ----------
                                         $  212,978
                                         ==========

NOTE 9--PENSION PLAN

The company has instituted a defined contribution pension plan for its employees. The terms of the plan are such that management has the discretion to contribute up to 15% of the applicable wages for each qualified employee each year. The Company elected not to make a contribution for 1999 or 1998.

F-25

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

NOTE 10--PREFERRED STOCK

During the year ended December 31, 1999 the Company placed a subscription offering for its newly authorized Series I, Class A Preferred stock. There were 10,000,000 shares authorized, of which 103,000 shares were issued at $5.00 per share. During the most recent year end $35,474 was paid out in dividends to the shareholders of this class of stock, representing a 12% dividend rate. The shares are preferred as to dividends and as to convertibility.

NOTE 11--CONCENTRATIONS OF RISK

The Company currently utilizes one single brokerage clearing house to transact all of its trades. Although there are a limited number of clearing houses, management believes that other clearing houses could provide similar services on comparable terms. In fact, the company changed to a different clearing house at more favorable terms during the past year. The current firm provides $24.5 million in investor protection for each account (in addition to the SIPC protection of $500,000) and also enables the Company to provide day-trading and on-line investing opportunities for its customers.

NOTE 12--SUBSEQUENT EVENTS

Effective January 14, 2000, the Company's Board of Directors entered into a business combination agreement with the Board of Directors of a publicly traded company, J.R. Consulting, Inc. ("JRCI"), a Nevada Corporation. On January 12, 2000, the company changed its name from JR Consulting, Inc. to Providential Securities, Inc., and then again changed to Providential Holdings, Inc.

Under the terms of the agreement, JRCI issued 40 million shares of its restricted common stock to the shareholders of PSI as consideration for all of the outstanding shares of PSI, resulting in 53,381,258 issued and outstanding shares of JRCI. The new entity then declared a two-for-one reverse stock split, resulting in 26,690,629 issued and outstanding shares of PRVH. The former shareholders of PSI control approximately 74.9% of the PRVH stock and the former Board of Directors of PSI were elected as Board of Directors of PRVH.

The new management of PRVH does not anticipate any changes in the operations of the former PSI, however, the board has elected to dispose of all of the shares of a former subsidiary of JRCI, DIVA Entertainment, Inc., which operates a modeling agency in New York.

During the year ended December 31, 1999, PSI incurred certain direct acquisition costs related to this combination in the amount of $600,000. Under the guidance of APB Opinion 16, those costs have been capitalized in these financial statements.

NOTE 13--ESTIMATES AND CLAIMS

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Due to the nature of its core business, the Company has been, and continues to be, named as a defendant in customer complaints. Some of these complaints have been dismissed and some have been

F-26

PROVIDENTIAL SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

NOTE 13--ESTIMATES AND CLAIMS (CONTINUED)
settled for damages that had a less than material impact on the financial statements. The Company does continue to be a defendant in a number of cases that have been filed with NASD Dispute Resolution and involve amounts that would have a material impact on the financial statements. The Company's counsel has not begun discovery in these matters, so it is unable to predict the outcome, however, management intends to vigorously defend these claims.

The Company has also undergone an NASD examination during the year ended December 31, 1999. Management expects the NASD to assess monetary fines as a result of their examination, however, it cannot yet be determined if the assessments will have a material impact on the financial statements.

NOTE 14--SCHEDULE OF NET CAPITAL REQUIREMENT

The accompanying schedule of net capital requirement (included in supplementary information) determines the Company's compliance with the Securities Exchange Commission's net worth requirements.

F-27

SUPPLEMENTARY INFORMATION

F-28

PROVIDENTIAL SECURITIES, INC.

SCHEDULE OF NET CAPITAL REQUIREMENT-

UNDER SEC RULE 15C3-1

FOR THE YEAR ENDED DECEMBER 31, 1999

Aggregate Indebtedness......................................                $    316,949
                                                                            ============

Net Capital Computation:

Stockholder's Equity:
  Capital Stock.............................................  $    19,971
  Preferred Stock...........................................      515,000
  Paid in Capital...........................................   28,111,198
  Retained Earnings.........................................      142,132
                                                              -----------
  Adjusted Net Worth........................................                $ 28,788,301

  Subordinated Loans........................................                         N/A

  Total Available Capital...................................                  28,788,301

  Non-Allowable Assets:
    Loans to Shareholders...................................  $   123,203
    Undeveloped Property....................................   26,500,000
    Furniture and Fixtures..................................       34,056
    Office equipment........................................      297,853
    Buildings and Improvements..............................      136,513
    Automobile..............................................       81,103
    Deferred Tax Asset......................................      136,127
    Deposits & prepaid Expenses.............................      929,383
                                                              -----------

  Total Non-Allowable Assets................................                 (28,238,238)

  Tentative Capital.........................................                     550,063

  Haircuts..................................................                    (123,203)
                                                                            ------------

  Net Capital...............................................                $    426,860
                                                                            ============

Ratio of Aggregate Indebtedness to Net Capital: AI/NC = 316,949/426,860 = 0.74

Additional Note: Difference exists between the above net capital figure and that which was submitted by the audited firm.

F-29

PROVIDENTIAL SECURITIES, INC.

SCHEDULE OF NET CAPITAL REQUIREMENT-

UNDER SEC RULE 15C3-1

FOR THE YEAR ENDED DECEMBER 31, 1999

Aggregate Indebtedness......................................                $    297,103
                                                                            ============

Net Capital Computation:

Stockholder's Equity:
  Capital Stock.............................................  $    19,971
  Paid in Capital...........................................   26,767,000
  Retained Earnings.........................................      457,817
                                                              -----------
  Adjusted Net Worth........................................                $ 27,245,488

  Subordinated Loans........................................                         N/A

  Total Available Capital...................................                  27,245,488

  Non-Allowable Assets:
    Undeveloped Property....................................   26,500,000
    Furniture and Fixtures..................................       30,504
    Office equipment........................................      114,245
    Buildings and Improvements..............................      126,495
    Prepaid Expenses deposits...............................       96,731
                                                              -----------

  Total Non-Allowable Assets................................                 (26,867,975)

  Tentative Capital.........................................                     377,513

  Haircuts..................................................                    (171,325)
                                                                            ------------

  Net Capital...............................................                $    206,188
                                                                            ============

Ratio of Aggregate Indebtedness to Net Capital: AI/NC = 297,103/206,188 = 1.44

Additional Note: Difference exists between the above net capital figure and that which was submitted by the audited firm.

F-30

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

The company's articles of incorporation do not have any provisions dealing with indemnification.

The bylaws of the company provide that every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the company or is or was serving at the request of the company or for its benefit as a director or officer of another company, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the general corporation law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the company as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the company. Such rights of indemnification are not exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and they are entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law or otherwise, as well as their rights as set forth above.

In addition, the corporation laws of the States of California and Nevada set forth indemnification provisions as set forth in the prospectus under the heading "Disclosure of Commission Position on Indemnification for Securities Act Liabilities."

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the costs and expenses, all of which shall be borne by the company, in conation with the offering of the common stock pursuant to this registration statement.

USE OF PROCEEDS

                                                         MAXIMUM OFFERING
                                                    --------------------------
                                                      AMOUNT*       PERCENT*
                                                    -----------   ------------
Transfer Agent Fee................................  $     1,000   less than 1%
Printing Costs....................................  $    10,000   less than 1%
Legal Fees........................................  $    25,000   less than 1%
Accounting Fees...................................  $     5,000   less than 1%
Working Capital...................................  $21,523,000      99.8%
                                                    ===========
  Total...........................................  $21,564,000


* Estimated

II-1


ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

DIVA-FLORIDA.

In May 1998, Diva Entertainment, Inc.-Florida sold 221,000 shares of its Series A Convertible Preferred Stock at a price of $2.00 per share, resulting in total proceeds of $442,000. Commissions of $30,000 were paid in connection with such sales. The proceeds were applied to working capital. Pursuant to the reorganization, which became effective in April 1999, 200,000 of these shares were exchanged for 200 shares of Series A Convertible Preferred Stock of Diva-Delaware. The balance of 21,000 shares was redeemed by Diva-Florida.

DIVA-DELAWARE.

In February through April 1999, Diva Entertainment, Inc. -Delaware conducted a private offering of 750 shares of Series A Convertible Preferred Stock at a price of $2,000.00 per share. On June 30, 1999, 375 shares of the Series A Preferred were sold for $750,000 in cash and the company took subscriptions for an additional 375 shares for $750,000. The subscriptions and the payment of purchase price will be closed when Diva-Delaware files an amendment to the registration statement for the shares of its common stock underlying the Series A Preferred. The Company incurred $30,000 of placement agent fees in connection with this offering. These proceeds were used to finance capital expenditures and applied to working capital.

PROVIDENTIAL SECURITIES, INC.

(A) COMMON STOCK OFFERING.

Providential Securities sold its common stock at the price of $1.25 per share to a total of eight individuals in October 1997. That offering resulted in the sale of a total of 101,198 shares for a aggregate consideration of $126,497.50. The 101,198 shares were exchanged for those of Providential Holdings, Inc. in relation to the Corporate Combination Agreement between Providential Holdings and Providential Securities, which resulted in total holdings of these eight individuals of 4,054,206 shares of common stock of Providential Holdings.

(B) PREFERRED STOCK OFFERING.

In December 1998, Providential Securities sold it preferred stock at the price of $5.00 per share to a total of 22 individuals and firms. This offering resulted in the sale of a total of 103,000 shares for aggregate consideration of $515,000. Under the terms of the Corporate Combination Agreement between the company and Providential Securities, all of the holders of the preferred stock will either convert their shares into shares of common stock of the company on the basis of one share of common stock for each share of preferred stock, or will enter into a convertible promissory note, in the amount of their original investment resulting in the issuance of preferred stock, having a right to convert into common stock at the conversion price of $5.00 per share, with a conversion right limited to two years from the date of closing. The company has executed a convertible promissory note in favor of each of these shareholders.

PROVIDENTIAL HOLDINGS, INC.

The company has issued convertible promissory notes in the principle amount of $1,750,000 in order to raise capital for the company's operations and acquisition of certain corporate opportunities, to three investors (this offering has now been closed).

The notes are demand notes that have a six-month term and bear interest at 8% annually, unless the notes are in default, in which instance the interest rate will increase to 12% annually. The notes bear a redemption premium, based upon the date of redemption equal to: (i) 5% if within the first

II-2


60 days; (ii) 10% if within the second 60 days; (iii) 15% if within the third 60 day-period, and (iv) 20% if redeemed after 181 days. On the 180th day, the company can require the holders to convert (if a registration statement is in effect) the notes into common stock. After the 180th day, only the holders can elect to convert; there is no right of the company to force conversion after that time. On the second anniversary, any remaining notes will automatically covert into shares of common stock (if a registration statement is in effect). If the conversion is at the direction of the company, then, in addition to the redemption amount, the company will also owe a 20% per annum rate of return on the redemption amount. If the conversion is at the direction of the holder, then the company will only owe the redemption amount. Under the Purchase and Security Agreement, notwithstanding any rights of conversion or exercise contained in the notes, the repricing warrants or purchaser warrants associated therewith, the holder agrees not to convert or exercise any notes, repricing warrants or purchaser warrants in excess of that number which, upon giving effect to such conversion or exercise, would cause the aggregate number of shares of common stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the common stock following such conversion.

The notes may be paid by tender of common stock of the company, with the conversion rate for the issuance of the common stock equal to the "closing price" on the date of initial purchase of the notes, which is the average of the closing bid price for the five previous trading days. Repricing warrants have also been issued in contemporaneous amounts, such that any decrease in the trading price of the stock will entitle the note holders to reset the exercise price to a lower price than that which existed on the closing date. The note purchasers are also entitled to a separate set of warrants, equal to 20% of the total purchase amounts of the notes acquired, allowing for an exercise price of 110% of the closing price and having a 5-year term.

In accepting subscriptions for these convertible notes, the company has agreed to file a registration statement with respect to the company's common stock issuable upon conversion of the notes and any exercise of the warrants, with the initial filing to occur within 60 days of the first closing. A 2% per month penalty will accrue if the registration statement is not declared effective on or prior to the 181st day following the date of filing of this registration statement. The holders have the right to require repayment in cash if no registration statement is in effect on the 181st day.

Under the Purchase and Security Agreement, each purchaser agrees, not to purchase, sell, make any short sale of, pledge, grant any option for the purchase or sale of or otherwise trade any of the company's common stock prior to the conversion of the bridge notes (other than a purchase of common stock from the company pursuant to the exercise of the warrant to the repricing warrant), without the prior written consent of the company.

The placement agent for these notes is Sovereign Capital Advisors, LLC, which is entitled to a 10% finder's fee, a 3% non-accountable expense allowance and the right to acquire warrants to purchase common stock of the company at the rate of 5,000 warrants for each $100,000 of notes placed; as a total of $1,750,000 was raised, this entitles Sovereign to 100,000 warrants (which have not yet been issued). The exercise price on these warrants will be 110% of the market price of the company's common stock on the date on which a note or series of notes is placed. As part of the placement agreement between Sovereign and the company, Sovereign has the right of first refusal to act as placement agent for any future private financings of the company, whether of equity securities, convertible debt securities or securities or instruments convertible into or exchangeable for debt or equity securities of the company or similar transactions for a period of one year following the final closing of the offering.

ALL OFFERINGS.

All of these sales were undertaken pursuant to the limited offering exemption from registration under the Securities Act of 1933 as provided in Rule 506 under Regulation D. These sales met the

II-3


requirements of Rule 506 in that: (a) there are no more than, or the issuer reasonably believes that there are no more than, 35 purchasers of securities from the issuer in any offering under this section; and (b) each purchaser who is not an accredited investor is a "sophisticated investor," that is, the investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes immediately prior to making any sale that such purchaser comes within this description. No commissions or fees were paid in connection with the above sales, except as noted.

ITEM 27. EXHIBITS

The Exhibits required by Item 601 of Regulation S-B, and an index thereto, are attached.

ITEM 28. UNDERTAKINGS

The undersigned company hereby undertakes to:

(a) (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and Notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation From the low or high end of the estimated maximum offering range may be reflected in the form of prospects filed with the U.S. Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

(iii) Include any additional or changed material information on the plan of distribution.

(2) For determining liability under the Securities Act of 1933, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(e) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

II-4


SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, thereunto duly authorize, in the City of Fountain Valley, State of California, on September 25, 2000.

PROVIDENTIAL HOLDINGS, INC.

By:             /s/ HENRY D. FAHMAN
     -----------------------------------------
                  Henry D. Fahman
      HENRY D. FAHMAN, CHIEF EXECUTIVE OFFICER

II-5


SPECIAL POWER OF ATTORNEY

The undersigned constitute and appoint Henry D. Fahman their true and lawful attorney-in-fact and agent with full power of substitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Form SB-2 registration statement, and to file the same with all exhibits thereto, and all documents in connection therewith, with the U.S. Securities and Exchange Commission, granting such attorney-in-fact the full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated:

                 SIGNATURE                                   TITLE                    DATE
                 ---------                                   -----                    ----
            /s/ HENRY D. FAHMAN
-------------------------------------------       Chief Executive Officer/     September 25, 2000
              Henry D. Fahman                       Chairman of the Board

             /s/ TINA T. PHAN
-------------------------------------------       Secretary/Vice President of  September 25, 2000
               Tina T. Phan                         Operations/Director

            /s/ DAVID BANERJEE                    Chief Financial Officer
-------------------------------------------         (Principal Financial and   September 25, 2000
              David Banerjee                        Accounting Officer)

           /s/ TIMOTHY D. FAHMAN
-------------------------------------------       Vice President of Marketing  September 25, 2000
             Timothy D. Fahman

               /s/ NHI T. LE
-------------------------------------------       Corporate                    September 25, 2000
                 Nhi T. Le                          Strategist/Director

II-6


EXHIBIT INDEX

EXHIBIT NO.                                     DESCRIPTION
-----------             ------------------------------------------------------------
         2.1            Plan of Exchange between the company and Prima Eastwest
                          Model Management, Inc. (incorporated by reference to
                          Exhibit 2 to the Form 8-K filed on March 1, 1996).

         2.2            Corporate Combination Agreement between the company and
                          Providential Securities, Inc., effective on January 14,
                          2000 (incorporated by reference to Exhibit 10.12 to the
                          Form 10-KSB filed on January 10, 2000).

         3.1            Articles of Incorporation (incorporated by reference to
                          Exhibit 3.1 of the Form S-18 declared effective on
                          August 10, 1982).

         3.2            Amendment to Articles of Incorporation (incorporated by
                          reference to Exhibit 3.1 of the Form 10-KSB for the fiscal
                          year ended June 30, 1995).

         3.3            Articles of Amendment to Articles of Incorporation (see
                          below).

         3.4            Certificate of Amendment to Articles of Incorporation (see
                          below).

         3.5            Bylaws (see below).

         4.1            Form Of Series 1 Bridge Notes Purchase And Security
                          Agreement between the company and investors, dated
                          March 27, 2000 (see below).

         4.2            Form of Series 1 Bridge Note executed by the company issued
                          by the company to investors (see below).

         4.3            Form of Common Stock Purchase Warrant issued by the company
                          to investors (see below).

         4.4            Form of Repricing Warrant issued by the company to investors
                          (see below).

         4.5            Form of Registration Rights Agreement between the company
                          and investors, dated March 27, 2000 (see below).

         4.6            Form of Common Stock Purchase Warrant to be issued by the
                          company to Sovereign Capital Advisors, LLC (see below).

         4.7            Form of convertible promissory note issued by the company to
                          preferred shareholders of Providential Securities, Inc.
                          (see below).

         4.8            Consulting Agreement (see below).

         5              Opinion Re: Legality (see below).

        10.1            Escrow Agreement between the company and Warshaw Burstein
                          Cohen Schlesinger & Kuh, LLP, dated March 28, 2000 (see
                          below).

        10.2            Placement Agency Agreement between the company and Sovereign
                          Capital Advisors, LLC, dated March 28, 2000 (see below).

        10.3            Guaranty Agreement between Henry Fahman and SovCap Equity
                          Partners, Ltd, dated March 28, 2000 (see below).

        10.4            Pledge Agreement between Henry Fahman and SovCap Equity
                          Partners, Ltd, dated March 28, 2000 (see below).

        10.5            Partnership Purchase Agreement between the company and
                          Holt + Collins, dated May 31, 2000 (see below).

        21              Subsidiaries of the company (see below).

        23.1            Consent of Accountant (see below).

        23.2            Consent of Counsel (see below).

        27              Financial Data Schedules (see below).

II-7


ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
JR CONSULTING, INC.

Pursuant to the provisions of the Nevada Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation:

1. The name of the Corporation is J R Consulting, Inc.

2. The following amendments were adopted by the directors and majority of the shareholders of Corporation by written consents of the Board of Directors and Majority Shareholders, in the manner prescribed by the Nevada Corporation Act:

Article I is deleted in its entirety and replaced with the following:

The name of the Corporation is Providential Securities, Inc.

Article V is amended by the addition of the following provision:

Effective January 14, 2000 ("the Effective Date"), every two shares of the Corporation's outstanding common stock, par value $0.04 per share (the "Common Stock"), issued and outstanding immediately prior to the Effective Date (the "Old Common Stock") shall automatically and without any action on the part of the record holder thereof be reclassified as and changed into one share of Common Stock (the "New Common Stock"), subject to the treatment of fractional share interests as described below. Each record holder of a certificate or certificates which immediately prior to the Effective Date represented outstanding shares of Old Common Stock (the "Old Certificates", whether one or more) shall be entitled to receive, upon surrender of such Old Certificates to the Company's transfer agent Jersey Transfer & Trust Company who will act as escrow agent (the "Escrow Agent") for cancellation, a certificate or certificates (the "New Certificates" whether one or more) representing the number of whole shares of the New Common Stock into which and for which the shares of the Old Common Stock formerly represented by such Old Certificates so surrendered, are reclassified under the terms hereof. From and after the Effective Date, Old Certificates shall represent only the right to receive New Certificates pursuant to the provision hereof.

A record holder of Old Certificates shall receive, in lieu of any fraction of a share of New Common Stock to which the record holder would otherwise be entitled, one full share.


If any New Certificate is to be issued in the name other than that for which the Old Certificates surrendered for exchange are issued, the Old Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer, and the person or persons requesting such exchange shall affix any requisite stock transfer tax stamps to the Old Certificates surrendered, or provide funds for their purchase, or establish to the satisfaction of the Exchange Agent that such taxes are not payable. From and after the Effective Date this amount which the shares of the Old Common Stock are reclassified under the terms hereof shall be the same as the amount of capital represented by the shares of Old Common stock so reclassified, until thereafter reduced or increased in accordance with applicable law.

IN WITNESS WHEREOF, J R Consulting, Inc. has caused this Certificate to be signed and attested by its duly authorized officers, this 12th day of January 2000.

J R CONSULTING, INC.

By: /s/  Henry Fahman
   ------------------
Henry Fahman, President


By: /s/  Tina Phan
   ---------------

Tina Phan, Secretary


EXHIBIT 3.4

CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PROVIDENTIAL SECURITIES, INC.

The undersigned, being the President and Secretary of Providential Securities, Inc., A Nevada corporation, hereby certify:

That the Board of Directors at a meeting held on February 9, 2000, adopted a Resolution to amend the Articles of Incorporation as follows:

ARTICLE ONE of the existing Articles of Incorporation, filed January 13, 2000, is Amended to read as follows:

"The name of the corporation is PROVIDENTIAL HOLDINGS, INC."

The number of shares of the corporation outstanding and entitled to vote on an amendment to the Articles of Incorporation is 26,690,62; that the amendment has been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon.

/s/  Henry Fahman
-----------------
Henry Fahman, President


/s/  Tina Phan
--------------


Tina Phan, Secretary


EXHIBIT 3.5

BYLAWS OF
PROVIDENTIAL HOLDINGS, INC.
A NEVADA CORPORATION

ARTICLE I

Stockholders

Section 1. ANNUAL MEETING. Annual meetings of the stockholders, commencing with the year 2000, shall be held on the 31st day of August each year if not a legal holiday and, if a legal holiday, then on the next secular day following, or at such other time as may be set by the Board of Directors from time to time, at which the stockholders shall elect by vote a Board of Directors and transact such other business as may properly be brought before the meeting.

Section 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President or the Secretary by resolution of the Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose of the proposed meeting.

Section 3. PLACE OF MEETINGS. All annual meetings of the stockholders shall be held at the registered office of the corporation or at such other place within or without the State of Nevada as the directors shall determine. Special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 4. QUORUM; ADJOURNED MEETINGS. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

Section 5. VOTING. Each stockholder of record of the corporation holding stock which is entitled to vote at this meeting shall be entitled at each meeting of stockholders to one vote for each share of stock standing in his name on the books of the corporation. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting shall be by ballot.


When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall be sufficient to elect directors or to decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question.

Section 6. PROXIES. At any meeting of the stockholders any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that any such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting.

Section 7. ACTION WITHOUT MEETING. Any action which may be taken by the vote of the stockholders at a meeting may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power, unless the provisions of the statutes or of the Articles of Incorporation require a greater proportion of voting power to authorize such action in which case such greater proportion of written consents shall be required.

ARTICLE II

Directors

Section 1. MANAGEMENT OF CORPORATION. The business of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 2. NUMBER, TENURE, AND QUALIFICATIONS. The number of directors which shall constitute the whole board shall be at least one. The number of directors may from time to time be increased or decreased to not less than one nor more than fifteen. The directors shall be elected at the annual meeting of the stockholders and except as provided in Section 2 of this Article, each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.

Section 3. VACANCIES. Vacancies in the Board of Directors including those caused by an increase in the number of directors, may be filled by a majority of the renaming directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders. The holders of two-thirds of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the directors by vote at a meeting called for such purpose or by a written statement filed with the secretary or, in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously.


A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any directors, or if the authorized number of directors be increased, or if the stockholders fall at any annual or special meeting of stockholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting.

If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board or the stockholders shall have power to elect a successor to take office when the resignation is to become effective.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office.

Section 4. ANNUAL AND REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at any place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation regular meetings shall be held at the registered office of the corporation. Special meetings of the Board may be held either at a place so designated or at the registered office.

Regular meetings of the Board of Directors may be held without call or notice at such time and at such place as shall from time to time be fixed and determined by the Board of Directors.

Section 5. FIRST MEETING. The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors.

Section 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman or the President or by any Vice-President or by any two directors.

Written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records or if such address is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company at least three (3) days prior to the time of the holding of the meeting. In case such notice is hand delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director.

Section 7. BUSINESS OF MEETINGS. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.


Section 8. QUORUM, ADJOURNED MEETINGS. A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board shall be as valid and effective in all respects as if passed by the Board in regular meeting.

A quorum of the directors may adjourn any directors meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board.

Notice of the time and place of holding an adjourned meeting need not be given to the absent directors if the time and place be fixed at the meeting adjourned.

Section 9. COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees of the Board of Directors, each committee to consist of at least one or more of the directors of the corporation which, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the corporation and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members shall constitute a quorum for the transaction of business, and the act of a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee.

The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors.

Section 10. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.

Section 11. SPECIAL COMPENSATION. The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings.


ARTICLE III

Notices

Section 1. NOTICE OF MEETINGS. Notices of meetings shall be in writing and signed by the President or a Vice-President or the Secretary or an Assistant Secretary or by such other person or persons as the directors shall designate. Such notice shall state the purpose or purposes for which the meeting is called and the time and the place, which may be within or without this State, where it is to be held. A copy of such notice shall be either delivered personally to or shall be mailed, postage prepaid, to each stockholder of record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before such meeting. If mailed, it shall be directed to a stockholder at his address as it appears upon the records of the corporation and upon such mailing of any such notice, the service thereof shall be complete and the time of the notice shall begin to run from the date upon which such notice is deposited in the mail for transmission to such stockholder. Personal delivery of any such notice to any officer of a corporation or association, or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. In the event of the transfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not be necessary to deliver or mail notice of the meeting to the transferee.

Section 2. EFFECT OF IRREGULARLY CALLED MEETINGS. Whenever all parties entitled to vote at any meeting, whether of directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part 'in the deliberations at such meeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders may be by proxy or attorney, but all such proxies and powers of attorney must be in writing.

Section 3. WAIVER OF NOTICE. Whenever any notice whatever is required to be given under the provisions of the statutes, of the Articles of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE IV

Officers

Section 1. SECTION. The officers of the corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer, none of whom need be directors. Any person may hold two or more offices. The Board of Directors may appoint a Chairman of the Board, Vice-Chairman of the Board, one or more vice presidents, assistant treasurers and assistant secretaries.

Section 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at meetings of the stockholders and the Board of Directors, and shall see that all orders and resolutions of the Board of Directors are carried into effect.


Section 3. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties as the Board of Directors may from time to time prescribe.

Section 4. PRESIDENT. The President shall be the chief executive officer of the corporation and shall have active management of the business of the corporation. He shall execute on behalf of the corporation all Instruments requiring such execution except to the extent the signing and execution thereof shall be expressly designated by the Board of Directors to some other officer or agent of the corporation. In the absence of the President the Vice President will assume all of the President's responsibilities.

Section 5. VICE-PRESIDENT. The Vice-President shall act under the direction of the' President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice-Presidents or may otherwise specify the order of seniority of the Vice-Presidents. The duties and powers of the President shall descend to the Vice-Presidents in such specified order of seniority.

Section 6. SECRETARY. The Secretary shall act under the direction of the President. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors. In the absence of the Secretary the Vice President will assume all of the Secretary's responsibilities.

Section 7. ASSISTANT SECRETARIES. The Assistant Secretaries shall act under the direction of the President. In order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.

Section 8. TREASURER. The Treasurer shall act under the direction of the President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation. In the absence of the Treasurer the Vice President will assume all of the Treasurer's responsibilities.

If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation.


Section 9. ASSISTANT TREASURERS. The Assistant Treasurers in the order of their seniority, unless otherwise determined by the President or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.

Section 10. COMPENSATION. The salaries and compensation of all officers of the corporation shall be fixed by the Board of Directors.

Section 11. REMOVAL, RESIGNATION. The officers of the corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors.

ARTICLE V

Capital Stock

Section 1. CERTIFICATES. Every stockholder shall be entitled to have a certificate signed by the President or a Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation, certifying the number of shares owned by him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarized on the face or back of the certificate, which the corporation shall issue to represent such stock.

If a certificate is signed (1) by a transfer agent other than the corporation or its employees or (2) by a registrar other than the corporation or its employees, the signatures of the officers of the corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such officer before such certificate is issued, such certificate may be issued with the same effect as though the person had not ceased to be such officer. The seal of the corporation, or a facsimile thereof, may, but need not be, affixed to certificates of stock.

Section 2. SURRENDERED; LOST OR DESTROYED CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed.

Section 3. REPLACEMENT CERTIFICATES. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation, if it is satisfied


that all provisions of the laws and regulations applicable to the corporation regarding transfer and ownership of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 4. RECORD DATE. The Board of Directors may fix in advance a date not exceeding sixty (60) days nor less than ten (10) days preceding the date of any meeting of stockholders, or the date for the payment of any distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, and any adjournment thereof, or entitled to receive payment of any such distribution, or to give such consent, and in such case, such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed, shall be entitled to notice of and to vote at such meeting, or any adjournment thereof, or to receive payment of such distribution, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid.

Section 5. REGISTERED OWNER. The corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and distribution, and the corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.

ARTICLE VI

General Provisions

Section 1. REGISTERED OFFICE. The registered office of this corporation shall be in the State of Nevada.

The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require.

Section 2. DISTRIBUTIONS. Distributions upon the capital stock of the corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Distributions may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Articles of Incorporation.

Section 3. RESERVES. Before payment of any distribution, there may be set aside out of any funds of the corporation available for distributions such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing distributions or for repairing or maintaining any property of the corporation or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 4. CHECKS; NOTES. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.


Section 5. FISCAL YEAR. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

Section 6. CORPORATE SEAL. The corporation may or may not have a corporate seal, as may from time to time be determined by resolution of the Board of Directors. If a corporate seal is adopted, it shall have 'inscribed thereon the name of the corporation and the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE VII

Indemnification

Section 1. INDEMNIFICATION OF OFFICERS AND DIRECTORS, EMPLOYEES AND OTHER PERSONS. Every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation or for its benefit as a director or officer of another corporation, or as its representative in a partnership, Joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the general corporation law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines and amounts paid or to be paid "in settlement) reasonably incurred or suffered by him in connection therewith. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. Such night of indemnification shall be a contract right which may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law or otherwise, as well as their rights under this Article.

Section 2. INSURANCE. The Board of Directors may cause the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the corporation would have the power to indemnify such person.

Section 3. FURTHER BYLAWS. The Board of Directors may from time to time adopt further Bylaws with respect to indemnification and may amend these and such Bylaws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Nevada.


ARTICLE VIII

Amendments

Section 1. AMENDMENTS BY STOCKHOLDERS. The Bylaws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote for the election of directors of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting.

Section 2. AMENDMENTS BY BOARD OF DIRECTORS. The Board of Directors by a majority vote of the whole Board at any meeting may amend these Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the Board of Directors.

APPROVED AND ADOPTED JANUARY 31, 2000.

/s/  Tina Phan
--------------
Tina Phan, Secretary

CERTIFICATE OF SECRETARY

I hereby certify that I am the Secretary of Providential Holdings, Inc. and that the foregoing Bylaws, consisting of 11 pages, constitute the code of Bylaws of Providential Holdings, Inc. as duly adopted at a regular meeting of the Board of Directors of the corporation held January 31, 2000.

In witness whereof, I have hereunto subscribed my name January 31, 2000.

/s/  Tina Phan
--------------


Tina Phan, Secretary


EXHIBIT 4-1.aa

FORM OF SERIES 1 BRIDGE NOTES
PURCHASE AND SECURITY AGREEMENT

THIS SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT (the "Agreement") is made and entered into as of this 28th day of March, 2000, among PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company") and the persons listed on the Purchaser signature pages attached hereto (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers").

BACKGROUND

The Company has authorized the issuance, sale, and delivery of up to $4,000,000 in original principal amount of the Company's Series 1 Secured Convertible Bridge Financing Notes, in substantially the form attached hereto as Exhibit A (the "Bridge Notes"). The Bridge Notes are convertible into shares of the Company's common stock, par value $.001 (the "Common Stock"). The Common Stock issuable upon conversion of the Bridge Notes is hereinafter referred to as the "Conversion Shares". The Bridge Notes have attached repricing rights evidenced by a warrant in substantially the form of Attachment 1 to the Bridge Notes (the "Repricing Warrant"), exercisable under certain circumstances for additional shares of Common Stock (the "Repricing Shares") at the exercise price of $.001. In connection with the issuance of the Bridge Notes, the Company has authorized the issuance of Purchase Warrants, in substantially the form attached hereto as Exhibit B (the "Warrants") giving a Purchaser the right to purchase Common Stock. Each Purchaser will be issued a Warrant at that Closing exercisable for 20,000 shares of Common Stock for each $100,000 in principal amount of Bridge Notes purchased. The shares of Common Stock issuable upon exercise of the Warrants are hereinafter referred to as the "Warrant Shares." The proceeds of the Bridge Notes will be used to provide the Company with operating capital. The Bridge Notes are secured by a pledge of certain assets of the Company and also by certain shares of Common Stock held by certain Company officers pledged as part of their limited guaranty of the Company's Obligations hereunder, all having a value of approximately 200% of the principal amount of the Bridge Notes at any time outstanding. The Purchasers wish to purchase, upon the terms and conditions stated in this Agreement, up to $4,000,000 in principal amount of the Bridge Notes, with each Purchaser purchasing Bridge Notes in the principal amount set forth on such Purchaser's signature page affixed to this Agreement. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement in substantially the form attached hereto as Exhibit C (the "Registration Rights Agreement") pursuant to which the Company has agreed to provide certain registration rights in respect of the Conversion Shares, the Warrant Shares, and the Repricing Shares under the Securities Act of 1933 ("1933 Act") and the rules and regulations promulgated thereunder, and applicable state securities laws. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration pursuant to Section 4(2) and Regulation D ("Regulation D").


AGREEMENT

For and in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Purchaser hereby agree as follows:

SECTION 1. BRIDGE NOTES.

SECTION 1.1 AUTHORIZATION, ISSUANCE, AND SALE OF NOTES. The Company has authorized the sale and issuance, in accordance with the terms of this Agreement, of up to $4,000,000 in original principal amount of its Bridge Notes at one or more closings. The Company agrees to issue and sell to each Purchaser and each Purchaser agrees to purchase from the Company, at a Closing, a Bridge Note in the principal amount (the "Purchased Bridge Notes") set forth adjacent to the caption "Purchased Bridge Notes" on the signature page to this Agreement of each Purchaser hereto at a purchase price (the "Purchase Price") of 100% of the principal amount of Bridge Notes purchased.

SECTION 1.2 AUTHORIZATION AND ISSUANCE OF WARRANTS. The Company has authorized the issuance and delivery of Warrants exercisable for up to 800,000 shares of Common Stock in connection with the issuance, sale, and delivery of the Bridge Notes. The Company agrees to issue and deliver to each Purchaser a Warrant exercisable for 20,000 shares of Common Stock for each $100,000 in principal amount of the Bridge Notes purchased by such Purchaser.

SECTION 1.3 FORM OF PAYMENT. On or before the Closing Date, each Purchaser shall pay the Purchase Price for the Purchased Bridge Notes to be issued and sold to such Purchaser at the Closing, by wire transfer of immediately available funds to:

Bank:
Center:
Account No.:
ABA Routing No.:
Attn:
Re:

SECTION 1.4 CLOSING. All closings of the purchase and sale of the Purchased Bridge Notes shall take place at the offices of Warshaw Burstein Cohen Schlesinger & Kuh LLP, 555 Fifth Avenue, New York, New York 10017, within five
(5) business days following the date that $1,500,000 (the "Minimum Amount") is held by SunTrust Bank, Atlanta (the "Escrow Agent"), subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Section 5 below (such closing being called the "First Closing" and such date and time being called the "First Closing Date"). Following the First Closing, the Company anticipates it will continue to offer the Bridge Notes until the offering of the Bridge Notes is terminated or all $4,000,000 in principal amount is purchased. From time to time, one or more additional closings may occur at such time and date as is mutually agreeable between the Purchasers purchasing Bridge Notes at such closing and the Company (each such closing being called an "Additional Closing" and such date and time being called an "Additional Closing Date," and all of such closings are hereinafter referred to individually as a "Closing" and collectively as the "Closings," and each date on which a Closing shall occur is hereinafter referred to as a "Closing Date" and collectively as the "Closing Dates"). Each Closing is expected to take place by exchange of faxed signature pages with originals to follow by overnight delivery.


SECTION 1.5 DELIVERIES AT CLOSING. At each Closing the Company shall deliver to the Purchasers:

(a) the original of this Agreement;

(b) Bridge Notes in definitive form with attached Repricing Warrants, registered in the name of each Purchaser, or the designee of such Purchaser, representing the Purchased Bridge Notes purchased by such Purchaser;

(c) Warrants in definitive form, registered in the name of each Purchaser, or the designee of such Purchaser;

(d) a copy of the Registration Rights Agreement;

(e) a copy of the Escrow Agreement in substantially the form of EXHIBIT D hereto (the "Escrow Agreement");

(f) a copy of the Guaranty Agreement executed by the Company and Henry Fahman (each a "Pledgor" and collectively, the "Pledgors") as guarantor thereunder and an accompanying Stock Pledge Agreement executed by each Pledgor as pledgor of certain shares of Common Stock (the shares pledged are hereinafter referred to as the "Pledged Shares"), along with share certificates representing the Pledged Shares;

(g) a copy of the opinion of counsel to the Company, in substantially the form of Exhibit E hereto;

(h) a copy of the Irrevocable Transfer Agent Instructions, in substantially the form of Exhibit F hereto, (the "Transfer Agent Instructions");

(i) the Compliance Certificate of the Company (the "Compliance Certificate"); and

(j) the Secretary Certificate of the Company (the "Secretary Certificate").

SECTION 2. SECURITY AGREEMENT.

The provisions of this Section 2 shall remain in effect so long as any of the Bridge Notes shall remain outstanding.

SECTION 2.1 GRANT OF SECURITY INTEREST. In order to secure the obligations of the Company due to the Purchasers (such obligations are sometimes hereinafter referred to as the "Obligations") under the Bridge Notes, in addition to the general credit of the Company and the Pledged Shares, the Company hereby grants to the Purchasers and the Representative (for and on behalf of the Purchasers), effective at the First Closing, a continuing first priority security interest in and a general lien upon:

(a) the assets of the Company listed and described on Exhibit G hereto (the "Pledged Assets"); and

(b) all proceeds, as such term is defined in Section 9-306(1) of the Uniform


Commercial Code as in effect in the State of New York on the date hereof (the "UCC")and, in any event, shall include, without limitation,
(i) any and all proceeds of any insurance, indemnity, warranty, or guaranty payable to the Company from time to time with respect to any of the Pledged Assets, (ii) any and all payments (in any form whatsoever) made or due and payable to the Company from time to time in connection with any requisitions, confiscation, condemnation, seizure, or forfeiture of all or any part of the Pledged Assets by any governmental authority (or any person acting under color of governmental authority), and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Pledged Assets (collectively, the "Collateral").

SECTION 2.2 REMEDIES UPON DEFAULT. Upon the occurrence or existence of an Event of Default (as defined in Section 10 of the Bridge Notes), the Representative (on behalf of each Purchaser) shall have the right to pursue all available remedies at law or in equity, including without limitation:

(a) all of the rights and remedies available to a secured party under the UCC, and any other applicable law, all of which shall be cumulative and none of which shall be exclusive, to the fullest extent permitted by law, and all other legal and equitable rights under this Agreement and the Transaction Agreements which may be available to the Representative, all of which shall be cumulative;

(b) the right to take possession of the Collateral upon reasonable notice and to enter the offices of the Company during normal business hours to take possession of the Collateral; the right of the Purchaser to (a) enter upon the premises of Company or any of its subsidiaries, or any other place or places where the Collateral is located and kept, through self-help and without judicial process, without first obtaining a final judgment or giving Company or any of its subsidiaries notice and opportunity for a hearing on the validity of the Representative's claim and without any obligation to pay rent to Company or any of its subsidiaries, and remove the Collateral therefrom to the premises of Representative or any agent of Representative, for such time as Representative may desire, in order to effectively collect or liquidate the Collateral; and/or (b) require Company to assemble the Collateral and make it available to Representative at a place to be designated by the Representative, in their sole discretion.

(c) the right to sell or otherwise dispose of all or any part of the Collateral in its then condition, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as such Representative may deem advisable, and purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations, and to apply the proceeds realized from such sale, after allowing two (2) business days for collection, first to the reasonable costs, expenses, and attorneys' fees and expenses incurred by such Representative for collection and for acquisition, storage, sale, and delivery of the Collateral, secondly to interest due upon the Obligations, and thirdly to the principal of the Obligations; and

(d) the right to proceed by an action or actions at law or in equity to obtain possession of the Collateral, to recover the Obligations and amounts secured hereunder or to foreclose under this Agreement and sell the Collateral or any portion thereof, pursuant to a judgment or decree of a court or courts of competent jurisdiction, all without the necessity of


posting any bond.

SECTION 2.3 FINANCING STATEMENTS. The Company and the Representative (on behalf of each Purchaser) agree to file or cause to be filed on or before the First Closing UCC financing statements in such jurisdictions (including the State of California evidencing the security interests granted herein, copies of which are attached hereto as Exhibit H. The Representative is authorized, to the extent permitted by law, to file any such financing statements without the signature of the Company.

SECTION 2.4 NOTICE. Any notice required to be given by Representative of a sale, lease, or other disposition of the Collateral or any other intended action by Representative, given to Company in the manner set forth in Section 9.6 below, at least ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to Company.

SECTION 2.5 APPOINTMENT OF PURCHASER REPRESENTATIVE. Each Purchaser hereto hereby irrevocably appoints SovCap Equity Partners, Ltd., a corporation organized under the laws of the Bahamas and a First Closing Purchaser hereunder, to act as the sole and exclusive agent and representative (the "Representative") of each such Purchaser to act on behalf of such Purchaser and in such Purchaser's name, place, and stead, to (i) exercise all rights of such Purchaser, and (ii) take all action on behalf of the Purchaser that may be taken by the Purchaser with respect to the Collateral, under this Agreement, the Bridge Notes, and the other Transaction Agreements. Without limiting the generality of the foregoing:

(a) The Representative shall have the power, on behalf of all Purchasers, to send all notices which shall or may be given by the Purchasers, under the Transaction Agreements, declare Events of Default under this Agreement, the Bridge Notes, and the other Transaction Agreements, accelerate the Bridge Notes, rescind acceleration of the Bridge Notes, and enforce the Bridge Notes, this Agreement, and the other Transaction Agreements. The Representative reserves the right, in its sole discretion, in each instance without prior notice to the Purchasers, (i) to agree to the modification, waiver, or release of any of the terms of any of the Transaction Agreements, including, without limitation, the waiver or release of any of the conditions precedent for the purchase and sale of the Bridge Notes; (ii) to consent to any action or failure to act by the Company; and (iii) to exercise or refrain from exercising any powers, rights, or remedies that the Purchasers have or may have with respect to Collateral under the Transaction Agreements; PROVIDED, HOWEVER, that the Representative shall not, without obtaining the prior written consent of each Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), exercise any of such rights so as to knowingly release or waive any claim against the Company or any other person who may be liable with respect to the Bridge Notes if such action would have a materially adverse effect on the collection of the indebtedness evidenced by the Bridge Notes or the enforcement of the Transaction Agreements.

If any Purchaser shall refuse to consent to any amendment, modification, waiver, release, or subordination requiring the written consent of the Purchasers, the Purchasers who consent to such amendment, modification, waiver, release, or subordination may, at their option, at any time thereafter (but shall not be obligated to) purchase the Bridge Note or Bridge Notes held by the non-consenting Purchaser or Purchasers by paying to such non-consenting Purchaser or Purchasers an amount equal to the unpaid principal and accrued but unpaid interest on the Bridge Note held by such non-consenting Purchaser or Purchasers.


(b) The Representative shall have the power to collect, enforce, and bring any action on the Transaction Agreements and any Collateral granted therein in the name of the Representative for the benefit of all Purchasers.

SECTION 2.6 ASSURANCES.

(a) Each Purchaser hereby authorizes third parties with whom Representative deals in carrying out the responsibilities of Representative hereunder, to rely conclusively on the instructions and decisions of the Representative as to any action taken pursuant to and in accordance with the terms of this Agreement and the other Transaction Agreements without any further or additional approval or authorization from such Purchaser, including without limitation, the execution and delivery of any documents or instruments, or any other actions required to be taken by the Representative under this Agreement and the other Transaction Agreements, and no Purchaser shall have any cause of action against third parties with whom Representative deals in carrying out the responsibilities of Representative hereunder or under the other Transaction Agreements for any action taken by such third parties in reliance upon the instructions or decisions of the Representative.

(b) All actions, decisions, and instructions of the Representative shall be conclusive and binding upon all of the Purchasers, and no Purchaser shall have any cause of action against the Representative for any actions taken, decision made or instruction given by the Representative under this Agreement, except as provided in
Section 2.8(a).

SECTION 2.7 DEFAULT AND ACCELERATION PROCEDURES.

(a) Each Purchaser acknowledges and agrees that its respective rights in, to, and under the Collateral are limited to its Proportionate Share of the Collateral securing all the Bridge Notes, whether Such Bridge Notes are issued at the Initial Closing or an Additional Closing.

(b) The Representative shall give all Purchasers written notice of any Event of Default under the Bridge Notes, this Agreement, or the other Transaction Agreements known to it which, in the sole judgment of the Representative, materially adversely affects the respective interests of the Purchasers under any of the Transaction Agreements. In the event of any Event of Default thereunder, the Representative shall pursue any remedies available to the Purchasers under the Transaction Agreements which the Representative in its sole discretion shall deem advisable, and Representative may also elect to postpone the pursuit of remedies if in its sole discretion and judgment it is appropriate under the circumstances to do so.

(c) In the event proceedings are instituted for a sale under power of sale or a judicial foreclosure of the Collateral provided under the Transaction Agreements, the provisions of the UCC, absent written agreement to the contrary, shall govern such proceedings and the actions taken pursuant thereto, as among the Representative and the Purchasers.

(d) In the event the Representative acquires title to any of the Collateral provided under the Transaction Agreements pursuant to a foreclosure or conveyance in lieu of foreclosure, title shall be taken in a form acceptable to the Representative and shall be held


by or on behalf of the Representative for the benefit of the Purchasers in their Proportionate Share. The Representative shall manage such Collateral in its ordinary course of business and in accordance with its customary practices and procedures for as long as such title is held in whole or in part in the name of or on behalf of the Representative. The Representative shall have the authority to contemporaneously to sell such Collateral on terms and conditions reasonably acceptable to the Representative.

(e) If the Representative receives a payment after acceleration of the Bridge Notes, whether pursuant to a demand for payment or as a result of legal proceedings against the Company, or from any source whatsoever, such payment shall be applied in the following order (unless mandated otherwise by the Transaction Agreements):

(1) To the expenses incurred in effecting such recovery or in enforcing any right or remedy under the Transaction Agreements, and any other expenses theretofore incurred by the Representative and not previously reimbursed by the Company;

(2) To accrued interest, payable by the Company, according to Purchaser's Proportionate Share of the accrued interest on the Bridge Notes; and

(3) To the unpaid principal of the Bridge Notes with each Purchaser receiving such Purchaser's Proportionate Share of such principal.

(f) The term "Proportionate Share" shall mean the outstanding principal amount of each Purchaser's Bridge Note divided by the total outstanding principal amount of Bridge Notes.

SECTION 2.8 STANDARD OF CARE OF THE REPRESENTATIVE.

(a) The Representative shall endeavor in good faith to perform all services and duties and exercise all powers hereunder specifically assigned and delegated to the Representative, and the Representative shall perform and exercise, and shall have the right and power to perform and exercise, such other services and powers as are reasonably incidental thereto. Neither the Representative nor any of its officers, directors, employees or agent shall be liable to the Purchasers for any action or failure to act or any error of judgment, negligence or mistake under any the Transaction Agreement or in connection herewith and therewith (a) at the request or with the approval of the Purchasers or (b) in the absence of its or their willful misconduct or gross negligence. Without limiting the generality of the foregoing, the Representative may consult with counsel or other advisors selected by it, and the Representative shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel or other advisors. In performing its obligations hereunder and under the Transaction Agreements, the Representative may rely in good faith on written and telephonic communications received by the Representative without investigating the genuineness thereof or the power and authority of the author of such communications. The Representative may exercise any of its powers and rights to perform any duty under this Agreement through attorneys and agents. Each Purchaser acknowledges and agrees that the Representative's duties and obligations under this Agreement are administrative and ministerial in nature, and that the Representative has no fiduciary obligation to the Purchasers.


(b) The Representative does not assume, and shall not have, any responsibility or liability, express or implied, for the adequacy, sufficiency, validity, collectability, genuineness, or enforceability of any of the Transaction Agreements, for the financial condition of the Company, for compliance by the Company with the terms and conditions of the Transaction Agreements, for the accuracy of any financial or other information furnished to the Purchaser by the Representative or by any other party or for the perfection of any of the Collateral. The Representative shall not be required to ascertain or inquire as to the performance or observance by the Company of any of the terms, conditions, provisions, covenants, or agreements contained in any of the Transaction Agreements or as to the use of the proceeds of the offering of the Bridge Notes or of the existence or possible existence of any Event of Default thereunder.

(c) The Representative may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory, or other business with the Company or any affiliate thereof as if it were not performing the duties specified herein, and may accept fees and other consideration from the Company or affiliate for services in connection with such services, without having to account for the same to the Purchasers.

(d) Neither the Representative (acting in its capacity as Representative and not as a Purchaser) nor any of its directors, officers, employees or Representatives shall have any responsibility to any Borrower on account of the failure or delay in performance or breach by any Purchaser (other than the Representative acting in its capacity as Representative) of any of its obligations hereunder or to any Purchaser on account of the failure of or delay in performance or breach by any other Purchaser or any Borrower of any of their respective obligations hereunder or in connection herewith.

(e) The Representative and the Company may deem and treat the payee of any Bridge Note as the holder thereof until written notice of transfer shall have been delivered as provided herein by such payee to the Representative and the Company.

(f) Each Purchaser agrees (i) to reimburse the Representative in the amount of such Purchaser's Proportionate Share of any expenses incurred for the benefit of the Purchasers by the Representative, including counsel fees and compensation of representatives and employees paid for services rendered on behalf of the Purchasers, not reimbursed by the Company and (ii) to indemnify and hold harmless the Representative and any of its directors, officers, employees or representatives, on demand, in the amount of its Proportionate Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Representative or any of them in any way relating to or arising out of this Agreement or any of the other Transaction Agreements or any action taken or omitted by it or any of them under this Agreement or any of the other Transaction Agreements, to the extent not reimbursed by the Company; provided, however, that no Purchaser shall be liable to the Representative for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgment, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Representative or any of its directors, officers, employees or Representatives.

(g) Each Purchaser acknowledges that it has, independently and without reliance upon the Representative or any other Purchaser and based on such documents and


information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and any other Transaction Agreement to which such Purchaser is party. Each Purchaser also acknowledges that it will, independently and without reliance upon the Representative or any other Purchaser and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Transaction Agreement, any related agreement or any document furnished hereunder.

(h) Subject to the appointment and acceptance of a successor Representative as provided below, the Representative may resign at any time by notifying the Purchasers and the Company. Upon any such resignation, the Purchasers shall have the right to appoint a successor Representative. If no successor Representative shall have been so appointed by such Purchasers and shall have accepted such appointment within 30 days after the retiring Representative gives notice of its resignation, then the retiring Representative may, on behalf of the Purchasers, appoint a successor Representative, which successor Representative shall be reasonable acceptable to the holders of at least 51% of the principal amount of the Bridge Notes then outstanding. Upon the acceptance of any appointment as Representative hereunder by a successor bank, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Representative and the retiring Representative shall be discharged from its duties and obligations hereunder and under each of the other Transaction Agreements. After any Representative's resignation hereunder, the provisions of this Article shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Representative.

(i) The Purchasers hereby acknowledge that the Representative shall be under no duty to take any discretionary action permitted to be taken by the Representative pursuant to the provisions of this Agreement or any of the other Transaction Agreements unless it shall be requested in writing to do so by the Purchasers.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

To induce the Purchasers to purchase the Bridge Notes, the Company represents and warrants to each Purchaser, except as referenced on Schedule 1 hereto (the "Disclosure Schedule"), which reference shall set forth the specific section to which the qualification relates and the statement which constitutes the qualification, that:


SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company and its subsidiaries are corporations duly organized, validly existing, and in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power to own their properties and to carry on their business as now being conducted. Each of the Company and each subsidiary is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its subsidiaries taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Transaction Agreements.

SECTION 3.2 AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS.

(a) The Company has the requisite corporate power and authority to enter into and perform each of this Agreement, the Bridge Notes, the Repricing Warrants, the Warrants, the Registration Rights Agreement, the Escrow Agreement, the individual guaranties and stock pledge agreements of the Pledgors, the Transfer Agent Instructions, the Financing Statement, and any related agreements (collectively, the "Transaction Agreements" and individually a "Transaction Agreement"), and to issue the Bridge Notes, the Repricing Warrants, the Warrants, the Conversion Shares, the Repricing Shares, and the Warrant Shares;

(b) the execution and delivery by the Company of each of the Transaction Agreements and the consummation by it of the transactions contemplated thereby, including without limitation the issuance of the Bridge Notes, the Warrants, and the Repricing Warrants, the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Bridge Notes and the reservation for issuance and the issuance of the Repricing Shares, and the Warrant Shares, upon exercise of the Repricing Warrants, and the Warrants (the Bridge Notes, the Repricing Warrants, the Warrants, the Conversion Shares, the Repricing Shares, and the Warrant Shares are hereinafter collectively, the "Securities") have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors, or its stockholders;

(c) each of the Transaction Agreements have been duly and validly executed and delivered by the Company; and

(d) each of the Transaction Agreements constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies.

SECTION 3.3 CAPITALIZATION. Immediately prior to Closing, the authorized capital stock of the Company consisted of (a) [100,000,000] shares are Common Stock, par value $.001, of which [26,690,629] shares are issued and outstanding, and (b) 1,000,000 shares of preferred stock ("Preferred Stock"), par value $.001, none of which are issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. Except as


described in Section 3.3 of the Disclosure Schedule, no shares of Common Stock or preferred stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as disclosed in Section 3.3 of the Disclosure Schedule, as of the effective date of this Agreement, (a) there are no outstanding options, warrants, scrip, rights to subscribe to, calls, or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or contracts, commitments, understandings, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, (b) there are no outstanding debt securities, and (c) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement). There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities in the manner contemplated by this Agreement. The Company has furnished to the Purchaser true and correct copies of the Company's Certificate of Incorporation, as amended (the "Charter") and the Company's Bylaws, as in effect on the date hereof (the "Bylaws"), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.

SECTION 3.4 ISSUANCE OF SECURITIES. The Bridge Notes have been duly authorized and are free from all taxes, liens, and charges with respect to the issue thereof. The Conversion Shares issuable upon conversion of the Bridge Notes have been duly authorized and reserved for issuance. The Repricing Warrants have been duly authorized and are free from all taxes, liens, and charges with respect to the issuance thereof. The Repricing Shares issuable upon exercise of the Repricing Warrants have been duly authorized and reserved for issuance. The Warrants have been duly authorized and are free from all taxes, liens, and charges with respect to the issuance thereof. The Warrant Shares issuable upon exercise of the Warrants have been duly authorized and reserved for issuance. Upon conversion of the Bridge Notes, the Conversion Shares will, and upon exercise of the Repricing Warrants and the Warrants, the Repricing Shares and the Warrant Shares will, be duly and validly issued, fully paid, and nonassessable, and free from all taxes, liens, and charges, with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance of the Securities by the Company is exempt from registration under the 1933 Act.

SECTION 3.5 NO CONFLICTS. Except as disclosed in Section 3.5 of the Disclosure Schedule, the execution, delivery, and performance of the Transaction Agreements by the Company, and the consummation by the Company of the transactions contemplated thereby, will not (a) result in a violation of the Charter or the Bylaws of the Company or (b) conflict with, constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration, or cancellation of, any agreement, indenture, or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment, or decree (including federal and state securities laws and regulations and the rules and regulations of the principal market or exchange on which the Common Stock is traded or listed) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected. Except as described in
Section 3.5 of the Disclosure Schedule, neither the Company nor any subsidiary is in violation of any term of, or in default under, its Charter or the Bylaws or their organizational charter or bylaws, respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,


decree, or order or any statute, rule, or regulation applicable to the Company or its subsidiaries. The business of the Company and its subsidiaries is not being conducted in violation of any law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization, or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver, and perform any of its obligations under or contemplated by the Transaction Agreements in accordance with the terms thereof. Except as disclosed in Section 3.5 of the Disclosure Schedule, all consents, authorizations, orders, filings, and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

SECTION 3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 1997, the Company has filed all reports, schedules, forms, statements, and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the "SEC Documents"). The Company has made available to each Purchaser or its representative true and complete copies of the SEC Documents. The Company has a class of securities registered under Section 12(b) or 12(g) of the 1934 Act or is required to file reports pursuant to Section 15(d) of the 1934 Act, and has filed all the materials required to be filed as reports pursuant to the Exchange Act for the period the Company was required by law to file such material. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the Sec promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents (the "Financial Statements") complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and present fairly, in all material respects, the financial position of the Company as of the dates thereof, and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Purchaser which is not included in the SEC Documents, including, without limitation, information referred to in Section 4.4 of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. Neither the Company nor any of its subsidiaries or any of their officers, directors, employees or agents have provided any of the Purchasers with any material, nonpublic information.

SECTION 3.7 ABSENCE OF CERTAIN CHANGES. Except as described in Section 3.7 of the Disclosure Schedule, since the date of the most recent [audited] balance sheet included in the SEC Documents, there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, results of operations, or prospects of the


Company or its subsidiaries. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its subsidiaries have any knowledge that its creditors intend to initiate involuntary bankruptcy proceedings.

SECTION 3.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry, or investigation before or by any court, public board, government agency, self-regulatory organization, or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company, the Common Stock, or any of the Company's subsidiaries or any of the Company or its subsidiaries, officers or directors in their capacity as such, wherein an unfavorable decision, ruling or finding would (a) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under the Transaction Agreements or (b) except as expressly set forth in Schedule 3.8 of the Disclosure Schedule, have a Material Adverse Effect.

SECTION 3.9 PURCHASE OF SECURITIES. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Purchasers or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser's purchase of the Securities. The Company further represents to the Purchaser that the Company's decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.

SECTION 3.10 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS, OR CIRCUMSTANCES. No event, liability, development, or circumstance has occurred or exists, or to the knowledge of the Company is contemplated to occur, with respect to the Company or its subsidiaries or their respective business, properties, prospects, operations, or financial condition, which could be material but which has not been publicly announced.

SECTION 3.11 NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Bridge Notes or the Conversion Shares.

SECTION 3.12 NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions nor will the company or any of its subsidiaries take any action or steps that would require registration of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings.


SECTION 3.13 EMPLOYEE RELATIONS. Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer's employment with the Company.

SECTION 3.14 INTELLECTUAL PROPERTY RIGHTS. The Company and its subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets, and rights necessary to conduct their respective businesses as now conducted. Except as set forth on Section 3.14 of the Disclosure Schedule, none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets, or other intellectual property rights have expired or terminated, or are expected to expire or terminate in the near future. The Company and its subsidiaries do not have any knowledge of any infringement by the Company or its subsidiaries of the trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret, or other similar rights of others. Except as set forth on Section 3.15 of the Disclosure Schedule, there is no claim, action, or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret, or other infringement, and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality, and value of all of their intellectual properties.

SECTION 3.15 ENVIRONMENTAL LAWS. The Company and its subsidiaries are
(a) in compliance with any and all applicable foreign, federal, state, and local laws and regulations relating to the protection of human health and safety, the environment, or hazardous, toxic substances, wastes, pollutants, or contaminants ("Environmental Laws"), (b) have received all permits, licenses, or other approvals required of them under applicable Environmental Laws to conduct their respective businesses, and (c) are in compliance with all terms and conditions of any such permit, license, or approval.

SECTION 3.16 TITLE. The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, and defects except as described in Section 3.16 of the Disclosure Schedule or as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting, and enforceable leases with such exceptions as are not material, and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries. The Pledged Assets are owned by the Company free and clear of any and all encumbrances, liens, and adverse claims whatsoever, has been at all times prior to the date hereof, and shall remain from and after the date of this Agreement in the possession of the Company and


located at its principal executive offices located in San Diego, California. The fair market value of the Pledged Assets is not less than 200% of the principal amount of the Bridge Notes.

SECTION 3.17 INSURANCE. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks, and in such amounts, as management of the Company believes to be prudent and customary in the businesses in which the Company and its subsidiaries are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial, or otherwise, or the earnings, business, or operations of the Company and its subsidiaries, taken as a whole.

SECTION 3.18 REGULATORY PERMITS. The Company and its subsidiaries possess all certificates, authorizations, and permits issued by the appropriate federal, state, or foreign regulatory authorities necessary to conduct their respective businesses, except to the extent that the failure to possess any such certificate, authorization, and permit would not have a Material Adverse Effect, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization, or permit.

SECTION 3.19 INTERNAL ACCOUNTING CONTROLS. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management's general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management's general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

SECTION 3.20 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its subsidiaries is subject to any charter, corporate, or other legal restriction, or any judgment, decree, order, rule, or regulation which in the judgment of the Company's officers has, or to the knowledge of the Company is expected in the future to have, a Material Adverse Effect. Neither the Company nor any of its subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has, or to the knowledge of the Company is expected to have, a Material Adverse Effect.

SECTION 3.21 TAX STATUS. Except as set forth on Section 3.21 of the Disclosure Schedule, the Company and each of its subsidiaries has made or filed all federal and state income and all other tax returns, reports, and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes), and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports, and declarations, except those being contested in good faith, and has set aside on its books amounts deemed reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports, or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim, and except as set forth on Schedule


3.21, there are no open years, examinations in progress or claims against it for federal, state or other taxes (including penalties and interest) for any period or periods prior to the date hereof.

SECTION 3.22 CERTAIN TRANSACTIONS. Except as set forth on Section 3.22 of the Disclosure Schedule and in the SEC Documents, and except for arm's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties and other than the grant of stock options disclosed on Section 3.22 of the Disclosure Schedule, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any subsidiary of the Company (other than for services as employees, officers, and directors), including any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director, or such employee or, to the knowledge of the Company, any corporation, partnership, trust, or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, or partner.

SECTION 3.23 DILUTIVE EFFECT. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Bridge Notes will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Bridge Notes in accordance with this Agreement and the Bridge Notes is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

SECTION 3.24 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreements) or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the state of its incorporation which is or could become applicable to the Purchaser as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and the Purchaser's ownership of the Securities.

SECTION 3.25 FEES AND RIGHTS OF FIRST REFUSAL. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents, or other third parties.


SECTION 3.26 FOREIGN CORRUPT PRACTICES ACT. The Company has not made, offered, or agreed to offer anything of value to any government official, political party, or candidate for government office nor has it taken any action which would cause the Company to be in violation of the Foreign Corrupt Practices Act of 1977.

SECTION 3.27 DISCLOSURE. Neither this Agreement nor any Schedule or Exhibit hereto, contains an untrue statement of a material fact or omits a material fact necessary to make the statements contained herein or therein not misleading. None of the statements, documents, certificates or other items prepared or supplied by the Company with respect to the transactions contemplated hereby contains an untrue statement of a material fact or omits a material fact necessary to make the statements contained therein not misleading.

SECTION 4. REPRESENTATION AND WARRANTIES OF PURCHASERS

Each Purchaser represents and warrants to the Company, with respect to such Purchaser only that:

SECTION 4.1 INVESTMENT PURPOSE. The Purchaser is acquiring the Securities for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, the Purchaser does not agree to hold any Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

SECTION 4.2 ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D.

SECTION 4.2 RELIANCE ON EXEMPTION. The Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments, and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire such securities.

SECTION 4.3 INFORMATION. The Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances, and operations of the Company and materials relating to the offer and sale of the Securities, which have been requested by such Purchaser. The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Purchaser or its advisors, if any, or its representatives shall modify, amend, or affect such Purchaser's right to rely on the Company's representations and warranties contained in Section 3 hereof. The Purchaser understands that its investment in the Securities involves a high degree of risk. The Purchaser has sought such accounting, legal, and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

SECTION 4.4 NO GOVERNMENTAL REVIEW. The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in


the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

SECTION 4.5 TRANSFER OR RESALE. The Purchaser understands that except as provided in the Registration Rights Agreement:

(a) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned, or transferred unless;

(i) subsequently registered thereunder;

(ii) the Purchaser shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such securities to be sold, assigned, or transferred may be sold, assigned, or transferred pursuant to an exemption from such registration; or

(iii) the Purchaser provides the Company with reasonable assurance that such securities can be sold, assigned, or transferred pursuant to Rule 144 or promulgated under the 1933 Act (or a successor rule thereto);

(b) any sale of such securities made in reliance on Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and

(c) neither the Company nor any other person is under any obligation to register such securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

SECTION 4.6 LEGENDS. The Purchaser understands that the certificates or other instruments representing the Bridge Notes and, until such time as the sale of the Conversion Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificates representing the Conversion Shares shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE


STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Bridge Notes and the Conversion Shares, upon which it is stamped, if, unless otherwise required by state securities laws, (a) the sale of the Conversion Shares is registered under the 1933 Act, (b) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment, or transfer of the Bridge Notes and the Conversion Shares may be made without registration under the 1933 Act, or (c) such holder provides the Company with reasonable assurances that the Bridge Notes and the Conversion Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold.

SECTION 4.7 AUTHORIZATION ENFORCEMENT. This Agreement has been duly and validly authorized, executed, and delivered on behalf of the Purchaser and is a valid and binding agreement of the Purchaser enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

SECTION 4.08 RESIDENCE. The Purchaser is a resident of that jurisdiction specified in its address on the Purchaser signature page.

SECTION 4.9 NO SCHEME TO EVADE REGISTRATION. The Purchaser represents and warrants to the Company, as to itself only, that the acquisition of the Securities is not a transaction (or any element of a series of transactions) that is part of a plan or scheme by the Purchaser to evade the registration provisions of the 1933 Act and that

(a) such Purchaser is an "accredited investor" within the meaning of Rule 501 under the Securities Act;

(b) such Purchaser has sufficient knowledge and experience to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof;

(c) such Purchaser has had an opportunity to ask questions of and receive answers from and to discuss the Company's business, management, and financial affairs with the Company's management;

(d) the Securities are being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof;

(e) such Purchaser was not offered nor made aware of the Company's interest in issuing the Bridge Notes by any means of public advertisement or solicitation;

(f) in connection with such Purchaser's purchase of the Securities, it has been solely responsible for its own (i) due diligence investigation of the Company and (ii) investment decision, and has not engaged or relied upon any agent or "purchaser representative" to review or analyze the Company's business and affairs or advise the


Purchaser with respect to the merits of the investment;

(g) such Purchaser has full power and authority to execute, deliver, and perform this Agreement; and this Agreement constitutes the legal, valid, and binding obligation of such Purchaser, enforceable against it in accordance with their respective terms; and

(h) if such Purchaser proposes to sell the Securities pursuant to Rule 144A under the Securities Act, it will (A) take reasonable steps to obtain the information required by such Rule to establish a reasonable belief that the prospective purchaser is a "qualified institutional buyer" as such term is defined in Rule 144A and (B) advise the prospective purchaser that the Purchaser is relying on the exemption from the registration provisions of the Securities Act available pursuant to Rule 144A.

SECTION 4.10 COVENANT NOT TO TRADE. Each Purchaser covenants and agrees, not to purchase, sell, make any short sale of, pledge, grant any option for the purchase or sale of or otherwise trade any Common Stock prior to the conversion of the Bridge Notes (other than a purchase of Common Stock from the Company pursuant to the exercise of the Repricing Warrant or the Warrant), without the prior written consent of the Company.

SECTION 5. CONDITIONS TO EACH CLOSING

Each Purchaser's obligation to purchase and pay for the Securities is subject to the satisfaction prior to or at each Closing of the following conditions provided that these conditions are for each Purchaser's sole benefit and may be waived by such Purchaser at any time in its sole discretion:

SECTION 5.1 TRANSACTION AGREEMENTS. The Company shall have delivered to the Purchaser the Transaction Agreements as provided in Section 1.5, above, executed by all the parties thereto.

SECTION 5.2 OPINION OF COUNSEL. The Purchaser shall have received from counsel for the Company, an opinion in substantially the form of Exhibit E, addressed to the Purchaser, dated the Closing Date.

SECTION 5.3 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and warranties of the Company contained in this Agreement and those otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall be true when made and as of the Closing Date, except to the extent of changes caused by the transactions contemplated herein; provided, however, that there shall exist at the time of the Closing and after giving effect to such transactions no default or Event of Default (as defined in Section 10 of the Bridge Notes) and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Agreements to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Purchaser shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect, and an update as of the Closing Date of the representation contained in
Section 3 (c) above.

SECTION 5.4 PURCHASE AND LOAN PERMITTED BY APPLICABLE LAWS. The purchase of, and payment for, all the Securities evidenced by or attendant to the Bridge Notes shall not violate any


applicable domestic law or governmental regulation (including, without limitation, Section 5 of the Securities Act) and shall not subject the Purchaser to any tax, penalty, liability, or other onerous condition under, or pursuant to, any applicable law or governmental regulation or order.

SECTION 5.5 NO ADVERSE LITIGATION. There shall be no action, suit, investigation, or proceeding, pending or, to the best of the Purchaser's or the Company's knowledge, threatened, against or affecting the Purchaser, the Company, any of the Purchaser's or the Company's properties or rights, or any of the Purchaser's or the Company's Affiliates, officers, or directors, by or before any court, arbitrator, or administrative or governmental body which (i) seeks to restrain, enjoin, prevent the consummation of, or otherwise affect the transactions contemplated by this Agreement or (ii) questions the validity or legality of any such transactions, or (iii) seeks to recover damages or obtain other relief in connection with any such transactions, and, to the best of the Purchaser's and the Company's knowledge, there shall be no valid basis for any such action, proceeding, or investigation, and the Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect.

SECTION 5.6 APPROVALS AND CONSENTS. The Company shall have duly received all authorizations, waivers, consents, approvals, licenses, franchises, permits, and certificates (collectively, "Consents") by or of all federal, state, and local governmental authorities and all material consents by or of all other persons necessary or advisable for the issuance of the Bridge Notes, all such consents shall be in full force and effect at the time of Closing, and the Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect.

SECTION 5.7 NO MATERIAL ADVERSE CHANGE. Since the date of the balance sheet in the most recently filed SEC Document filed at least 10 days prior to the Closing Date, there shall not have been any material adverse change in the business, condition (financial or other), assets, properties, operations, or prospects of the Company, and the Purchaser shall have received a certificate executed by the chief executive officer of the Company, dated the Closing Date, to such effect.

SECTION 5.8 PROCEEDINGS. All proceedings taken or to be taken in connection with the transactions contemplated hereby, and all documents incident thereto shall be reasonably satisfactory in form and substance to the Purchaser and the Purchasers counsel, and the Purchaser and the Purchasers counsel shall have received all such counterpart originals or certified or other copies of such documents as the Purchaser or the Purchaser's counsel may reasonably request.

SECTION 5.9 SECRETARY CERTIFICATE. The Purchaser shall have received a Secretary's Certificate from the Secretary or an Assistant Secretary of the Company dated the Closing Date and certifying: (A) that attached thereto is a true and complete copy of the Charter as then in effect, certified or bearing evidence of filing by the Secretary of State of Delaware, and (B) a certificate of said Secretary of State, dated as of a recent date as to the due incorporation and good standing of the Company, the payment of all franchise taxes by the Company, and listing all documents of the Company on file with said Secretary of State; (C) that attached thereto is a true and complete copy of the Bylaws of the Company as in effect on the date of such certification; (D) that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors or the stockholders of the Company authorizing the execution, delivery, and performance of Transaction Agreements and the issuance, sale, and delivery of the Securities, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the foregoing agreements and the transactions


contemplated thereby; (E) that the Charter has not been amended since the date of the last amendment referred to in the certificate delivered pursuant to clause (A) above; and (F) to the incumbency and specimen signature of each officer of the Company executing all Transaction Agreements and any certificate or instrument furnished pursuant hereto, and a certification by another officer of the Company as to the incumbency and signature of the officer signing the certificate.

SECTION 5.10 TRANSFER AGENT INSTRUCTIONS. The Transfer Agent Instructions shall have been delivered to and acknowledged in writing by the Company's transfer agent.

SECTION 5.11 LIEN SEARCH. The Company shall have obtained a lien search, the results of which shall indicate that, upon filing of the UCC Financing Statements contemplated hereby, the Purchasers will have a first priority security interest in the Collateral.

SECTION 5.12 UCC FINANCING STATEMENTS. The Company shall have promptly filed the appropriate UCC Financing Statement in the form, manner, time, and place of filing required by the county and state where the Collateral is situated, to properly perfect the security granted herein.

SECTION 5.13 NO SUSPENSIONS. There shall be no suspensions of trading in or in delisting (or pending delisting) of the Common Stock (including the removal from the OTCBB).

SECTION 5.14 STOCKHOLDER APPROVAL. If the Common Stock is then listed or traded on a principal securities exchange or The Nasdaq Stock Market, the Company shall have obtained stockholder approval in accordance with Section 6.11.

SECTION 6. AFFIRMATIVE COVENANTS

The Company covenants to each Purchaser that from and after the date of this Agreement through the Closing and thereafter so long as any of the Bridge Notes remain outstanding:

SECTION 6.1 FINANCIAL INFORMATION. The Company shall furnish to the Purchaser:

(a) within five (5) days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K, and any registration statements or amendments filed pursuant to the 1933 Act;

(b) within one (1) day after release thereof, copies of all press releases issued by the Company or any of its subsidiaries;

(c) copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders;

(d) promptly upon any officer of the Company obtaining knowledge (i) of any condition or event which constitutes an Event of Default, (ii) that the holder of any Bridge Notes has given any notice or taken any other action with respect to a claimed Event of Default under this Agreement, (iii) of any condition or event which, in the opinion of management of the Company would have a Material Adverse Effect, other than conditions or events applicable to the economy as a whole, (iv) that any person has given any notice to the Company or taken any other action with respect to a claimed Event of Default, or
(v) of the


institution of any litigation involving claims against the Company, unless such litigation is defended by the insurance carrier without any reservation of rights and is reasonably expected to be fully covered by a creditworthy insurer, in an amount equal to or greater than $250,000 with respect to any single cause of action or of any adverse determination in any litigation involving a potential liability to the Company equal to or greater than $100,000 with respect to any single cause of action, a certificate executed by the chief executive officer of the Company specifying the nature and period of existence of any such condition or event, or specifying the notice given or action taken by such holder or person and the nature of such claimed Event of Default, event or condition, and what action the Company has taken, is taking, or proposes to take with respect thereto; and

(e) with reasonable promptness, such other information and data with respect to the Company as the Purchaser may reasonably request.

SECTION 6.2 FORM D; FORM 8-K. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Purchaser promptly after such filing. The Company shall, on or before each Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for, or obtain exemption for the Securities for, sale to the Purchaser at each Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of any such action so taken to the Purchaser on or prior to the Closing Date. On or before the fifth (5th) business day following the Initial Closing Date and on or before the first business day following any Additional Closing Date, the Company shall file a Form 8-K with the SEC describing the terms of the transaction contemplated by the Transaction Agreement and consummated on such Closing Date or Additional Closing Date, as the case may be, in each case in the form required by the 1934 Act.

SECTION 6.3 REPORTING STATUS. Until the earlier of (a) the date as of which the Investors (as that term is defined in the Registration Rights Agreement) may sell all of the Conversion Shares without restriction pursuant to Rule l44(k) promulgated under the 1933 Act (or successor thereto), or (b) the date on which (i) the Investors shall have sold all the Conversion Shares and
(ii) none of the Bridge Notes is outstanding (the "Registration Period"), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination.

SECTION 6.4 INSPECTION OF PROPERTY. The Company will permit any Person designated by any Purchaser in writing, at the Purchaser's expense, to visit and inspect any of the properties of the Company, to examine the books and financial records of the Company and make copies thereof or extracts therefrom and to discuss its affairs, finances, and accounts with its officers and its independent public accountants, all at reasonable times and upon reasonable prior notice to the Company.

SECTION 6.5 MAINTENANCE OF PROPERTIES; INSURANCE. The Company will maintain or cause to be maintained in good repair, working order, and condition all properties used or useful in the business of the Company and from time to time will make or cause to be made all appropriate repairs, renewals, and replacements thereof. The Company will maintain or cause to be maintained, with financially sound and reputable insurers (or, as to workers' compensation or similar insurance, in an insurance fund or by self-insurance authorized by the laws of the jurisdiction in question),


insurance with respect to their respective properties and businesses against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar businesses and similarly situated, of such type and in such amounts as are customarily carried under similar circumstances by such other corporations and as are in good faith believed by the Company to be sufficient to prevent the Company from becoming a co-insurer within the terms of the policies in question.

SECTION 6.6 MAINTENANCE OF SECURITY INTEREST. The Company will at all times maintain or cause to be maintained a perfected first priority security interest in Collateral as security therefor in favor of all Purchasers as a group, together with the Pledged Shares, with a value of not less than 200% of the aggregate principal amount of the Bridge Notes then outstanding.

SECTION 6.7 EXPENSES. The Company and the Purchasers shall pay all costs and expenses incurred by such party in connection with the negotiation, investigation, preparation, execution, and delivery of this Agreement, the Bridge Notes, the Escrow Agreement, the Registration Rights Agreement, and other documents executed in connection with the issuance of the Bridge Notes. The costs and expenses of Sovereign Capital Advisors, LLC for the First Closing, including the fees and expenses of Warshaw Burstein Cohen Schlesinger & Kuh LLP, shall be paid for by the Company at the First Closing and the fees and expenses for all Additional Closings shall be paid for by the Company at such Additional Closing.

SECTION 6.8 AUTHORIZED SHARES OF COMMON STOCK, RESERVATION OF SHARES. The Company shall at all times, so long as any of the Bridge Notes are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Bridge Notes, such number of shares of Common Stock equal to or greater than 150% of the number of Conversion Shares issuable upon conversion of the Bridge Notes which are then outstanding or which could be issued at any time under this Agreement.

SECTION 6.9 CORPORATE EXISTENCE, ETC. The Company will at all times preserve and keep in full force and effect its corporate existence, and rights, licenses, and franchises material to its business, and will qualify to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a Material Adverse Effect.

SECTION 6.10 TRANSFER AGENTS. The Company covenants and agrees that, in the event that the Company's agency relationship with the transfer agent should be terminated for any reason, the Company shall immediately appoint a new transfer agent and shall require that the transfer agent execute and agree to be bound by the terms of the Irrevocable Instructions to Transfer Agent.

SECTION 6.11 STOCKHOLDER APPROVAL; PROXY. If the Common Stock becomes listed on a principal securities exchange or the Nasdaq Stock Market the Company covenants to submit to its stockholders a proposal for ratification of the issuance of the Bridge Notes, the Conversion Shares and Warrant Shares and the Repricing Warrant Shares, if and as required by the rules of such exchange or the National Association of Securities Dealers, Inc. (the "NASD"), as the case may be, applicable to the transaction. All officers and directors will, upon request of the Purchaser, execute a proxy authorizing the Purchaser or any designee of the Purchaser to vote all shares of Common Stock, the voting of which is controlled by such officer or director, at any meeting (or any adjournment thereof) at which Stockholder action is proposed to ratify the issuance of the Bridge Notes and the Conversion Shares.


SECTION 6.12 TRANSFER AGENT INSTRUCTIONS. The Company shall issue Transfer Agent Instructions to its transfer agent to issue certificates, registered in the name of the Purchaser or its respective nominee(s), for the Conversion Shares, the Repricing Shares, and the Warrant Shares in such amounts as specified from time to time by the Purchaser to the Company upon conversion of the Bridge Notes, except as provided in Section 6.18 herein. Prior to registration of the Conversion Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 4.6 of this Agreement. The Company warrants that no instruction other than the Transfer Agent Instructions referred to in this Section 6.12, and stop transfer instructions to give effect to Section 4.6 hereof (in the case of the Conversion Shares, prior to registration of such shares under the 1933 Act) will be given by the Company to its transfer agent and that the Bridge Notes and the Conversion Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. Nothing in this Section 6.12 shall affect in any way the Purchaser's obligations and agreement to comply with all applicable securities laws upon resale of the Bridge Notes or Conversion Shares. If the Purchaser provides the Company with an opinion of counsel, reasonably satisfactory in form, and substance to the Company, that registration of a resale by the Purchaser of any of the Bridge Notes or Conversion Shares is not required under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by the Purchaser. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 6.12 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 6.12, that the Purchaser shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

SECTION 6.13 PAYMENT OF TAXES. The Company will pay all taxes, assessments, and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income, or properties before any penalty or significant interest accrues thereon, and all claims (including, without limitation, claims for labor, services, materials, and supplies) for sums which have become due and payable and which by law have or may become a lien upon any of its properties or assets; provided, however, that no such charge or claim need be paid if such claim is (i) being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, and (ii) the amount of such claim is accrued on the financial statements of the Company or other appropriate provision is made as shall be required by generally accepted accounting principles.

SECTION 6.14 COMPLIANCE WITH LAWS, ETC. The Company will comply with the requirements of all applicable laws, rules, regulations, and orders of any court or other governmental authority (including, without limitation, those related to environmental or ERISA compliance), noncompliance with which could materially adversely affect the business, condition (financial or other), assets, property, operations, or prospects of the Company.

SECTION 6.15 USE OF PROCEEDS. The Company will use the proceeds from the sale and issuance of the Bridge Notes for operating capital purposes.

SECTION 6.16 REGISTRATION STATEMENT. The Company shall comply with all of the dates and obligations contained in the Registration Rights Agreement.


SECTION 6.17 LISTINGS. The Company shall promptly secure the listing of the Conversion Shares, the Repricing Shares and the Warrant Shares, upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listings of all Conversion Shares, the Repricing Shares and the Warrant Shares from time to time issuable under the terms of the Bridge Notes, the Repricing Warrants, the Warrants, and the Registration Rights Agreement. The Company shall maintain the Common Stock's authorization for quotation in the over-the-counter market. The Company shall promptly provide to the Purchaser copies of any notices it receives regarding the continued eligibility of the Common Stock for trading in the over-the-counter market.

SECTION 6.18 INDEMNIFICATION. In consideration of the Purchaser's execution and delivery of this Agreement and acquiring the Securities hereunder and in addition to all of the Company's other obligations under this Agreement, the Company shall defend, protect, indemnify, and hold harmless each Purchaser and each other holder of the Securities and each officer, director, employee, and agent of each Purchaser (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities, and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in any Transaction Agreement or any other certificate, instrument, or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement, or obligation of the Company contained in the Transaction Agreements, or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit, or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance, or enforcement of this Agreement or any other instrument, document, or agreement executed pursuant hereto by any of the Indemnitees, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Bridge Notes, or the status of the Purchaser or holder of the Bridge Notes or the Conversion Shares, as an investor in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

SECTION 6.19 BEST EFFORTS. The Company shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in
Section 5 of this Agreement.

SECTION 7. NEGATIVE COVENANTS

The provisions of this Section 7 shall remain in effect so long as any of the Bridge Notes shall remain outstanding.

SECTION 7.1 DEFINITION OF DEBT.

For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean:

(a) all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar


instruments;

(b) all indebtedness guaranteed in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise;

(c) all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable;

(d) all indebtedness secured by any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness;

(e) all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other title retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property;

(f) all bankers' acceptances and letters of credit; and

(g) liabilities in respect of unfunded vested benefits under Plans covered by Title IV of ERISA.

SECTION 7.2 RESTRICTIONS ON DEBT. The Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except:

(a) the Bridge Notes issued pursuant to this Agreement;

(b) Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred in the ordinary course of business thereafter; and

(c) purchase money security interests not to exceed $250,000 per year.

Notwithstanding the foregoing provisions of Section 7.2, the Company will not create, assume, or incur, or become or at any time be liable in respect of, any Debt for money borrowed, advances made, or goods purchased, if the Purchaser, the Person making such advances, or the vendor of such goods (or any Person who guarantees or becomes surety for all or any part of such Debt or acquires any right or incurs any obligation to become, either immediately or upon the occurrence of some future contingency, the owner of all or any part thereof) shall have any right, by reason of any statute or otherwise, to have any claim in respect of such Debt first satisfied out of the general assets of the Company in priority to the claims of its general creditors.

SECTION 7.3 RESTRICTIONS ON DIVIDENDS. The Company will not (a) pay any dividends, in cash or otherwise, on, (b) make any distributions to holders of, or (c) purchase, redeem, or otherwise acquire any of its outstanding Common Stock or Preferred Stock or set apart assets for a sinking or other analogous fund for the purchase, redemption, retirement, or other acquisition of, any shares of its


Common Stock or Preferred Stock; provided, however, that the Company may, so long as at the time of and after giving effect thereof no Event of Default has occurred and is continuing: (i) pay dividends on its outstanding Preferred Stock in accordance with the Charter; (ii) with prior written approval of each Purchaser, repurchase shares of its Common Stock issued or to be issued by the Company upon exercise of stock options granted to employees and directors of the Company pursuant to the terms of plans adopted by the Board of Directors of the Company; and (iii) pay cash in lieu of fractional shares of its Common Stock on the exercise of outstanding warrants to purchase its Common Stock, pursuant to the terms of such warrants.

SECTION 7.4 RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES. So long as any Bridge Notes are outstanding the Company shall not, and shall cause each of its subsidiaries not to, enter into, amend, modify or supplement, or permit any subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any subsidiary's officers, directors, person who were officers or directors at any time during the previous two years, stockholders who beneficially own 5% or more of the Common Stock, or Affiliates with any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a "Related Party"), except for (a) customary employment arrangements and benefit programs on reasonable terms, (b) any agreement, transaction, commitment or arrangement on a aims-length basis on terms no less favorable than terms which would have been obtainable from a person other than such Related Party, or (c) any agreement, transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company. For purposes hereof, any director who is also an officer of the Company or any subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment or arrangement. "Affiliate" for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5% or more common ownership with that person or entity, (iii) controls that person or entity, or (iv) shares common control with that person or entity. "Control" or "controls" for purposes hereof means that a person or entity has the power, direct or indirect, to control or govern the policies of another person or entity.

SECTION 7.5 RESTRICTIONS ON INVESTMENTS. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of, any other company or business; provided, however, that the Company may invest its Excess Cash as defined below in:

(a) securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition;

(b) certificates of deposit or eurodollar certificates of deposit, having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement);

(c) commercial paper of any Person that is not a subsidiary or an Affiliate of the Company, maturing within one hundred eighty days after the date of acquisition;


(d) bank loan participations; and

(e) money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement);

in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes which has not been invested as described in Section hereof.

SECTION 7.6 RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS. The Company will not sell or transfer any of its properties to anyone with the intention of taking back a lease of the same property or leasing other property for substantially the same use as the property being sold or transferred; provided, however, that the Company may continue and extend its existing leasing arrangements and may lease, under operating leases, fixtures, equipment, and real estate in the ordinary course of business of the Company.

SECTION 7.7 RESTRICTIONS ON SALES OF ASSETS. The Company will not sell, transfer, or dispose of any property except for sales of obsolete equipment having a book value at the time of sale of not more than $100,000 in the aggregate in any fiscal year.


SECTION 7.8 RESTRICTIONS ON SUBSIDIARIES. The Company will not, without the written consent of the Purchaser, organize, or transfer any assets to, any subsidiary, provided that, if consent of the Purchaser is obtained and any Subsidiaries are organized, or assets transferred, in compliance with this
Section 7.8, the Company will not permit such Subsidiaries to enter into any transaction or agreement which would violate any of the provisions of this
Section 7.8 if such provisions were applicable to such subsidiary.

SECTION 7.9 CHANGE IN BUSINESS; OPERATIONS. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by the Purchaser, such that more than 10% of the consolidated net revenues of the Company are derived from a business other than the business in which the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in Business"), except any such changes approved in advance in writing by the Representative. The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity.

SECTION 7.10 EXCEPTIONS WITH CONSENT OF THE PURCHASERS. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to all the Purchasers of Bridge Notes under this Agreement, along with copies of all documentation requested by any Purchaser relating to such requested exception, and second, in the sole discretion of the Purchasers, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this
Section 7 only after receiving the advance written consent of the Purchasers holding at least two-thirds (2/3) of the principal amount of the Bridge Notes then outstanding.

SECTION 8. MISCELLANEOUS.

SECTION 8.1 RESTRICTIONS ON CONVERSION AND EXERCISE. Notwithstanding any rights of conversion or exercise contained in the Series 1 Bridge Notes, the Repricing Warrants or Purchaser Warrants, in no event shall any Purchaser or subsequent holder thereof be entitled to convert or exercise any Series 1 Bridge Notes, Repricing Warrants or Purchaser Warrants in excess of that number which, upon giving effect to such conversion or exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of any Series 1 Bridge Notes, Repricing Warrants or Purchaser Warrants with respect to which the determination of such proviso is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, unconverted or unexercised Series 1 Bridge Notes, Repricing Warrants and Purchaser Warrants beneficially owned by the holder and its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 9.1, beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act.

SECTION 8.2 COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any


signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof.

SECTION 8.3 HEADINGS. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

SECTION 8.4 SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

SECTION 8.5 ENTIRE AGREEMENT. AMENDMENTS. This Agreement supersedes all other prior oral or written agreements between the Purchaser, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any representation, warranty, covenant, or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Company and the holders of at least two-thirds (2/3) of the principal amount of Bridge Notes then outstanding, and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares then outstanding.

SECTION 8.6 NOTICES. Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, PROVIDED, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:        PROVIDENTIAL HOLDINGS, INC.
                          8700 Warner Avenue
                          Fountain Valley, California 92708
                          Attention:
                          Telephone:

Facsimile:

If to any Purchaser, to its address and facsimile number on the signature page of such Purchaser hereto, with copies to such Purchaser's counsel as set forth on the signature page of such Purchaser hereto. Each party shall provide five
(5) days prior written notice to the other party of any change in address or facsimile number.

SECTION 8.7 INTEREST. In no event shall the amount of interest due or payable hereunder or under the Bridge Notes exceed the maximum rate of interest allowed by applicable law, and if any such payment is inadvertently made by the Company or is inadvertently received by any holder of Bridge Notes, then such excess sum shall be credited as a payment of principal, unless the applicable


holder of a Bridge Notes shall notify the Company in writing that it elects to have such excess sum returned forthwith. It is the express intent hereof that the Company not pay and the holder of the Bridge Notes not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Company under applicable law.

SECTION 8.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of two-thirds (2/3) of the principal amount of the Bridge Notes then outstanding. Any Purchaser may assign its rights hereunder without the consent of the Company; PROVIDED, HOWEVER, that any such assignment shall not release such Purchaser from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption.

SECTION 8.9 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

SECTION 8.10 SURVIVAL. The representations, warranties, agreements, covenants and indemnification provisions contained in this Agreement shall survive each of the Closings. Each Purchaser shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

SECTION 8.11 PUBLICITY. The Company and the Purchasers shall have the right to approve, before issuance, any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Purchasers, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations (although the Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof).

SECTION 8.12 FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

SECTION 8.13 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

SECTION 8.14 GOVERNING LAW. The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or


in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

IN WITNESS WHEREOF, the Purchasers and the Company have caused this Series 1 Bridge Note Purchase and Security Agreement to be duly executed as of the date first written above.

COMPANY SIGNATURE PAGE
TO
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT

COMPANY

PROVIDENTIAL HOLDINGS, INC.

By: /s/  Henry Fahman
    -----------------
Henry Fahman
President and Chief Executive Officer


PURCHASER SIGNATURE PAGE
TO
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT

PURCHASER

Purchaser Name:_______________________

By:___________________________________

Name:_________________________________

Title:________________________________

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PURCHASER NAME                        __________________________________________
ADDRESS AND
FACSIMILE NUMBER                      __________________________________________

                                      __________________________________________

                                      __________________________________________



PRINCIPAL AMOUNT OF BRIDGE NOTES
PURCHASED                             __________________________________________
--------------------------------------------------------------------------------

PURCHASER'S LEGAL COUNSEL             __________________________________________
ADDRESS AND
FACSIMILE NUMBER                      __________________________________________

                                      __________________________________________

                                      __________________________________________


================================================================================


EXHIBIT 4.2

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

FORM OF PROVIDENTIAL HOLDINGS, INC.

SERIES 1 BRIDGE FINANCING NOTE

No. S1BFN-__ $___,000.00 March 28, 2000

PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (such corporation, or any successor permitted hereunder, the "Company"), for value received, hereby promises to pay to [HOLDER NAME], a [resident of the State of] ______
[corporation] [limited liability company] or any subsequent holder hereof (such holders, assignees, or any registered assignees, the "Holders"), the principal sum of ___ THOUSAND DOLLARS (US $____,000.00), and to pay interest on such principal sum, at the rate of eight percent (8%) per annum (the "Note Rate") from the Original Issue Date (as defined below) until the one hundred twentieth
(120th) day after the Original Issue Date (the "Maturity Date") and at the rate of twelve percent (12%) per annum (the "Default Rate") after the Maturity Date until payment of all principal, premium, and accrued and unpaid interest has been paid in full. Interest shall be payable on the Maturity Date. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. The date on which this Series 1 Bridge Note shall have first been issued is referred to herein as the "Original Issue Date."

SECTION 1. DESCRIPTION. This Series 1 Bridge Note is one of a series of Series 1 Bridge Financing Notes that have been authorized by the Company (the "Series 1 Bridge Notes") and are alike except for principal amount and issue date, and are in registered form. This Series 1 Bridge Note is convertible, into shares of the Company's common stock, $.04 par value (the "Common Stock"), as provided herein, and, effective upon any such conversion, the Common Stock so issued shall be subject to all terms and conditions and shall enjoy all rights, privileges, and preferences applicable to such Common Stock under the Company's Certificate of Incorporation (the "Certificate of Incorporation"). The Common Stock issuable upon conversion of this Series 1 Bridge Note (the "Conversion Shares") are entitled to registration rights pursuant to a Registration Rights Agreement between Holder, the Company, and certain other signatures thereto dated March 27, 2000 (the


"Registration Rights Agreement"). This Series 1 Bridge Note is secured by certain collateral of the Company having a value of approximately 200% of the aggregate principal amount of all of the Series 1 Bridge Notes issued pursuant to the terms of (i) a Series 1 Bridge Note Purchase and Security Agreement dated as of March 28, 2000 (the "Purchase Agreement"), and is otherwise entitled to all of the rights and benefits thereunder.

SECTION 2. OFFICE FOR REGISTRATION AND CONVERSION. The Company shall maintain an office where this Series 1 Bridge Note shall be surrendered or presented for registration of transfers or exchanges and conversions. This office will initially be located at the offices of the Company at 8700 Warner Avenue, Fountain Valley, California 92708. The Company shall keep a register of the Series 1 Bridge Notes and of their transfer and exchange, including the names and addresses of Holders of the Series 1 Bridge Notes. Holder shall give the Company notice of any change in Holder's address to the office indicated in this Section 2. Upon two (2) Business Days written request, the Company shall permit Holder or its duly authorized representatives to inspect such register. Upon written notice to Holder, the Company may change the address of the office to be maintained by the Company pursuant to this Section 2 or appoint one or more co-registrars, stock registrars, paying agents, or conversion agents to assist the Company in performing its functions under the Series 1 Bridge Notes.

SECTION 3. REDEMPTION.

(a) VOLUNTARY REDEMPTION ON THE MATURITY DATE. If (i) this Series 1 Bridge Note is outstanding on the Maturity Date and (ii) on the Maturity Date a registration statement (a "Registration Statement") under the Securities Act of 1933 (the "Securities Act") is effective covering the resale by Holder of all of the Conversion Shares, the Company may, at its option, redeem the then outstanding principal amount of this Series 1 Bridge Note by payment of the Maturity Date Redemption Price (as defined below) by conversion of this Series 1 Bridge Note into Common Stock in the manner contemplated by Section 3(d). To effect a redemption pursuant to this Section 3(a), the Company shall give notice to Holder, on the Maturity Date, which notice shall state that the Company has elected to pay the redemption price by conversion of this Series 1 Bridge Note into Common Stock. Within two (2) Business Days of the date of such notice, the Company shall tender to Holder, as specified in the Company's notice, Conversion Shares (in the manner contemplated by Section 3(d) ). The "Maturity Date Redemption Price" shall be equal to 120.0% of the then outstanding principal amount of this Series 1 Bridge Note plus accrued and unpaid interest thereon at the Note Rate through and including the Maturity Date and at the Default Rate after the Maturity Date through and including the date the payment is disbursed (whether by issuance of Conversion Shares or a payment in cash).

(b) VOLUNTARY REDEMPTION AT THE OPTION OF HOLDER AFTER THE MATURITY DATE. If on the Maturity Date a Registration Statement is not effective with respect to the Conversion Shares, Holder may, at any time and from time to time after the Maturity Date, make demand to the Company to redeem, all or any part of the then outstanding principal under this Series 1 Bridge Note at a price equal to Maturity Date Redemption Price. Such demand shall specify Holder's election to accept payment of the redemption price in cash or by conversion of this Series 1 Bridge Note into Common Stock, in the manner contemplated by Section 3(d). Within two (2) Business Days of the date of such notice, the Company shall tender to Holder, as specified in Holder's notice, either (A) cash or (B) Conversion Shares (in the manner contemplated by Section
3(d)). The date of any redemption under either paragraph (a) or (b) above shall be referred to as a "Redemption Date."


(c) VOLUNTARY REDEMPTION BY THE COMPANY. At any time from and after the Original Issue Date, the Company may, at its option, redeem all or a portion of this Series 1 Bridge Note for cash, at the redemption price set forth in subparagraph (i), below, plus accrued and unpaid interest on such redeemed amount through and including the Voluntary Redemption Date, as such term is defined below (such redemption being the "Voluntary Redemption"), under and in accordance with the following terms and procedures:

(i) The Company at its option prior to the Maturity Date may redeem this Series 1 Bridge Note at the Redemption Price set forth below plus all accrued and unpaid interest on the principal amount through and including the Voluntary Redemption Date (the "Voluntary Redemption Price") as of a Voluntary Redemption Date:

REDEMPTION DATE                                                   REDEMPTION PRICE

Original Issue Date through and including the 60th day after      105.0%
the Original Issue Date

61st day after the Original Issue Date through and including      110.0%
the 120th day after the Original Issue Date

121st day after the Original Issue Date through and including     115.0%
the 180th day after the Original Issue Date

181st day after the Original Issue Date through and including     120.0%
the date of redemption or conversion

(ii) At least ten (10) days before a Voluntary Redemption, the Company shall mail a notice of redemption to Holder, stating (A) the redemption date, which shall be a business day in New York, New York (the "Voluntary Redemption Date"), (B) the aggregate principal amount of this Series 1 Bridge Note to be redeemed, (C) the Voluntary Redemption Price, and (D) the name and address of the Person to whom this Series 1 Bridge Note must be presented to receive payment if required pursuant to subparagraph (iv) below. Once notice of redemption is mailed and the Company shall have complied with subparagraph (iii) below, the Voluntary Redemption Price shall become due and payable on the Voluntary Redemption Date.

(iii) On or before the third (3rd) day prior to the Voluntary Redemption Date, the Company shall deposit into a bank trust account for the benefit of Holder of this Series 1 Bridge Note money sufficient to pay the Redemption Price and all accrued and unpaid interest.

(iv) The Company may, at its option, require as a condition to the receipt of a payment pursuant to this Section 3(c) that Holder present the Series 1 Bridge Notes to the bank specified in subparagraph (ii) above for surrender.

(v) Notwithstanding anything to the contrary contained herein, if the Company delivers a notice to effect a Voluntary Redemption of this Series 1 Bridge Note on or after the 181st day after the Original Issue Date, Holder, upon notice delivered to the Company within


five days after receipt of the Company's notice of Voluntary Redemption, may elect for the Voluntary Redemption Price to be paid in Common Stock in the manner contemplated by Section 3(d).

(d) CONVERSION INTO COMMON STOCK IN LIEU OF PAYMENTS.

(i) In lieu of making payment of the Maturity Date Redemption Price in cash to Holder pursuant to Section 3(a), the Company may elect to pay all or part of such amount in Conversion Shares, under the terms of Section 3(f) and Section 6.

(ii) In lieu of receiving payment of the Maturity Date Redemption Price pursuant to Section 3(b) or the Voluntary Redemption Price pursuant to Section 3(c)(v) in cash, Holder may elect to require the Company to pay all or part of such amount in Conversion Shares, under the terms of Section 3(f) and Section 6.

(iii) Upon issuance of any shares of Common Stock to Holder upon redemption of this Series 1 Bridge Note in lieu of cash or upon conversion, Holder shall be entitled to receive Repricing Warrants in accordance with the Repricing Warrant attached hereto as Attachment 1.

(e) AUTOMATIC CONVERSION INTO COMMON STOCK. If (i) this Series 1 Bridge Note is outstanding on the second anniversary of the Original Issue Date (the "Second Anniversary Date") and (ii) on the Second Anniversary Date either (A) a Registration Statement under the Securities Act is effective covering the resale by Holder of all of the Conversion Shares or (B) all the Conversion Shares can be resold by Holder without registration under Rule 144(k) under the Securities Act, the Company shall redeem the then outstanding principal amount of this Series 1 Bridge Note at a price equal to the Maturity Date Redemption Price, by conversion (an "Automatic Conversion") of this Series 1 Bridge Note into Common Stock in the manner contemplated by Section 3(d). The Company shall deliver the Conversion Shares to Holder within two (2) Business Days of the Second Anniversary Date (in the manner contemplated by Section 3(f) and Section 6.

(f) NUMBER OF SHARES ISSUABLE UPON CONVERSION IN LIEU OF PAYMENTS. The number of shares of Common Stock (rounded up to the nearest whole number) issuable in payment of the Mandatory Redemption Price, the Voluntary Redemption Price or upon Automatic Conversion shall be equal to the quotient of the Mandatory Redemption Price or the Voluntary Redemption Price (as the case may be) divided by $2.40 (the "Conversion Price").


SECTION 4. METHOD OF PAYMENT.

(a) Interest accruing through and including the Maturity Date shall be computed at the Note Rate. Interest accruing after the Maturity date shall be computed at the Default Rate. Accrued and unpaid interest shall be due and payable at the time the principal and premium of this Series 1 Bridge Note is paid. All such interest shall be computed on the basis of the actual number of days elapsed during any interest period in a year of 360 days. Interest shall begin to accrue on the Original Issue Date.

(b) The Company shall pay interest and principal on this Series 1 Bridge Note (except defaulted interest) to the Person who is the registered Holder of this Series 1 Bridge Note on the day on which the interest or principal payment is due.

(c) The Company shall pay interest by check payable in money of the United States of America that at the time of payment is legal tender for public and private debts. Payments of interest shall be mailed to Holder's address shown in the register maintained pursuant to Section 2; provided, however, that with respect to the final payment of principal and accrued and unpaid interest necessary to pay this Series 1 Bridge Note in full, to receive such payment Holder must surrender this Series 1 Bridge Note for cancellation to the Company or to a paying agent appointed by the Company. Principal and interest shall be considered paid on the date due, and no interest shall accrue thereafter, if there is on deposit on that date, in a bank trust account for the benefit of Holder of this Series 1 Bridge Note, money sufficient to pay the Redemption Price and all accrued and unpaid interest due under this Series 1 Bridge Note.

SECTION 5. CONVERSION PRICE AND ADJUSTMENTS.

(a) At anytime after the Maturity Date, Holder may convert all or any portion of the Redemption Price and accrued and unpaid interest due on this Series 1 Bridge Note into shares of Common Stock.

(b) If Holder elects to convert less than the full Redemption Price of this Series 1 Bridge Note, such conversion shall be permitted only in one hundred (100) share increments unless the Company has given its contemporaneous consent to conversion of an odd lot. The provisions hereof that apply to conversion of the entire Redemption Price of this Series 1 Bridge Note shall also apply to conversion of a portion of the Redemption Price. Upon surrender of the Series 1 Bridge Note for conversion in part, the Company shall issue new Series 1 Bridge Notes in substantially the same form as this Series 1 Bridge Note, except that the principal amount shall be reduced by the principal amount so converted (exclusive of the redemption premium).

(c) The number of shares of Common Stock issuable upon conversion of this Series 1 Bridge Note is equal to the quotient of the Redemption Price of this Series 1 Bridge Note being converted divided by Conversion Price. Fractional shares will not be issued. In lieu of any fraction of a share, the Company shall deliver its check for the dollar amount of the less than full share remainder. Accrued and unpaid interest shall be included in computing the number of Conversion Shares issuable upon conversion of this Series 1 Bridge Note. Interest shall cease to accrue on that portion of the Redemption Price converted from and after the Conversion Date.


SECTION 6. PROCEDURES FOR CONVERSION, AND ISSUANCE OF CONVERSION SHARES.

(a) HOLDERS' DELIVERY REQUIREMENTS. To convert this Series 1 Bridge Note into Common Stock pursuant to the provisions of Section 5, Holder shall (A) deliver or transmit by facsimile, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company or its designated Transfer Agent, and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original Series 1 Bridge Note being converted (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of the Series 1 Bridge Note) and the originally executed Conversion Notice. The date the Company receives the Conversion Note and this Series 1 Bridge Note is hereinafter referred to as, the "Conversion Date."

(b) COMPANY'S RESPONSE. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Company or the Transfer Agent of the Series 1 Bridge Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within two (2) Business Days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which such Holder shall be entitled to Holder's or its designee's balance account at The Depository Trust Company.

(c) RECORD HOLDER. The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Series 1 Bridge Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date.

(d) COMPANY'S FAILURE TO TIMELY CONVERT. If the Company shall fail to issue to Holder a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Series 1 Bridge Note within four (4) Business Days following (i) the date of receipt by the Company of a Conversion Notice in the event of a voluntary conversion by Holder or (ii) the occurrence of an event requiring conversion (a "Conversion Event"), including without limitation, a mandatory redemption required by Section 3(a) or an automatic conversion required by Section 3(e), then, in addition to all other available remedies which such Holder may pursue hereunder and under the Purchase Agreement between the Company and the initial Holder of this Series 1 Bridge Note (including indemnification pursuant to Section 7.18 thereof), the Company shall pay as additional damages to Holder on each day after the date of receipt by the Company for the Conversion Notice or the date of the Conversion Event until the Conversion Shares are received by Holder, an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Business Day following the date of receipt by the Company of the Conversion Notice or the date of the Conversion Event. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a holder of this Series 1 Bridge Note, if Holder has otherwise complied with this Section 6.

(e) ADJUSTMENTS TO CONVERSION PRICE. If any adjustment to the Conversion Price to be made pursuant to Section 7 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after the record date, the Company may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for


any cash remainder required by reason of such adjustment until the occurrence of such event; provided, however, that the Company delivers to Holder a due bill or other appropriate instrument evidencing Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment.

(f) RESERVATION OF CONVERSION SHARES. Until such time as this Series 1 Bridge Note has been fully redeemed, the Company shall reserve out of its authorized but unissued Common Stock enough shares of Common Stock to permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on this Series 1 Bridge Note at any time. All shares of Common Stock issued upon conversion of this Series 1 Bridge Note shall be fully paid and nonassessable. The Company covenants that if any shares of Common Stock, required to be reserved for purposes of conversion of this Series 1 Bridge Note hereunder, require registration with or approval of any governmental authority under any federal or state law or listing upon any national securities exchange before such shares may be issued upon conversion, the Company shall in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered, approved or listed, as the case may be.

SECTION 7. ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price shall be subject to adjustment from time to time as follows:

(a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Series 1 Bridge Note shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the conversion (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Series 1 Bridge Note Series 1 Bridge Note would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Series 1 Bridge Note. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 7(a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder and executed by the Successor Company which provides that Holder shall have the right upon conversion of this Series 1 Bridge Note to receive the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon conversion (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Series 1 Bridge Note would have been entitled upon such consolidation, share exchange, merger, or sale.

(b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights


convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of shares of Common Stock issuable upon conversion hereof shall be proportionately increased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Conversion Price below $.04 per share.

(c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of shares of Common Stock issuable upon the conversion hereof shall be proportionately decreased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction.

(d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Series 1 Bridge Note shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of shares of Common Stock issuable upon the conversion hereof immediately prior to such reclassification.

(e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Series 1 Bridge Note, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company
(x) will not create a par value of any share of stock receivable upon the exercise of the Series 1 Bridge Note above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares upon the exercise of the Series 1 Bridge Note.

SECTION 8. NOTICES. The Company shall give the following notices at the times specified:

(a) Immediately upon any adjustment of the Conversion Price, the Company will give notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment.

(b) The Company will give notice to Holder, at least twenty (20) days prior to the date on which the Company closes its books or takes a record
(i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to Holder of Common Stock, or
(iii) for determining rights to vote with respect to any dissolution, or liquidation or with respect to any of the events specified in Section 7(a)


(c) The Company will also give written notice to Holder at least twenty (20) days prior to the date on which any of the events specified in
Section 7(a) or any dissolution, or liquidation will take place.

SECTION 9. SUCCESSORS TO THE COMPANY. The Company shall not consolidate or merge with or into, or sell all or substantially all of its assets to, any Person unless: (i) the Person is a corporation; (ii) such Person executes, and mails to Holder a copy of, an instrument by which such Person or an affiliate assumes the due and punctual payment of the principal of and interest on this Series 1 Bridge Note and the performance and observance of all the obligations of the Company under this Series1 Bridge Note; and (iii) immediately after giving effect to the transaction, no Event of Default or event which after notice or lapse of time or both would become an Event of Default shall have occurred. Upon compliance with this Section 9, the Successor Corporation shall succeed to and be substituted for the Company under this Series 1 Bridge Note with the same effect as if the Successor Corporation had been named as the Company herein. Nothing in this Series 1 Bridge Note shall prevent any consolidation or merger in which the Company is the surviving corporation, or any acquisition by the Company by purchase or otherwise of all or any part of the assets of any other Person, and no such consolidation, merger, or acquisition shall require compliance with this Section 9.

SECTION 10. EVENTS OF DEFAULT AND REMEDIES.

(a) As used herein, an "Event of Default" occurs if:

(i) the Company defaults in the payment of principal and/or interest when the same becomes due and payable.

(ii) the Company fails to comply with any other provision contained in this Series 1 Bridge Note, the Purchase Agreement, the Warrant, the Repricing Warrant, or the Registration Rights Agreement, and such failure is not cured within five (5) days after the Company receives written demand from Holder to remedy the same;

(iii) the Company defaults in any payment of principal of or interest on any Debt (excluding trade payables) in excess of $100,000 beyond any period of grace provided with respect thereto and the effect of such failure is to cause Holder of such Debt to accelerate the Debt such that such Debt becomes due prior to its stated maturity;

(iv) any representation or warranty made in writing by or on behalf of the Company in the Purchase Agreement, the Registration Rights Agreement or the Escrow Agreement or in any writing furnished in connection therewith or in connection with the transactions contemplated by the Purchase Agreement shall be false in any material respect on the date as of which made;

(v) the Company makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due;

(vi) any order or decree for relief in respect of the Company is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction;


(vii) the Company petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidation, or similar official of the Company, or of any substantial part of the assets of the Company, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Company under the Bankruptcy Law of any other jurisdiction;

(viii) any petition or application described in Section 10(a)(vi) above is filed, or any such proceedings are commenced, against the Company and the Company by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator, or similar official, or approving the petition in any such proceedings, and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days;

(ix) any order, judgment, or decree is entered in any proceedings against the Company decreeing the dissolution of the Company and such order, judgment, or decree remains unstayed and in effect for more than sixty (60) days; or

(x) a final judgment (not fully covered by insurance) in an amount in excess of $100,000 is rendered against the Company and, within ten (10) Business Days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within ten
(10) days after the expiration of any such stay, such judgment is not discharged.

(b) Upon the occurrence of an Event of Default described in subsection (vi), (vii), or (viii) of Section 10(a), the principal of and accrued interest on this Series 1 Bridge Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. If any other Event of Default exists, Holder may, in addition to the exercise of any right, power, or remedy permitted to Holder by law, declare (by written notice or notices to the Company) the entire principal of and all interest accrued on this Series 1 Bridge Note to be due and payable, and this Series 1 Bridge Note shall thereupon become immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. Upon such declaration, the Company will immediately pay to Holder of this Series 1 Bridge Note the then outstanding principal of and accrued and unpaid interest on the Series 1 Bridge Notes. If at any time after acceleration of the maturity of the Series 1 Bridge Notes, the Company shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rate specified in the Series 1 Bridge Notes) and all Events of Default (other than nonpayment of principal of or interest on this Series 1 Bridge Note due and payable solely by virtue of acceleration) shall be remedied or waived by Holder by written notice to the Company may rescind and annul the acceleration and its consequences, but such action shall not affect any subsequent Event of Default or impair any right consequent thereon.

(c) A delay or omission by Holder of this Series 1 Bridge Note in exercising any right or remedy arising upon an Event of Default shall not impair such right or remedy or constitute a waiver of or an acquiescence in the Event of Default.

(d) If any Event of Default shall occur and be continuing, Holder of this Series 1 Bridge Note may proceed to protect and enforce their rights under this Agreement and this Series 1 Bridge Note by exercising such remedies as are available to such Holder either by suit in equity or by action


at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise.

SECTION 11. EXCHANGE, TRANSFER, REPLACEMENT OR CANCELLATION.

(a) This Series 1 Bridge Note may be exchanged for an equal principal amount of Series 1 Bridge Notes in denominations of US$25,000.00 or in greater multiples of US$5,000.00 upon written request to the Company accompanied by surrender of this Series 1 Bridge Note to the Company or to an agent designated for that purpose. Any Series 1 Bridge Notes issued in exchange for this Series 1 Bridge Note shall be one of this Series 1 Bridge Note referred to in Section 1, and shall be entitled to all the rights thereof.

(b) The Series 1 Bridge Notes may not be transferred except upon the conditions specified in this Section 11(b), which conditions are intended to insure compliance with the provisions of the Securities Act. Prior to any proposed transfer of this Series 1 Bridge Note Holder shall give written notice to the Company of the proposed disposition and shall furnish to the Company a statement of the circumstances surrounding the proposed disposition and an opinion of counsel reasonably satisfactory to the Company to the effect that (i) such disposition will not require registration of such securities under the Securities Act or qualification of such securities under the blue sky or state securities laws of any state in which such qualification would be required, or
(ii) appropriate action necessary for compliance with the Securities Act or the blue sky or securities laws of such states has been taken. Holder shall cause any proposed transferee of such securities to agree to take and hold such securities subject to the provisions and upon the conditions specified in this
Section 11. The Company or any co-registrar appointed by the Company may require Holder to furnish appropriate endorsements and/or transfer documents, including information regarding any proposed transferee's name, address and social security or taxpayer identification number, and to pay any issue or transfer taxes or fees as may be required by law. The registered Holder of this Series 1 Bridge Note may be treated as its owner for all purposes.

(c) If Holder claims this Series 1 Bridge Note has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Series 1 Bridge Note upon (i) receipt of any indemnity bond or other assurance requested by the Company to protect it from any loss which it may suffer by reason of such replacement or subsequent presentment of the original Series 1 Bridge Note, and
(ii) payment of any expenses reasonably incurred by the Company in replacing the Series 1 Bridge Note.

SECTION 12. AMENDMENTS AND WAIVERS. This Series 1 Bridge Note may, with the consent of the Company and Holder be amended or any provision thereof waived.

SECTION 13. NOTICE. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Series 1 Bridge Note must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to


the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:         Providential Holdings, Inc.
                           8700 Warner Avenue
                           Fountain Valley, California 92708
                           Attention:  Chief Executive Officer

Facsimile: (714) 596-0252

If to Holder, to the registered address of Holder appearing on the books of the Company. Each party shall provide five (5) days prior written notice to the other party of any change in address, which change shall not be effective until actual receipt thereof

SECTION 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under this Series 1 Bridge Note or for any claim based on, in respect of or by reason of such obligations or their creation. Holder of this Series 1 Bridge Note by accepting this Series 1 Bridge Note waives and releases all such liability and such waiver and release are part of the consideration for the issue of the Series 1 Bridge Note.

SECTION 15. GOVERNING LAW. The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Series 1 Bridge Note shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Series 1 Bridge Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Series 1 Bridge Note shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

SECTION 16. DEFINITIONS. Capitalized terms used in this Series 1 Bridge Note but not otherwise define herein shall have the meanings assigned to such terms in the Purchase Agreement.

IN WITNESS WHEREOF, the parties have caused this Series 1 Bridge Financing Note to be duly executed under seal as of day and year first above written.


COMPANY SIGNATURE PAGE
TO
SERIES 1 BRIDGE FINANCING NOTE

PROVIDENTIAL HOLDINGS, INC.

                                         By: /s/  Henry Fahman
                                             -----------------
                                         Henry Fahman
                                         President and Chief Executive Officer

ATTEST:

By: /s/  Tina Phan
    --------------
    Secretary/Assistant Secretary

[CORPORATE SEAL]


EXHIBIT A
TO
BRIDGE NOTE

CONVERSION NOTICE

Reference is made to terms and conditions of the Series 1 Bridge Note in the principal amount of $________ registered in the name of ____________________________________ {NAME OF HOLDER} (the "Bridge Note"). In accordance with and pursuant to the terms of the Bridge Note, the undersigned hereby elects to convert $________ in principal amount of the Bridge Note into shares of Common Stock, $.04 par value per share (the "Common Stock"), of the Company, by tendering the original Bridge Note specified below as of the date specified below.

Date of Conversion:                               ______________________________

Principal Amount of Bridge Note to be converted:  ______________________________

Identification Number of Bridge Note:             ______________________________

PLEASE CONFIRM THE FOLLOWING INFORMATION:

Conversion Price:                                 ______________________________

Number of shares of Common Stock to
be issued:                                        ______________________________

Please issue the Common Stock into which the Bridge Notes are being converted in the following name and to the following address:

Issue to:      __________________________________________

               __________________________________________

               __________________________________________

               Facsimile Number:_________________________

Authorization: __________________________________________

                 By:_____________________________________
                 Title:__________________________________
                 Dated:__________________________________

If electronic book entry transfer, complete the following:
Account Number:__________________________________________ Transaction Code Number:_________________________________


COMPANY ACKNOWLEDGEMENT
TO
CONVERSION NOTICE

ACKNOWLEDGED AND AGREED:

PROVIDENTIAL HOLDINGS, INC.

By:__________________________________________ Name:
Title:

Date:


EXHIBIT 4.3

ATTACHMENT 1
TO
SERIES 1 BRIDGE FINANCING NOTE

Form of Repricing Warrant

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

FORM OF PROVIDENTIAL HOLDINGS, INC.
COMMON STOCK PURCHASE WARRANT

Warrant No. ____ __,000 shares

ORIGINAL ISSUE DATE: MARCH 28, 2000

THIS CERTIFIES THAT, FOR VALUE RECEIVED, _______________ {Purchaser of Bridge Notes} or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on fifth (5th) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to _______ THOUSAND (___,000) shares of the Common Stock, par value $.001 (the "Common Stock"), of PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company"), at $____ {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Capitalized terms used in this Warrant but not otherwise defined herein shall have the meanings assigned to such terms in the Securities Purchase Agreement.


SECTION 1. EXERCISE OF WARRANT; CONVERSION OF WARRANT.

(a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 8700 Warner Avenue, Fountain Valley, California 92708 Attention: President, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check payable to the order of the Corporation, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials").

(b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price on the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price on the Effective Date. As used herein, "Average Market Price" on any particular date means the arithmetic mean of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in the five (5) trading day period ending on the trading day immediately preceding the date on which the calculation is to be made. As used herein, "Closing Bid Price" means, the last closing bid price of the Common Stock during regular trading hours on the OTC Bulletin Board (the "OTCBB") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the OTCBB is not the principal trading market for the Common Stock, the last closing bid price during regular trading hours of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period).

(c) As promptly as practicable, and in any event within two (2) business days after its receipt of the Exercise Materials or the Conversion Materials, Company shall execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or Conversion Notice, together with cash in lieu of any fraction of a share, and if this Warrant is partially exercised, a new warrant on the same terms for the unexercised balance of the Warrant Shares. The stock certificate or certificates shall be registered in the name of Holder or such other name or names as shall be designated in the Exercise Notice. The


date on which the Warrant shall be deemed to have been exercised (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Corporation receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, provided, however, that if the Exercise Materials or Conversion Materials are received by the Company on a date on which the stock transfer books of the Company are closed, the Effective Date shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto.

(d) If the Company shall fail to issue to Holder within five (5) business days following the date of receipt by the Company of the Exercise Materials or Conversion Materials, a certificate for the number of shares of Common Stock to which Holder is entitled upon exercise of this Warrant, in addition to all other available remedies which such holder may pursue at law or in equity, including without limitation the rights to indemnification pursuant to Section 7.18 of the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement"), the Company shall pay additional damages to Holder on each day after the Effective Date until such certificate for the Repricing Shares is received by Holder, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed and due and payable daily.

SECTION 2. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows:

(a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such


consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof.

(b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.001 per Share.

(c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction.

(d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged.

(e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company
(x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares upon the exercise of the Warrant.

(f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly


notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment.

(g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full.

SECTION 3. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company.

SECTION 4. TRANSFER OF SECURITIES.

(a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant.

(b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form:

"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."

SECTION 5. REGISTRATION.

All Warrant Shares are subject to the rights and privileges granted in and under the Registration Rights Agreement dated March 27, 2000 as Registrable Securities (as such term is defined in such Registration Rights Agreement).


SECTION 6. MISCELLANEOUS.

(a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any permitted successors or assigns of the Company and of the Holder.

(b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

(c) Notwithstanding any provision herein to the contrary, Holder may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws.

(d) This Warrant may be divided into separate warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein.

(e) Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one
(1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:         Providential Holdings, Inc.
                           8700 Warner Avenue
                           Fountain Valley, California 92708
                           Attention:

Facsimile:

If to Holder, to the registered address of Holder appearing on the books of the Company. Each party shall provide five (5) days prior written notice to the other party of any change in address, which change shall not be effective until actual receipt thereof

(f) The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough


of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.


SIGNATURE PAGE
TO
COMPANY
COMMON STOCK PURCHASE WARRANT

IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under seal, and to be dated as of the date first above written.

PROVIDENTIAL HOLDINGS, INC.

                                          By: /s/  Henry Fahman
                                             ------------------
                                          Henry Fahman
                                          President and Chief Executive Officer

/s/  Tina Phan
--------------
Secretary/Assistant Secretary

[CORPORATE SEAL]

ASSIGNMENT

(To be Executed by the Registered Holder to effect a Transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto ___________________________________________________________ the foregoing Warrant and the rights represented thereto to purchase shares of Common Stock of PROVIDENTIAL HOLDINGS, INC. in accordance with terms and conditions thereof, and does hereby irrevocably constitute and appoint ________________ Attorney to transfer the said Warrant on the books of the Company, with full power of substitution.

Holder:


Address

Dated: __________________, 19__

In the presence of:



FORM OF NOTICE OF EXERCISE OR CONVERSION

[To be signed only upon exercise of Warrant]

To: PROVIDENTIAL HOLDINGS, INC.

The undersigned registered Holder of the attached Warrant hereby irrevocably elects to exercise the Warrant for, and to purchase thereunder, _____ shares of Common Stock of PROVIDENTIAL HOLDINGS, INC., issuable upon exercise of said Warrant and hereby surrenders said Warrant.

Choose One:

The Holder herewith delivers to PROVIDENTIAL HOLDINGS, INC., a check in the amount of $______ representing the Exercise Price for such shares.

OR

The Holder elects a cashless exercise pursuant to Section 2(b) of the Warrant. The Average Market Price as of _______ was $_____.

The undersigned herewith requests that the certificates for such shares be issued in the name of, and delivered to the undersigned, whose address is ________________________________.

Dated: ___________________

HOLDER:



By:_________________________________


NOTICE

The signature above must correspond to the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any

change whatsoever.


EXHIBIT 4.4

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

FORM OF PROVIDENTIAL HOLDINGS, INC.
ATTACHED REPRICING WARRANT

Warrant No. RPW-____ ___,000 Shares

Original Issue Date: March 28, 2000

THIS CERTIFIES THAT, FOR VALUE RECEIVED, _______________ {Purchaser of Bridge Notes} or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, after the Repricing Date, a number of shares of the Common Stock, par value $.04 (the "Common Stock"), of PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company"), determined in accordance with Section 2 hereof, at a price of $.04 per share (the "Exercise Price"). Each share of Common Stock as to which this Repricing Warrant is exercisable is a "Repricing Share" and all such shares are collectively referred to as the "Repricing Shares." This Repricing Warrant shall remain attached to the Series 1 Bridge Financing Note issued to Holder on the Original Issue Date (the "Bridge Note"), until conversion of the Bridge Note, at which time a portion of this Warrant shall automatically become exercisable and detach in accordance with the terms hereof.

SECTION 1. DEFINITIONS.

The following capitalized terms are not defined elsewhere in this Repricing Warrant, and are used herein with the meanings thereafter ascribed:

"Average Market Price" means, the arithmetic mean of the Closing Bid Prices of the Common Stock for each trading day in the Repricing Period.


"Closing Bid Price" means, the last closing bid price of the Common Stock during regular trading hours on the OTC Bulletin Board (the "OTCBB") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the OTCBB is not the principal trading market for the Common Stock, the last closing bid price during regular trading hours of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period);

"Conversion Date" means the date Holder converts the Bridge Note.

"Conversion Price" means $2.88.

"Conversion Shares" means the number of shares of Common Stock issued from time to time upon conversion of the Bridge Note.

"Repricing Date" means the twenty-first (21st) Trading Day after the Conversion Date.

"Repricing Period " means the twenty (20) Trading Days period commencing on the Conversion Date.

Other capitalized terms used in this Warrant but not otherwise defined herein shall have the meanings assigned to such terms in the Securities Purchase Agreement.

SECTION 2. DETERMINATION OF NUMBER OF REPRICING SHARES. The number of Repricing Shares issuable upon exercise of this Repricing Warrant shall be adjusted on the Repricing Date to an amount equal to: the number of Conversion Shares multiplied by a fraction, (a) the numerator of which is the Conversion Price minus the Average Market Price and (b) the denominator of which is the Average Market Price. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Exercise Price, the Company shall promptly issue to such Holder(s) the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such Holder(s) and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Exercise Price within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Exercise Price to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and such Holders of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error.


SECTION 3. EXERCISE OF WARRANT.

(a) This Warrant shall be exercised by Holder in whole (and not in part) promptly following the Repricing Date by delivery to the Company at its office at 8700 Warner Avenue, Fountain Valley, California 92708 Attention:
President, of the following: (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof; (ii) a check payable to the order of the Corporation, in an amount equal to the product of the Exercise Price multiplied by the number of Repricing Shares specified in the Exercise Notice; and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the "Exercise Materials"). Notwithstanding the foregoing, this Warrant is exercisable only if the Average Price is less than the Conversion Price.

(b) As promptly as practicable, and in any event within two (2) business days after its receipt of the Exercise Materials the Company shall execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice, together with cash in lieu of any fraction of a share. The stock certificate or certificates shall be registered in the name of the registered Holder of this Warrant or such other name or names as shall be designated in the Exercise Notice. The date on which the Warrant shall be deemed to have been exercised and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date (the "Effective Date") the Company receives the Exercise Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise hereof; provided, however, that if the Exercise Materials are received by the Company on a date on which the stock transfer books of the Company are closed, the Effective Date shall be the next succeeding date on which the stock transfer books are open. All shares of Common Stock issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto.

(c) If the Company shall fail to issue to Holder within five (5) business days following the date of receipt by the Company of the Exercise Materials, a certificate for the number of shares of Common Stock to which Holder is entitled upon exercise of this Warrant, in addition to all other available remedies which such holder may pursue at law or in equity, including without limitation the rights to indemnification pursuant to Section 7.18 of the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement"), the Company shall pay additional damages to Holder on each day after the Effective Date until such certificate for the Repricing Shares is received by Holder, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed and due and payable daily.

(d) The Company may, in lieu of issuing the Repricing Shares, pay to Holder an amount equal to the number of Repricing Shares issuable on the Effective Date MULTIPLIED BY the Average Market Price (the "Payment Amount"). In such event, the Company shall pay the Payment Amount to Holder within five (5) business days following the Effective Date. If the Company shall fail to pay the Payment Amount within five (5) business days after the Effective Date, in addition to all other available remedies which Holder may pursue at law or equity, including without limitation the rights to indemnification pursuant to
Section 7.18 of the Securities Purchase Agreement, the Company shall pay additional damages to Holder on each day after the Effective Date, until the Payment Amount


has been paid, an amount equal to 1.0% of the Payment Amount. Such damages shall be computed and due and payable daily.

SECTION 4. ADJUSTMENTS TO REPRICING SHARES. The number of Repricing Shares issuable upon the exercise hereof shall be subject to adjustment as follows:

(a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 4(a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Repricing Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof.

(b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.04 per Share.

(c) In the event the Company should at any time or from time to time after the Original


Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Repricing Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction.

(d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Repricing Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged.

(e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company
(x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares upon the exercise of the Warrant.

(f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment.

(g) The Company covenants and agrees that all Repricing Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the Warrant in full.

SECTION 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company.

SECTION 6. TRANSFER OF SECURITIES.

(a) This Warrant and the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant,


agrees to be bound by the provisions of this Section 6 and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Repricing Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant.

(b) Each certificate for the Repricing Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form:

"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."

SECTION 6. REGISTRATION.

All Repricing Shares are subject to the rights and privileges granted in and under the Registration Rights Agreement dated March 28, 2000 as Registrable Securities (as such term is defined in such Registration Rights Agreement).

SECTION 7. MISCELLANEOUS.

(a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any permitted successors or assigns of the Company and of the Holder.

(b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

(c) Notwithstanding any provision herein to the contrary, Holder may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws.

(d) This Warrant may be divided into separate warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this


Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein.

(e) Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one
(1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to Company:    Providential Holdings, Inc.
                           8700 Warner Avenue
                           Fountain Valley, California 92708
                           Attn:  Chief Executive Officer
                           Telephone:  (714) 596-0244
                           Facsimile:  (714) 596-0252

If to Holder, to the registered address of Holder appearing on the books of the Company. Each party shall provide five (5) days prior written notice to the other party of any change in address, which change shall not be effective until actual receipt thereof.

(f) The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.


SIGNATURE PAGE
TO
ATTACHED REPRICING WARRANT

IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under seal, and to be dated as of the date first above written.

PROVIDENTIAL HOLDINGS, INC.

                                       By: /s/  Henry Fahman
                                          ------------------
                                       Henry Fahman
                                       President and Chief Executive Officer

ATTEST:

/s/  Tina Phan
--------------
Secretary/Assistant Secretary

[CORPORATE SEAL]


ASSIGNMENT

(To be Executed by the Registered Holder to effect a Transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto __________________________________________________________ the foregoing Warrant and the rights represented thereto to purchase shares of Common Stock of PROVIDENTIAL HOLDINGS, INC. in accordance with terms and conditions thereof, and does hereby irrevocably constitute and appoint ________________ Attorney to transfer the said Warrant on the books of the Company, with full power of substitution.

Holder:



Address

Dated: __________________, 19__

In the presence of:



EXERCISE NOTICE

[To be signed only upon exercise of Warrant]

To: PROVIDENTIAL HOLDINGS, INC.

The undersigned registered Holder of the attached Warrant hereby irrevocably elects to exercise the Warrant for, and to purchase thereunder, _____ shares of Common Stock of PROVIDENTIAL HOLDINGS, INC., issuable upon exercise of said Warrant and hereby surrenders said Warrant.

Choose One:

The Holder herewith delivers to PROVIDENTIAL HOLDINGS, INC., a check in the amount of $______ representing the Exercise Price for such shares.

or

The Holder elects a cashless exercise pursuant to Section 2(b) of the Warrant. The Average Market Price as of _______ was $_____.

The undersigned herewith requests that the certificates for such shares be issued in the name of, and delivered to the undersigned, whose address is ________________________________.

If electronic book entry transfer, complete the following:
Account Number:_____________________________ Transaction Code Number:____________________

Dated: ___________________

Holder:



By:______________________________________ Name:


Title:

NOTICE

The signature above must correspond to the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.


COMPANY ACKNOWLEDGEMENT
TO
EXERCISE NOTICE

ACKNOWLEDGED AND AGREED:

PROVIDENTIAL HOLDINGS, INC.

By:__________________________________________ Name:
Title:

Date:


EXHIBIT 4.5

FORM OF REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and entered into as of the 27th day of March, 2000, by and among PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company"), and the Persons listed on the Purchaser Signature Pages hereto (each of whom is individually referred to as a "Purchaser" and all of whom collectively are referred to as the "Purchasers").

BACKGROUND

In connection with the consummation of the transactions contemplated by that Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement") of even date herewith by and among the Company and the Purchasers, the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to issue and sell to the Purchasers from time to time up to $4,000,000 in maximum principal amount of Series 1 Convertible Subordinated Secured Bridge Financing Notes (the "Bridge Notes") together with Common Stock Purchase Warrants (the "Purchaser Warrants"). Attached to the Bridge Notes are Repricing Warrants (the "Repricing Warrants" and together with the Purchaser Warrants collectively, the "Warrants"). Collectively, the Bridge Notes, and the Purchaser Warrants, and the Repricing Warrants are hereinafter collectively referred to as the "Purchased Securities"). The Bridge Notes are convertible into, and the Purchaser Warrants and the Repricing Warrants are exercisable for, shares of the Company's common stock, .001 par value per share (the "Common Stock"). The Common Stock issuable upon conversion of the Bridge Notes is hereinafter referred to as the "Conversion Shares," and the Common Stock issuable upon exercise or conversion of the Purchaser Warrants is hereinafter referred to as the "Purchaser Warrant Shares," and the Common Stock issuable upon exercise of the Repricing Warrants is hereinafter called the "Repricing Warrant Shares." To induce Purchasers to execute and deliver the Purchase Agreement, the Company has agreed to file a Registration Statement covering the Conversion Shares, the Purchaser Warrant Shares, and the Repricing Warrant Shares under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws.

AGREEMENT

For and in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows:

SECTION 1. DEFINITIONS. As used in this Agreement, the following capitalized terms are used with the meanings there after ascribed:

(a) "Investor" means any Purchaser and any transferee or assignee thereof to whom any Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions


of this Agreement in accordance with Section 9.

(b) "Person" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof, or a governmental agency.

(c) "Register," "registered," and "registration" refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement or Registration Statements by the United States Securities and Exchange Commission (the "SEC").

(d) "Registrable Securities" means the Conversion Shares, the Purchaser Warrant Shares, the Repricing Warrant Shares, and any shares of capital stock issued or issuable with respect to the Purchased Securities, Conversion Shares, the Purchaser Warrant Shares, or the Repricing Warrant Shares as a result of any stock split, stock dividend, recapitalization, exchange, or similar event or otherwise.

(e) "Registration Statement" means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

SECTION 2. REGISTRATION.

(a) MANDATORY REGISTRATION. The Company shall prepare and, as soon as practicable but in no event later than sixty (60) days after the Initial Closing Date (the "Filing Deadline"), file with the SEC a Registration Statement on Form S-3 (or, if such form is unavailable for such a registration, on such other form as is available for such a registration, subject to the consent of each Purchaser and the provisions of Section (e), which consent will not be unreasonably withheld), covering the resale of all of the Registrable Securities. The Registration Statement shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Bridge Notes and exercise of the Purchaser Warrants to prevent dilution resulting from stock splits, stock dividends, or similar transactions]. Such Registration Statement shall initially register for resale at least 150% of the number of Registrable Securities as of the date immediately preceding the date the Registration Statement initially is filed with the SEC, subject to adjustment as provided in Section (b) hereof. The Company shall use its best efforts to have the Registration Statement declared effective by the SEC within one hundred eighty (180) days after the Initial Closing Date (the "Registration Deadline"). The Company shall permit the registration statement to become effective within five (5) business days after receipt (whether orally or in writing) of a "no review" notice from the SEC.

(b) UNDERWRITTEN OFFERING. If any offering pursuant to a Registration Statement pursuant to Section (a) involves an underwritten offering, the Purchasers shall have the right to select one legal counsel and an investment banker or bankers and manager or managers to administer their interest in the offering, which investment banker or bankers or manager or managers shall be


reasonably satisfactory to the Company.

(c) PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the Registration Period (as hereinafter defined) the Company proposes to file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its securities (other than on Form S-4 or Form S-8 or their then equivalents relating to securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans) the Company shall promptly send to each Investor who is entitled to registration rights under this Section (c) written notice of the Company's intention to file a Registration Statement and of such Investor's rights under this Section (c) and, if within twenty (20) days after receipt of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, subject to the priorities set forth in Section (d) below. No right to registration of Registrable Securities under this Section (c) shall be construed to limit any registration required under Section (a) hereof. The obligations of the Company under this
Section (c) may be waived by Investors holding a majority of the Registrable Securities. If an offering in connection with which an Investor is entitled to registration under this Section (c) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering.

(d) PRIORITY IN PIGGY-BACK REGISTRATION RIGHTS IN CONNECTION WITH REGISTRATIONS FOR COMPANY ACCOUNT. If the registration referred to in Section
(c) is to be an underwritten public offering for the account of the Company and the managing underwriter(s) advise the Company in writing, that in their reasonable good faith opinion, marketing or other factors dictate that a limitation on the number of shares of Common Stock which may be included in the Registration Statement is necessary to facilitate and not adversely affect the proposed offering, then the Company shall include in such registration: (i) first, all securities the Company proposes to sell for its own account, (ii) second, up to the full number of securities proposed to be registered for the account of the holders of securities entitled to inclusion of their securities in the Registration Statement by reason of demand registration rights, and (iii) third, the securities requested to be registered by the Investors and other holders of securities entitled to participate in the registration, drawn from them pro rata based on the number each has requested to be included in such registration.

(e) ALLOCATION OF REGISTRABLE SECURITIES. The initial number of Registrable Securities included in any Registration Statement and each increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each Investor at the time the Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Person's Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors.

(f) LEGAL COUNSEL. Subject to Section 5 hereof, the Investors holding a majority of the


Registrable Securities shall have the right to select one legal counsel to review and oversee any offering pursuant to this Section 2 ("Legal Counsel"), which shall be Warshaw Burstein Cohen Schlesinger & Kuh, LLP or such other counsel as thereafter designated by the holders of a majority of Registrable Securities. The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations under this Agreement

(g) ELIGIBILITY FOR FORM S-3. The Company represents, warrants covenants that it has filed and shall file all reports required to be filed by the Company with the SEC in a timely manner so as to obtain and maintain such eligibility for the use of Form S-3. In the event that Form S-3 is not available for registration of the Registrable Securities hereunder, then (i) the Company shall register the Registrable Securities on another appropriate form and (ii) the Company shall undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.

(h) EFFECT OF FAILURE TO OBTAIN AND MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. If (i) the Registration Statement covering the Registrable Securities required to be filed by the Company pursuant to Section 2(a) hereof is not declared effective by the SEC or before the Registration Deadline, (ii) after the Registration Statement has been declared effective by the SEC, the Registration Statement is withdrawn or suspended or if sales otherwise cannot be made pursuant to the Registration Statement for a period of at least fifteen (15) consecutive trading days or thirty (30) days in any twelve
(12) month period, or (iii) the Common Stock is not listed or included for quotation on the OTC Bulletin Board (the "OTCBB"), the Nasdaq National Market ("NNM"), the Nasdaq SmallCap Market ("NSM"), the New York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") for a period of at least ten
(10) consecutive days, then the Company will make payments to the Investors in such amounts and at such times as shall be determined pursuant to this Section 2(i) as partial relief for the damages to the Investors by reason of any such delay in or reduction of their ability to sell the Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity). The Company shall pay to each holder of the Bridge Notes or Registrable Securities an amount equal to the aggregate Purchase Price (as defined below) of the Bride Notes ("Aggregate Share Price") multiplied by the Payment Percentage
(as defined below) times (x) the number of months (prorated for partial months) following the Registration Deadline and prior to the date the Registration Statement is declared effective by the SEC, provided, however, that there shall be excluded from such period any delays which are solely attributable to changes either required by the Investors in the Registration Statement with respect to information relating to the Investors, including, without limitation, changes to the plan of distribution, or to the failure of the Investors to conduct their review of the Registration Statement pursuant to Section 4(a) below in a reasonably prompt manner or changes reasonably requested by the Company as a result of changes in such information; (y) the number of months (prorated for partial months) after the end of the 15-day or 30-day period referenced in clause (ii) above that sales cannot be made pursuant to the Registration Statement after the Registration Statement has been declared effective (including, without limitation, when sales cannot be made by reason of the Company's failure to properly supplement or amend the prospectus included therein in accordance with the terms of this Agreement or when such prospectus otherwise contains a material misstatement or omission); or (z) the number of months (prorated for partial months) after the end of the 30-day period referenced in clause (iii) above that the Common Stock is not listed or included for quotation on the OTCBB, NNM, NSM, NYSE or AMEX or that trading thereon is halted after the Registration Statement has been declared effective. The Payment Percentage shall be two percent


(2%) per each thirty (30) day period (or $20,000 per each 30-day for each $1,000,000 of Purchase Price). Such amounts shall be paid in cash or, at the Investor's option, may be pay in shares Common Stock valued at the Average Market Price (as such term is defined in the Repricing Warrant). Any such shares of Common Stock shall be Registrable Securities. If any Investor desires to receive the amounts due hereunder in shares of Common Stock, it shall so notify the Company within two (2) business days of the date on which such amounts are first payable in cash and such amounts shall be issued beginning on the last day upon which the cash amount would otherwise be due in accordance with the following sentence. Payments of cash pursuant hereto shall be made within five
(5) days after the end of each period that gives rise to such obligation, provided that, if any such period extends for more than thirty (30) days, interim payments shall be made for each such thirty (30) day period. The term "Purchase Price" means the purchase price paid by the Investors for the Bridge Notes.

SECTION 3. RELATED OBLIGATIONS. Whenever an Investor has requested that any Registrable Securities be registered pursuant to Section (c) hereof, or at such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section (a) hereof, the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

(a) The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities (on or prior to the Filing Deadline), for the registration of Registrable Securities pursuant to Section (a) and use its best efforts to cause such Registration Statement relating to Registrable Securities to become effective as soon as possible after such filing and in any event by the Registration Deadline, and keep the Registration Statement effective pursuant to Rule 415 at all times until the later of (i) the date as of which the Investors may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which (A) the Investors shall have sold all the Registrable Securities and (B) none of the Purchased Securities is outstanding (the "Registration Period"), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

(b) The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement. In the event the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within fifteen (15) days after the necessity therefor arises (based on the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely). The Company shall use its best efforts to cause such


amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if at any time the number of Registrable Securities issued or issuable upon conversion of the Purchased Securities is greater than the quotient determined by dividing (i) the number of shares of Common Stock available for resale under such Registration Statement by (ii) 1.25. For purposes of the calculation set forth in the foregoing sentence, any restrictions on the convertibility of the Bridge Notes or exercise of the Purchaser Warrants and the Repricing Warrants shall be disregarded and such calculation shall assume that the Bridge Notes are then convertible into shares of Common Stock at the then prevailing Conversion Price (as defined in the Bridge Notes) and that the Purchaser Warrants and the Repricing Warrants are exercised at the then current exercise price.

(c) The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement and Legal Counsel, without charge, (i) promptly after the same is prepared and filed with the SEC at least one copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference, and all exhibits, the prospectus included in such Registration Statement (including each preliminary prospectus) and all correspondence by or on behalf of the Company to the SEC or the staff of the SEC and all correspondence from the SEC or the staff of the SEC to the Company or its representatives, related to such Registration Statement, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request), and (iii) such other documents, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

(d) The Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section (d) hereof, (B) subject itself to general taxation in any such jurisdiction, or (C) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor and Legal Counsel who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(e) In the event Investors who hold a majority of the Registrable Securities being offered in the offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering.


(f) As promptly as practicable after becoming aware of such event, the Company shall notify each Investor and Legal in writing of the happening of any event, as a result of which, the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to each Investor (or such other number of copies as such Investor may reasonably request), with a copy to Legal Counsel. The Company shall also promptly notify each Investor and Legal Counsel in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor and Legal Counsel by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

(g) The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment, and to notify each Investor who holds Registrable Securities being sold (and, in the event of an underwritten offering, the managing underwriters) and Legal Counsel of the issuance of such order and the resolution thereof, or its receipt of actual notice of the initiation, or threatened initiation of any proceeding for such purpose.

(h) The Company shall permit Legal Counsel to review and comment upon the Registration Statement and all amendments and supplements thereto at least seven (7) days prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of such counsel, which consent shall not be unreasonably withheld.

(i) At the request of the Investors who hold a majority of the Registrable Securities being sold, the Company shall furnish, on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement (i) if required by an underwriter, a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope, and substance as is customarily given in an underwritten public offering, addressed to the underwriters and the Investors.

(j) The Company shall make available for inspection by (i) any Investor, (ii) any underwriter participating in any disposition pursuant to a Registration Statement, (iii) Legal Counsel, (iv) one firm of accountants or other agents retained by the Investors, and (v) one firm of attorneys retained by all such underwriters (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to


exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence provided, however, that each Inspector shall hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (B) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (C) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement of which the Inspector has knowledge. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.

(k) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement of which the Company has knowledge. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(l) As soon as possible after the date that the Company meets the eligibility criteria for listing or inclusion of its securities thereon, the Company shall use its best efforts either to (i) apply for listing of its common stock on a national securities exchange and cause all the Registrable Securities covered by a Registration Statement to be listed thereon, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or
(ii) to apply for securities to be designated and quoted on the Nasdaq National Market or SmallCap Market and to cause of all the Registrable Securities covered by the Registration Statement, to be quoted thereof. If, despite using its best efforts, the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), the Company shall use its best efforts to continue to maintain the inclusion for quotation on the OTCBB and to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section (l).

(m) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, any managing underwriter or underwriters, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or, if there is no managing underwriter or underwriters, the Investors may reasonably request and registered in such names as the managing underwriter or underwriters, if any,


or the Investors may request. Not later than the date on which any Registration Statement registering the resale of Registrable Securities is declared effective, the Company shall deliver to its transfer agent instructions substantially in the form attached as Exhibit F to the Purchase Agreement, accompanied by any reasonably required opinion of counsel, that permit sales of unlegended securities in a timely fashion that complies with then mandated securities settlement procedures for regular way market transactions.

(n) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to a Registration Statement.

(o) The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement.

(p) If requested by the managing underwriters or an Investor, the Company shall immediately incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the Investors agree should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters, and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by a shareholder or any underwriter of such Registrable Securities.

(q) The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

(r) The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

SECTION 4. OBLIGATIONS OF THE INVESTORS.

(a) At least seven (7) business days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor's Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities, and shall execute such documents in connection with such registration as the Company may reasonably request.

(b) Each Investor by such Investor's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the


Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement.

(c) In the event Investors holding a majority of the Registrable Securities being registered determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations (only with respect to violations which occur in reliance upon and in conformity with information furnished in writing to the Company by such Investor expressly for use in the Registration Statement for such underwritten public offering), with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor notifies the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement.

(d) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section (g) or the first sentence of (f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section (g) or the first sentence of Section (f) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Certificate of Designations in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not yet settled.

(e) No Investor may participate in any underwritten registration hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions.

SECTION 5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings, or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and printing fees, accounting fees, and fees and disbursements of counsel for the Company and fees and disbursements of Legal Counsel, shall be borne by the Company.

SECTION 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless, and defend each Investor who holds such Registrable Securities, the directors, officers, partners, employees, agents, and each Person, if any, who controls any Investor


within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), and any underwriter (as defined in the 1933 Act) for the Investors, and the directors and officers of, and each Person, if any, who controls, any such underwriter within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing, or defending any action, claim, suit, inquiry, proceeding, investigation, or appeal taken from the foregoing by or before any court or governmental, administrative, or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to the restrictions set forth in
Section (d) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this
Section (a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section
(c); (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section (c),and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section (c), and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the


Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

(b) In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section (a), the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act, or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section (d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section (b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided further however, that the Investor shall be liable under this Section (b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section (b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented.

(c) The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in any distribution, to the same extent as provided above, with respect to information such persons so furnished in writing expressly for inclusion in the Registration Statement.

(d) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall pay reasonable fees for only one separate legal counsel for the Investors, and such


legal counsel shall be selected by the Investors holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms, or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

(e) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

(f) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

SECTION 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation, and
(iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

SECTION 8. REPORTS UNDER THE 1934 ACT. As long as any Purchased Securities or Registrable Securities remain outstanding, the Company, with a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144;


(b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 7.3 of the Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act, and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the investors to sell such securities pursuant to Rule 144 without registration.

SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement.

SECTION 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold two-thirds of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

SECTION 11. MISCELLANEOUS.

(a) A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices, or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice, or election received from the registered owner of such Registrable Securities.

(b) Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after


being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:        PROVIDENTIAL HOLDINGS, INC.
                          8700 Warner Avenue
                          Fountain Valley, California 92708
                          Attention:
                          Telephone:
                          Facsimile:

With a copy to:           [Name of Firm]
                          ____________________________

                          ____________________________
                          Attention:
                          Telephone:

Facsimile:

If to any Purchaser, to its address and facsimile number on the signature page of such Purchaser hereto, with copies to such Purchaser's counsel as set forth on the signature page of such Purchaser hereto. Each party shall provide five
(5) days prior written notice to the other party of any change in address or facsimile number.

(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

(d) The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

(e) This Agreement supersedes all other prior oral or written agreements between the Purchasers and the Company with respect to the matters discussed herein, and this Agreement and the Purchase and the instruments referenced herein ands therein contain the entire understanding of


the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any representation, warranty, covenant, or undertaking with respect to such matters.

(f) This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. The Company shall not assign this Agreement or any rights or obligations hereunder. This Agreement may be assigned by the Investors in accordance with the provisions of Section 9.

(g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(h) This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof.

(i) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

(j) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

(k) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


COMPANY SIGNATURE PAGE
TO
REGISTRATION RIGHTS AGREEMENT

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

COMPANY:

PROVIDENTIAL HOLDINGS, INC.

By: /s/  Henry Fahman
   ------------------
Henry Fahman
President and Chief Executive Officer


PURCHASER SIGNATURE PAGE
TO
REGISTRATION RIGHTS AGREEMENT

PURCHASER:

By:______________________________________

Name:____________________________________

Title:___________________________________


PURCHASER NAME ("PURCHASER")
ADDRESS AND
FACSIMILE NUMBER
--------------------------------------------------------------------------------

SECURITIES PURCHASED                  $____________
--------------------------------------------------------------------------------

PURCHASE PRICE                        __________________________________________
--------------------------------------------------------------------------------

PURCHASER'S LEGAL COUNSEL             __________________________________________
ADDRESS AND
FACSIMILE NUMBER                      __________________________________________

                                      __________________________________________

                                      __________________________________________
--------------------------------------------------------------------------------



EXHIBIT 4.6

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

FORM OF PROVIDENTIAL HOLDINGS, INC.
COMMON STOCK PURCHASE WARRANT

Warrant No. ____ __,000 shares

ORIGINAL ISSUE DATE: MARCH 28, 2000

THIS CERTIFIES THAT, FOR VALUE RECEIVED, Sovereign Capital Advisors, LLC or its designee or its assigns (the "Holder") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time or from time to time from the date hereof until 5:00 p.m., Eastern Time, on third (3rd) anniversary of the Original Issue Date set forth above, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business (such date is the "Expiration Date"), but not thereafter, to purchase up to _______ THOUSAND (___,000) shares of the Common Stock, par value $.001 (the "Common Stock"), of PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company"), at $____ {110% of Closing Bid Price on Original Issue Date} per share (the "Exercise Price"), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a "Warrant Share" and all such shares are collectively referred to as the "Warrant Shares." Capitalized terms used in this Warrant but not otherwise defined herein shall have the meanings assigned to such terms in the Securities Purchase Agreement.

SECTION 1. EXERCISE OF WARRANT; CONVERSION OF WARRANT.

(a) This Warrant may, at the option of the Holder, be exercised in whole or in part from time to time by delivery to the Company at its office at 8700 Warner Avenue, Fountain Valley, California 92708 Attention: President, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a written notice of such registered Holder's election to exercise this Warrant (the "Exercise Notice"), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the registered Holder or an authorized officer thereof, (ii) a check


payable to the order of the Corporation, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and
(iii) are collectively the "Exercise Materials").

(b) This Warrant may, at the option of the Holder, be converted into Common Stock in whole but not in part, if and only if the Average Market Price of one share of Common Stock on the Effective Date (as defined in Section 1(c) hereof) is greater than the Exercise Price, by delivery to the Company at the address designated in Section 1(a) above or to any transfer agent for the Common Stock, on or before 5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's election to convert this Warrant (the "Conversion Notice"), properly executed and completed by the registered Holder or an authorized officer thereof, and (ii) this Warrant (the items specified in (i) and (ii) are collectively the "Conversion Materials"). The number of shares of Common Stock issuable upon conversion of this Warrant is equal to the quotient of (x) the product of the number of Warrant Shares then issuable upon exercise of this Warrant (assuming an exercise for cash) multiplied by the difference between (A) the Average Market Price on the Effective Date (as such term is defined in Section 1(c) hereof) minus (B) the then effective Exercise Price divided by (y) the Average Market Price on the Effective Date. As used herein, "Average Market Price" on any particular date means the arithmetic mean of the Closing Bid Prices (as defined below) for the Common Stock for each trading day in the five (5) trading day period ending on the trading day immediately preceding the date on which the calculation is to be made. As used herein, "Closing Bid Price" means, the last closing bid price of the Common Stock during regular trading hours on the OTC Bulletin Board (the "OTCBB") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the OTCBB is not the principal trading market for the Common Stock, the last closing bid price during regular trading hours of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price is reported for the Common Stock by Bloomberg, the last closing trade price of the Common Stock as reported by Bloomberg. If the Closing Bid Price cannot be calculated for the Common Stock on such date on any of the foregoing bases, the Closing Bid Price of the Common Stock on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split, or other similar transaction during such period).

(c) As promptly as practicable, and in any event within two (2) business days after its receipt of the Exercise Materials or the Conversion Materials, Company shall execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Repricing Shares specified in the Exercise Notice or Conversion Notice, together with cash in lieu of any fraction of a share, and if this Warrant is partially exercised, a new warrant on the same terms for the unexercised balance of the Warrant Shares. The stock certificate or certificates shall be registered in the name of Holder or such other name or names as shall be designated in the Exercise Notice. The date on which the Warrant shall be deemed to have been exercised (the "Effective Date"), and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Corporation receives the Exercise Materials or Conversion Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, provided, however, that if the Exercise Materials or Conversion Materials are received by the Company on a date on which the stock transfer books of the Company are closed, the Effective Date shall be the next succeeding date on which the stock transfer books are open. All


shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto.

(d) If the Company shall fail to issue to Holder within five (5) business days following the date of receipt by the Company of the Exercise Materials or Conversion Materials, a certificate for the number of shares of Common Stock to which Holder is entitled upon exercise of this Warrant, in addition to all other available remedies which such holder may pursue at law or in equity, including without limitation the rights to indemnification pursuant to Section 7.18 of the Series 1 Bridge Note Purchase and Security Agreement between the Company and the initial holder of the Warrant (the "Securities Purchase Agreement"), the Company shall pay additional damages to Holder on each day after the Effective Date until such certificate for the Repricing Shares is received by Holder, an amount equal to 1.0% of the product of (A) the number of Repricing Shares not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the Effective Date. Such damages shall be computed and due and payable daily.

SECTION 2. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares issuable upon the exercise hereof shall be subject to adjustment as follows:

(a) In the event the Company is a party to a consolidation, share exchange, or merger, or the sale of all or substantially all of the assets of the Company to, any person, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation, and in which there is a reclassification or change of the shares of Common Stock of the Company, this Warrant shall after such consolidation, share exchange, merger, or sale be exercisable for the kind and number of securities or amount and kind of property of the Company or the corporation or other entity resulting from such share exchange, merger, or consolidation, or to which such sale shall be made, as the case may be (the "Successor Company"), to which a holder of the number of shares of Common Stock deliverable upon the exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale; and in any such case appropriate adjustments shall be made in the application of the provisions set forth herein with respect to the rights and interests of the registered Holder of this Warrant, such that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to the number and kind of securities or the type and amount of property thereafter deliverable upon the exercise of this Warrant. The above provisions shall similarly apply to successive consolidations, share exchanges, mergers, and sales. Any adjustment required by this Section 2 (a) because of a consolidation, share exchange, merger, or sale shall be set forth in an undertaking delivered to the registered Holder of this Warrant and executed by the Successor Company which provides that the Holder of this Warrant shall have the right to exercise this Warrant for the kind and number of securities or amount and kind of property of the Successor Company or to which the holder of a number of shares of Common Stock deliverable upon exercise (immediately prior to the time of such consolidation, share exchange, merger, or sale) of this Warrant would have been entitled upon such consolidation, share exchange, merger, or sale. Such undertaking shall also provide for future adjustments to the number of Warrant Shares and the Exercise Price in accordance with the provisions set forth in Section 2 hereof.

(b) In the event the Company should at any time, or from time to time after the Original Issue Date, fix a record date for the effectuation of a stock split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, or securities or rights


convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon exercise or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split, or subdivision if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately increased and the Exercise Price shall be appropriately decreased by the same proportion as the increase in the number of outstanding Common Stock Equivalents of the Company resulting from the dividend, distribution, split, or subdivision. Notwithstanding the preceding sentence, no adjustment shall be made to decrease the Exercise Price below $.001 per Share.

(c) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for the effectuation of a reverse stock split, or a transaction having a similar effect on the number of outstanding shares of Common Stock of the Company, then, as of such record date (or the date of such reverse stock split or similar transaction if no record date is fixed), the number of Warrant Shares issuable upon the exercise hereof shall be proportionately decreased and the Exercise Price shall be appropriately increased by the same proportion as the decrease of the number of outstanding Common Stock Equivalents resulting from the reverse stock split or similar transaction.

(d) In the event the Company should at any time or from time to time after the Original Issue Date, fix a record date for a reclassification of its Common Stock, then, as of such record date (or the date of the reclassification if no record date is set), this Warrant shall thereafter be convertible into such number and kind of securities as would have been issuable as the result of such reclassification to a holder of a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such reclassification, and the Exercise Price shall be unchanged.

(e) The Company will not, by amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution, issue, or sale of securities, sale of assets or any other voluntary action, void or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company
(x) will not create a par value of any share of stock receivable upon the exercise of the Warrant above the amount payable therefor upon such exercise, and (y) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares upon the exercise of the Warrant.

(f) When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of the Warrants and of the Exercise Price, together with the computation resulting in such adjustment.

(g) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of


the Warrant in full.

SECTION 3. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company.

SECTION 4. TRANSFER OF SECURITIES.

(a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws with respect to the transfer of such securities. The Holder of this Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of Section 4 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant.

(b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form:

"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."

SECTION 5. REGISTRATION.

The holder of this warrant shall be entitled to all the rights and privileges granted in and under Section 2(c) of the Registration Rights Agreement dated March 27, 2000 as if the Warrant Shares were Registrable Securities (as such term is defined in such Registration Rights Agreement).

SECTION 6. MISCELLANEOUS.

(a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any permitted successors or assigns of the Company and of the Holder.

(b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of


the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

(c) Notwithstanding any provision herein to the contrary, Holder may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws.

(d) This Warrant may be divided into separate warrants covering one share of Common Stock or any whole multiple thereof, for the total number of shares of Common Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein.

(e) Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one
(1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:         Providential Holdings, Inc.
                           8700 Warner Avenue
                           Fountain Valley, California 92708
                           Attention:  Chief Executive Officer
                           Facsimile:  (714) 596-0252

If to Holder, to the registered address of Holder appearing on the books of the Company. Each party shall provide five (5) days prior written notice to the other party of any change in address, which change shall not be effective until actual receipt thereof

(f) The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Warrant and


agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.


SIGNATURE PAGE
TO
COMPANY
COMMON STOCK PURCHASE WARRANT

IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under seal, and to be dated as of the date first above written.

PROVIDENTIAL HOLDINGS, INC.

By: _____________________________________
Name:
Title:

ATTEST:


Secretary/Assistant Secretary

[CORPORATE SEAL]


ASSIGNMENT

(To be Executed by the Registered Holder to effect a Transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto ___________________________________________________________ the foregoing Warrant and the rights represented thereto to purchase shares of Common Stock of PROVIDENTIAL HOLDINGS, INC. in accordance with terms and conditions thereof, and does hereby irrevocably constitute and appoint ________________ Attorney to transfer the said Warrant on the books of the Company, with full power of substitution.

Holder:


Address

Dated: __________________, 19__

In the presence of:



FORM OF NOTICE OF EXERCISE OR CONVERSION

[To be signed only upon exercise of Warrant]

To: PROVIDENTIAL HOLDINGS, INC.

The undersigned registered Holder of the attached Warrant hereby irrevocably elects to exercise the Warrant for, and to purchase thereunder, ________ shares of Common Stock of PROVIDENTIAL HOLDINGS, INC., issuable upon exercise of said Warrant and hereby surrenders said Warrant.

Choose One:

The Holder herewith delivers to PROVIDENTIAL HOLDINGS, INC., a check in the amount of $______ representing the Exercise Price for such shares.

or

The Holder elects a cashless exercise pursuant to Section 2(b) of the Warrant. The Average Market Price as of _______ was $_____.

The undersigned herewith requests that the certificates for such shares be issued in the name of, and delivered to the undersigned, whose address is ________________________________.

Dated: ___________________

Holder:



By:_________________________________


NOTICE

The signature above must correspond to the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any

change whatsoever.


EXHIBIT 4.7

CONVERTIBLE PROMISSORY NOTE

$_____________ Fountain Valley, California _________________, 2000

1. FOR VALUE RECEIVED, Providential Holdings, Inc., a Nevada corporation ("Maker"), promises to pay to the order of ______________________ (Holder"), at such address as Holder may from time to time designate, on or before the Maturity Date as set forth herein, the principal sum of __________________________________ Dollars ($_________) ("Loan") plus interest from the date hereof as computed below.

2. The Loan term shall commence on the date set forth above ("Commencement Date") and shall expire on January 14, 2002 ("Maturity Date").

3. The principal amount from time to time outstanding shall bear simple interest from the Commencement Date through the Maturity Date at a rate ten percent (10% per annum).

4. Subject to Section 5 below, upon the expiration of the term of this Note, whether as a result of maturity, acceleration upon default, permitted payment of the outstanding balance of this Note, or otherwise, but in no event later than the Maturity Date, the entire outstanding principal balance under this Note, together with all accrued and unpaid interest, shall be due and payable in full.

5. (a) Notwithstanding any provision to the contrary contained in this Note, Holder may, at its option and at any time and from time to time, convert all or any portion of the then outstanding principal amount and accrued interest hereunder into that number of fully paid and nonassessable shares (Shares") of voting common stock in Maker, as such shares shall be constituted at the date of conversion ("Common Stock), equal to the amount of the then outstanding principal amount as of the date of conversion divided by five dollars ($5.00). Holder may exercise this option an more than one occasion, so long as there still remains an outstanding principal balance under this Note.

(b) In case of any reorganization or recapitalization of Maker (by reclassification of its outstanding Common Stock, capital stock or otherwise), or its consolidation or merger with or into another corporation, Holder shall, upon conversion, be entitled to receive the shares of stock, cash or other consideration which the Holder would receive upon such reorganization, recapitalization, consolidation or merger if immediately prior thereto the conversion had occurred and Holder had exchanged the Shares of Common Stock in accordance with the terms of such reorganization, recapitalization, consolidation or merger.

6. All payments under this Note shall be applied in the following order:


(a) first, to the payment of accrued and unpaid interest on the principal outstanding balance; and

(b) second, to the reduction of the outstanding principal balance of this Note.

7. All amounts payable under this Note are payable in lawful money of the United States. Maker shall not be permitted to prepay any amount due hereunder without the express written consent of Holder, which consent may be granted or withheld in Holder's sole and absolute discretion.

8. It is agreed that time is of the essence in the performance of all obligations hereunder. An "Event of Default" shall exist hereunder if any one or more of the following events shall occur and be continuing:

(a) Default in the payment of the indebtedness evidenced by this Note or any other agreement or instrument evidencing or securing this Note or otherwise executed and delivered by Maker in connection with the indebtedness evidenced by this Note (collectively, of time, declaration, acceleration, or otherwise;

(b) The filing of an involuntary petition under the United States Bankruptcy Code or any other federal or state bankruptcy statute, as now in effect or as hereafter amended, against Maker, or if Maker shall allow the appointment of a receiver, trustee, conservator or liquidator of all or any part of its assets ("Assets"), or if any of the Assets be levied upon by virtue of any execution, attachment, tax levy or other writ, or if liens be filed against the Assets, and such involuntary petition, appointment, levy, or filing, as the case may be, shall not be released, stayed, bonded or insured against in favor of Maker, satisfied or vacated within one hundred twenty (120) days after the occurrence thereof;

(c) The filing by Maker of a petition under the United States Bankruptcy Code or any other federal or state bankruptcy statute, as now in effect or as hereafter amended, or if Maker shall make an assignment for the benefit of its creditors or be unable, whether or not admitted, to pay its debts as they become due; or

(d) The abandonment of all or any material part of the Assets.

Upon the occurrence of any Event of Default, the Holder hereof may, at its option, declare the entire unpaid balance of principal and accrued interest on this Note to be immediately due and payable, and foreclose all liens and security interests securing payment thereof or any part hereof. Upon the occurrence of any of the Events of Default, the entire unpaid balance of principal and accrued interest upon this Note shall, without any action by Maker, immediately become due and payable without demand for payment, presentment, protest, notice of protest and non-payment, or other notice of default, notice of acceleration and intention to accelerate or any other notice, all of which are hereby expressly waived by Maker.

9. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the stated rate or the Default Pate (collectively, "Additional Sums"), whether pursuant to this Note, the Loan Documents, or any other document or instrument in any way pertaining to this lending Transaction, or otherwise with respect to


this lending transaction, that, under the laws of the States of California or Nevada, may be deemed to be interest with respect to this lending transaction, for the purpose of any laws of the States of California or Nevada that may limit the maximum amount of interest to be charged with respect to this lending transaction, shall be payable by Maker, and shall be deemed to be additional interest, and for such purposes only, the agreed upon and "contracted for rate of interest" of this lending transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. Maker understands and believes that this lending transaction complies with the usury laws of the States of California and Nevada.

10. Maker and all endorsers, guarantors and all persons liable or to become liable on this Note, waive presentment, protest and demand, notice of protest, notice of intent to accelerate, notice of acceleration, and demand and dishonor and nonpayment of this Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions of the time of payment hereof, and agree further that at any time and from time to time without notice, the terms of payment herein may be modified or increased, changed or exchanged by agreement between Holder and Maker.

11. This Note will be governed by and construed in accordance with the laws of the State of California, except where such law is preempted by the laws and regulations of the United States.

12. If any provision hereof shall, for any reason and to any extent, be invalid or unenforceable, then the remainder of this Promissory Note shall not be affected thereby but instead shall be enforceable to the maximum extent permitted by law.

13. All agreements between Maker and Holder are expressly limited so that in no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof, acceleration of maturity of the unpaid principal balance hereof, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under the applicable usury law. If, from any circumstances whatsoever, fulfillment of any provision hereof or any other agreement referred to herein or otherwise relating to this Note, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable thereto, then IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity, and if, from any circumstance, Holder shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be in excess of the lawful interest shall be applied to the reduction of the unpaid principal balance due hereunder as of the date such amount is received or deemed to be received by Holder and not to the payment of interest. This provision shall control every other provision of all agreements between Maker and Holder. However, in the event an amount determined to be excess interest is applied against the unpaid principal balance, and thereafter the rate of interest accruing under this Note decreases, this Note shall in fact, secure interest at the then highest lawful rate until such time that the difference between such rate and the interest rate which would otherwise apply under this Note equals the amount of excess interest previously applied against principal.

14. All notices provided for herein shall be in writing and shall be (a) personally delivered or delivered by courier service (e.g., Federal Express) to the party being notified if an individual, or (b) transmitted by certified or registered mail, return receipt -requested, addressed to all parties hereto at the address designated for each party as follows:

To Holder: _____________________




To Maker:           Henry Fahman, President
                    Providential Holdings, Inc.
                    8700 Warner Avenue
                    Fountain Valley, California 92708

or to such other address as either party may designate in writing. Notice shall be deemed effective and received upon: (i) the date of receipt if delivered by courier or by personal delivery, or (ii) five (5) days after the deposit of same in a letter box or other means provided for the posting of mail, postage prepaid as provided above.

15. As used herein, the term "Maker" shall include the undersigned Maker and any other person or entity, who may subsequently become liable for the payment hereof. The term "Holder" shall include Holder as well as any other person or entity to whom this Note or any interest in this Note is conveyed, transfer or assigned with the prior written consent of Maker.

16. Maker has no redemption rights under this Note.

PROVIDENTIAL HOLDINGS, INC.

By:  /s/  Henry Fahman
   -------------------

Henry Fahman, President


EXHIBIT 4.8

PROVIDENTIAL HOLDINGS, INC.

CONSULTING AGREEMENT

This agreement is made and entered into on the 4th day of August, 2000, between Providential Holdings, Inc. ("Company"), a California corporation, having offices at 8700 Warner Avenue, Fountain Valley, California 92708 and OVS, Incorporated ("Consultant"), a California corporation, having offices at 2405 Plaza La Playa, San Clemente, California 92672.

WITNESSETH:

In consideration of the premises and mutual covenants hereinafter contained, the parties hereto agree as follows:

1. THE SERVICES

The Consultant agrees to provide strategic and tactical direction and guidance to the Company and assist the Company in international relations, international product development and international market distribution. Consultant will specifically be responsible for development of the company product line and corporate image in Central America, South America and Europe. Responsibilities will also include research into potential merger or acquisition candidates from the international marketplace.

2. WORK FOR HIRE

a. It is the intention of the parties hereto that all rights, including without limitation copyright in any reports, surveys, marketing promotional and collateral materials prepared by the Consultant pursuant to the terms of this Agreement, or otherwise for Company (hereinafter "the Work") vest in Company. The parties expressly acknowledge that the Work was specially ordered or commissioned by Company, and further agree that it shall be considered a "Work Made for Hire" within the meaning of the copyright laws of the United States and that Company is entitled as author to the copyright and all other rights therein, throughout the world, including, but not limited to, the right to make such changes therein and such uses thereof, as it may determine in its sole and absolute discretion.

b. If, for any reason, the Work is not considered a work made for hire under the copyright law, then the Consultant hereby grants and assigns to Company, its successors and assigns, all of its rights, title, and interest in and to the Work, including, but not limited to, the copyright therein throughout the world (and any renewal, extension or reversion copyright now or hereafter provided), and all other rights therein of any nature whatsoever, whether now known or hereafter devised, including, but not limited to the right to make such changes therein, and such uses thereof, as Company may determine.

3. PROPRIETARY INFORMATION

a. For purposes of this Agreement, "proprietary information" shall mean any information relating to the business of Company or any entity in which Company has a controlling


interest and shall include (but shall not be limited to) information encompassed in all drawings, designs, programs, plans, formulas, proposals, marketing and sales plans, financial information, costs, pricing information, customer information, and all methods, concepts or ideas in or reasonably related to the business of Company.

b. Consultant agrees to regard and preserve as confidential, all proprietary information, whether Consultant has such information in memory or in writing or other physical form. Consultant shall not, without written authority from Company to do so, directly or indirectly, use for the benefit or purposes, nor disclose to others, either during the term of its engagement hereunder or thereafter, except as required by the conditions of Consultant's engagement hereunder, any proprietary information.

c. Consultant shall not disclose any reports, recommendations, conclusions or other results of the Services or the existence or the subject matter of this contract without the prior written consent of Company. In Consultant's performance hereunder, Consultant shall comply with all legal obligations it may now or hereafter have respecting the information or other property of any other person, firm or corporation.

d. The Consultant expressly agrees that the covenants set forth in this Paragraph are being given to Company in connection with the engagement of the Consultant by Company and that such covenants are intended to protect Company against the competition by the Consultant, within the terms stated, to the fullest extent deemed reasonable and permitted in law and equity. In the event that the foregoing limitations upon the conduct of the Consultant are beyond those permitted by law, such limitations, both as to time and geographical area, shall be, and be deemed to be, reduced in scope and effect in the maximum extent permitted by law.

e. The foregoing obligations of this Paragraph shall not apply to any part of the information that (i) has been disclosed in publicly available sources of information, (ii) is, through no fault of the Consultant, hereafter disclosed in publicly available sources of information, (iii) is now in the possession of Consultant without any obligation or confidentiality, or (iv) has been or is hereafter lawfully disclosed to Consultant by any third party, but only to the extent that the use or disclosure thereof has been or is rightfully authorized by that third party.

4. INJUNCTIVE RELIEF

Consultant acknowledges that the injury to Company resulting from any violation by it of any of the covenants contained in this Agreement will be of such a character that it cannot be adequately compensated by money damages, and, accordingly, Company may, in addition to pursuing its other remedies, obtain an injunction from any court having jurisdiction of the matter restraining any such violation; and no bond or other security shall be required in connection with such injunction.

5. FEES AND REIMBURSEMENT OF CERTAIN EXPENSES

a. Company shall pay Consultant a consulting fee in the form of restricted and unrestricted stock. The Company will therefore issue to consultant Five Hundred Thousand (500,000) shares of stock upon the execution of this Agreement. The Company will use its best efforts to file a registration statement on Form S-8 covering the aforesaid stock. In addition, the Company will therefore issue (250,000) shares of the Company's Common Stock, exercisable in a

2

period of less than 12-months with piggy-back restriction rights to be converted into free trading shares.

b. The Consultant shall provide to the Company on the first day of every month an outline report as to the Services that will be performed that month. Within ten (10) days from the end of each and every month, Consultant will provide to Company a statement as to the work that was performed for the prior month.

c. If in reviewing the statements made by the Consultant to the Company that are required within ten (10) days after the close of a business month, Company determines that Consultant is not making sufficient progress in order to complete work for which Consultant was hired within a reasonable time, the Company will give written notice to Consultant. Consultant shall have fifteen (15) days to complete the work required and provide further reports to the Company.

6. BENEFITS

The Consultant, as an independent contractor, shall not be entitled to any other benefits other than the fees and reimbursement of expenses provided under Paragraph 5 of this Agreement.

7. DUTY TO REPORT INCOME

The Consultant acknowledges and agrees that it is an independent contractor and not an employee of the Company and that it is Consultant's sole obligation to report as income all compensation received from Company pursuant to this Agreement. The Consultant further agrees that the Company shall not be obligated to pay withholding taxes, social security, unemployment taxes, disability insurance premiums, or similar items, in connection with any payments made to the Consultant pursuant to the terms of this Agreement.

8. TERM

This Agreement shall be effective beginning as of August 4, 2000, and shall continue until date of delivery of completed product and Services; provided, however, that either Company or Consultant may terminate this Agreement in whole or in part at any time upon thirty (30) days' written notice to the other party. In the event of termination or upon expiration of this Agreement, Consultant shall return to Company any and all equipment, documents or materials, and all copies made thereof, which Consultant received from Company for the purposes of this Agreement and the Company shall pay to Consultant the amounts provided in Paragraph 5 hereof through the date of such termination or expiration.

9. INDEMNIFICATION

The Consultant shall indemnify and save Company harmless from and against all claims arising in favor of any person, firm or corporation on account of personal injury or property damage in any way resulting from the improper or illegal acts of Consultant, its employees or agents. The foregoing indemnity shall include all costs incurred by Company, including reasonable attorneys' fees.

10. NOTICES

3

All notices and billings shall be in writing and sent via first class mail to the respective addresses of the parties set forth at the beginning of this Agreement or to such other address as any party may designate by notice delivered hereunder to the other party.

11. GENERAL

a. The terms and conditions of Paragraphs 3, 4 and 5 hereof shall survive the termination of this Agreement or completion of the Services as the case may be.

b. Neither the Company nor Consultant shall assign this Agreement or delegate its duties hereunder and shall not subcontract any of the Services to be performed hereunder without the prior written consent of the other party hereto.

c. Consultant shall perform the Services as an independent contractor and shall not be considered an employee of Company or Partner, joint venturer or otherwise related to Company for any purpose.

d. This Agreement shall be governed by the laws of the State of Ohio.

e. This Agreement constitutes the entire understanding between Consultant and Company respecting the Services described herein. The terms and conditions of any purchase order shall have no effect upon this Agreement and shall be used for accounting purposes only.

f. The failure of either party to exercise its rights under this Agreement shall not be deemed to be a waiver of such rights or a waiver of any subsequent breach.

g. Any delay or nonperformance of any provision of this Agreement caused by conditions beyond the reasonable control of the performing party shall not constitute a breach of this Agreement, provided that the delayed party has taken reasonable measures to notify the other of the delay in writing. The delayed party's time for performance shall be deemed to be extended for a period equal to the duration of the conditions beyond its control. "Conditions beyond a party's reasonable control" include, but are not limited to, natural disasters, acts of government after the date of the Agreement, power failure, fire, flood, acts of God, labor disputes, riots, acts of war and epidemics. Failure of subcontractors and inability to obtain materials shall not be considered a condition beyond a party's reasonable control.

h. NON-SOLICITATION OF CONSULTANT'S EMPLOYEES: Company agrees not to knowingly hire or solicit Consultant's employees during performance of this Agreement and for a period of two years after termination of this Agreement without Consultant's written consent.

i. MEDIATION AND ARBITRATION: If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually agreed-upon mediator in Orange County, California. Any costs and fees other than attorney fees associated with the mediation shall be shared equally by the parties. If the dispute is not resolved through mediation, the parties agree to submit the dispute to binding arbitration in Orange County, California under the rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered in any court with jurisdiction to do so.

j. ATTORNEY FEES: If any legal action is necessary to enforce this Agreement, the prevailing party shall be entitled to reasonable attorney fees, costs and expenses.

4

k. COMPLETE AGREEMENT: This Agreement together with all exhibits, appendices or other attachments, which are incorporated herein by reference, is the sole and entire Agreement between the parties. This Agreement supersedes all prior understandings, agreements and documentation relating to such subject matter. In the event of a conflict between the provisions of the main body of the Agreement and any attached exhibits, appendices or other materials, the Agreement shall take precedence. Modifications and amendments to this Agreement, including any exhibit or appendix hereto, shall be enforceable only if they are in writing and are signed by authorized representatives of both parties.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

Signature:  /s/ Henry Fahman            Date: August 4, 2000
          --------------------
            Henry Fahman
            Chief Executive Officer
            Providential Holdings,
            Inc.

Signature:  /s/ Omar Sanchez            Date: August 4, 2000
          --------------------
            Omar Sanchez
            President
            OVS, Inc.

5

[LETTERHEAD]

September 27, 2000

BY FEDERAL EXPRESS

Providential Holdings, Inc.
8700 Warner Avenue
Fountain Valley, CA 92708
Attention: Henry D. Fahman

Re: REGISTRATION STATEMENT ON FORM SB-2

Dear Mr. Fahman:

This opinion is furnished to you in connection with a Registration Statement on Form SB-2 (Registration No. ______), (the "Registration Statement"), as filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, on behalf of Providential Holdings, Inc., (the "Company"). The Registration Statement relates to total of 60,000,000 shares of common stock which are to be registered, as follows (maximum amounts): (a) 4,054,206 shares for selling shareholders; (b) 9,500,000 shares to cover the conversion of certain bridge notes (including related repricing warrants issued to such note holders entitling them to purchase shares of common stock and that provide that any decrease in the trading price of the common stock will entitle the note holders to reset the exercise price to a lower price than that which existed on the closing date); (c) 1,900,000 shares to cover the exercise of warrants issued in connection with the bridge financing; and
(d) 44,545,794 shares for sales to the public for cash, possible future acquisitions by the company of other companies and/or assets, and consulting services for the company (the "Registered Stock").

We have reviewed the corporate actions of the Company in connection with this matter and have examined such documents, corporate records and other instruments as we have deemed necessary for the purpose of this opinion. Based upon the foregoing and upon such issues of law as we deem relevant, it is our opinion that the 60,000,000 shares of the Registered Stock will be, validly authorized when issued.


Providential Holdings, Inc.
September 27, 2000
Page Two

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to the use of our name in the Prospectus contained in the Registration Statement under the heading "Legal Matters."

Best regards,

STRADLING YOCCA CARLSON & RAUTH

                                               /s/      Tony Bayard de Volo
                                                  --------------------------

                                               Tony Bayard de Volo

TB:plw


EXHIBIT 10.1

ESCROW AGREEMENT

ESCROW AGREEMENT, dated as of March 28, 2000, among Providential Holdings, Inc., a Nevada corporation (the "Company"), the persons listed on the Purchaser Signature Page hereto (each of whom is individually referred to as a "Purchaser" and all of whom are collectively referred to as the "Purchasers") and Warshaw Burstein Cohen Schlesinger & Kuh, LLP, as escrow agent (the "Escrow Agent").

W I T N E S S E T H:

WHEREAS, pursuant to the terms of a Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement"), dated as of the date hereof, between the Purchasers and the Company, each Purchaser has agreed to purchase certain securities of the Company (the "Securities") at the purchase price (the "Purchase Price") set forth in the Purchase Agreement; and

WHEREAS, pursuant to the Purchase Agreement, each Purchaser is required to deposit the Purchase Price into escrow with the Escrow Agent;

NOW, THEREFORE, the parties agree as follows:

1. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Purchase Agreement.

2. The Escrow Agent agrees to act as escrow agent in accordance with the provisions hereof.

(a) Each Purchaser is depositing with the Escrow Agent, by wire transfer to the Escrow Agent's escrow account specified in
Section 1.3 of the Purchase Agreement, which shall be non-interest bearing, the Purchase Price specified in Section 1.1 of the Purchase Agreement (the "Escrow Fund").

(b) Upon receipt of a notice from the Company that the Closing has occurred, the Escrow Agent shall deliver the Escrow Fund by wire transfer to the Company.

(c) If the Escrow Agent receives a joint notice from all of the Purchasers and t he Company that the Purchase Agreement has been terminated without the Closing having occurred, the Escrow Agent shall return the Escrow Fund to each Purchaser.

(d) If after April 24, 2000, the Escrow Agent receives notice from any Purchaser that the Closing has not occurred and such Purchaser is electing to rescind the Purchase Agreement, the Escrow Agent shall return such Purchaser is potion of the Escrow Fund.

3. If the Escrow Agent receives timely notice from any party which, in the opinion of the Escrow Agent, is in conflict with the timely notice received from any other party, the Escrow


Agent shall refrain from taking any action thereon unless it is otherwise directed in writing by both of such parties or by an order of a court of competent jurisdiction.

4. The Escrow Agent shall be liable only for its willful misconduct and gross negligence and not for any act done or omitted by it in good faith.

5. The Escrow Agent may rely, and shall be protected in acting or refraining from acting, upon any written notice, instruction or request, furnished to it hereunder and reasonably believed by it to be genuine. If the Escrow Agent receives any notice under which some action is to be taken by it, it shall not be required to act thereon until it has had an opportunity, if it so desires, to investigate the authenticity of such notice.

6. The Escrow Agent has the right to, and may, at any time, resign and be discharged from its duties hereunder by giving notice in writing of such resignation, specifying a date (which shall be no earlier than thirty
(30) days after such notice is given) when such resignation shall take effect; and, after the giving of such notice, the Escrow Agent shall take no further action except in connection with such resignation unless all of the other parties hereto jointly request such action. If the other parties hereto do not appoint a substitute escrow agent prior to the effective date of the Escrow Agent's resignation, the Escrow Agent may deposit the Escrow Fund with a court of appropriate jurisdiction, and thereupon the Escrow Agent shall be fully relieved and discharged of any further duties hereunder.

7. The Escrow Agent may consult with counsel of its own choice, which may be Warshaw Burstein Cohen Schlesinger & Kuh, LLP, and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

8. The duties of the Escrow Agent shall be limited to those expressly set forth herein.

9. The Company shall reimburse the Escrow Agent for any costs and expenses incurred by it in connection with its acting as escrow agent hereunder, including the cost of consultation with counsel, and the Escrow Agent shall have a first lien on the Escrow Fund for any cost or expense incurred hereunder. The Escrow Agent shall not charge any fee for acting as escrow agent hereunder.

10. The Company and the Purchasers, jointly and severally, agree to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability, damage or expense incurred by the Escrow Agent arising out of, or in connection with, this Agreement, including but not limited to the costs and expenses of defending itself against any claim of liability in the premises, except for liability or expense resulting from the willful misconduct or gross negligence of the Escrow Agent, and the Escrow Agent shall have a first lien on the Escrow Fund for any such loss, liability, damage, or expense.

11. The Company and each of the Purchasers agree not to commence any litigation against the Escrow Agent unless, (a) the Escrow Agent has committed gross negligence or willful misconduct or (b) the Escrow Agent has not submitted its written resignation as escrow agent hereunder in accordance with paragraph 6 hereof; and if litigation is commenced against the Escrow Agent without satisfying all of the conditions set forth in clauses (a) or (b) above, the party


commencing such litigation shall pay all of the costs and expenses of the Escrow Agent in connection therewith.

12. Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one
(1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

(a) If to a Purchaser, to its, his or her address set forth on the signature page of this Agreement, with a copy to the person designated in the Purchase Agreement;

(b) If to the Company, at:

8700 Warner Avenue Fountain Valley, California 92708 Attn: Chief Executive Officer Fax: (714) 596-0252

(c) If to the Escrow Agent, at:

555 Fifth Avenue New York, NY 10017 Attn: Michael D. Schwamm, Esq.

Fax: (212) 972-9150;

or to such other address as any such party may designate by notice to the other party. Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number.

13. The Company and each Purchaser acknowledges and understands that the Escrow Agent has been, and currently is, acting as counsel to the placement agent (which through an affiliate also may be a Purchaser) and agrees that if any dispute arises with respect to this Agreement, the Purchase Agreement or any of the other documents being executed and delivered concurrently herewith or therewith, or in any other situation between the Company, the Purchasers and/or the placement agent, the Company and each Purchaser will waive any apparent conflict of interest should the Escrow Agent represent the placement agent.

14. This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements, understandings and arrangements, oral or written, among the parties with respect to the subject matter hereof.

15. This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors. Notwithstanding the foregoing, this Agreement is not assignable by the Company or the Purchasers and may be enforced only by the parties.


16. Nothing in this Agreement, expressed or implied, is intended to or shall (a) confer on any person other than the parties, or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement, or (b) constitute the parties, partners or participants in a joint venture. The Escrow Agent shall not be obliged to recognize any such succession, until appropriate written notice thereof shall have been received by it.

17. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by all of the parties. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

18. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.


ESCROW AGENT SIGNATURE PAGE
TO
ESCROW AGREEMENT

ESCROW AGENT:

WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP, AS ESCROW AGENT

By: /s/  Michael D. Schwamm
   ------------------------
Michael D. Schwamm, a partner


COMPANY SIGNATURE PAGE
TO
ESCROW AGREEMENT

THE COMPANY

PROVIDENTIAL HOLDINGS, INC.

By: /s/  Henry Fahman
    -----------------
    Name: Henry Fahman
    Title:   President and Chief
             Executive Officer


PURCHASER SIGNATURE PAGE
TO
ESCROW AGREEMENT

PURCHASER

Purchaser Name:__________________________

By:______________________________________

Name:____________________________________

Title:___________________________________

Address:_________________________________


Attn:____________________________

Fax:_____________________________


EXHIBIT 10.2

PLACEMENT AGENT AGREEMENT

THIS PLACEMENT AGENT AGREEMENT ("Agreement"), is made as of March 28, 2000, by and between PROVIDENTIAL HOLDINGS, INC., a Nevada corporation (the "Company"), and SOVEREIGN CAPITAL ADVISORS, LLC, a Nevada limited liability company ("Agent").

BACKGROUND

The Company proposes to issue and sell Series 1 Secured Bridge Notes (the "Securities") resulting in gross proceeds to the Company of up to $4,000,000 (the "Offering") in a transaction not involving a public offering and without registration under the Securities Act of 1933 (the "Securities Act"), pursuant to exemptions from the registration requirements of the Securities Act under Section 4(2) of the Securities Act and Regulation D promulgated under the Securities Act ("Regulation D"). Agent has offered to introduce the Company to prospective investors on a "best efforts basis" and give advise to the Company in connection with the structure of the Offering and the terms of the Securities, and the Company desires to secure the services of Agent on the terms and conditions hereinafter set forth.

AGREEMENT

For and in consideration of the mutual covenants herein, and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree:

SECTION 1. ENGAGEMENT OF AGENT.

SECTION 1.1 APPOINTMENT. The Company hereby appoints Agent as its exclusive agent in connection with the proposed issuance and sale by the Company of Securities resulting in gross proceeds to the Company of up to $4,000,000. Agent, on the basis of the representations and warranties herein contained, and upon and subject to the terms and conditions herein set forth, accepts such appointment. This appointment shall be irrevocable for the twenty (20) business day period, commencing March 28, 2000 and ending April 25, 2000, which period maybe extended by the consent of the Company and Agent (the "Offering Period").

SECTION 1.2 COMPENSATION. The Company shall pay Agent a finder's fee of ten percent (10%) of the gross proceeds derived from the sale of the Securities or any other securities issued by the Company during the Offering Period (the "Gross Proceeds") plus a non-accountable expense allowance of three percent (3%) of the Gross Proceeds. The Company agrees that the amount of such fees and expenses shall be paid at such Closing and that it shall instruct the Escrow Agent to deduct such amount, along with any amounts payable pursuant to Section 1.3 hereof, from the proceeds of the sale of the Securities prior to remittance of the balance of such proceeds to the Company. In addition, the Company shall issue to Agent at the Initial Closing and each Subsequent


Closing, a warrant (each a "Warrant" and collectively, the "Warrants"), in the form of Exhibit 1 hereto, exercisable for 5,000 shares of the Company's common stock for each $100,000 principal amount of Series 1 Bridge Notes issued at such Closing.

SECTION 1.3 REIMBURSEMENT OF EXPENSES. In addition to the non-accountable expense allowance, the Company shall be responsible for (i) fees and expenses of counsel to Agent for the preparation of the Transaction Agreements, (ii) the fees, if any, and expenses of the Escrow Agent and (iii) fees and expenses of counsel to Agent in connection with any state securities or "blue sky" filings or notices.

SECTION 1.4 LIMITED ROLE OF AGENT. Agent has acted only as an advisor to the Company, and in such role, Agent has advised the Company on the structure of the Offering and the terms of the Securities, and has identified potential investors but has given no other advice. The Company, and not Agent, has offered the Securities to the investors and the Company, and not Agent, has negotiated directly with the investors in the Offering. Agent will use reasonable efforts to introduce the Company only to "accredited investors" as defined in Regulation D.

SECTION 1.5 RIGHT OF FIRST REFUSAL. The Company hereby grants Agent a right of first refusal to act as placement agent for any future private financings of the Company, whether of equity securities, convertible debt securities or securities or instruments convertible into or exchangeable for debt or equity securities of the Company or similar transactions. The duration of Agent's right of first refusal under this Section 1.5 shall be for a period of one (1) year following the final Closing of the Offering. In the event that the Company wishes to undertake a transaction described in this Section 1.5, the Company shall send Agent a written notice of the proposed transaction (whether the transaction is initiated by the Company or is offered to the Company by a third party) in sufficient specificity to allow Agent to understand the proposed transaction clearly. This notice must be delivered to Agent at least twenty (20) days prior to the contemplated closing of the proposed transaction. Agent shall have ten (10) days from receipt of that notice to determine whether or not it wishes to exercise its right of first refusal with respect to that transaction. Agent shall notify the Company in writing of its decision to exercise or waive its right of first refusal with respect to the transaction described in the notice. If Agent waives its right of first refusal with respect to a particular transaction, the Company may proceed with that transaction; provided, however, that if the terms of the transaction are changed in any material way from the terms set forth in the notice to Agent, Agent's right of first refusal shall commence again. Agent's waiver of its rights of first refusal with respect to any specific transaction shall not act as a waiver of its rights with respect to any future transactions within the applicable time period.

SECTION 1.6 CONFIDENTIALITY. The Company agrees to maintain the confidentiality of all prospective investors identified to the Company by Agent, except as required by applicable law. For a period of two (2) years from the date of the final Closing, the Company will not solicit or enter into any financing transaction with such investors without the written consent of Agent and payment to Agent of compensation no less than the compensation to be paid to Agent hereunder for raising a like amount.

SECTION 1.7 REMEDIES. In addition to all other remedies Agent may have at law or in equity, in the event that the Company breaches Section 1.5 hereof or Section 1.6 hereof, Agent shall be entitled to receive compensation in respect of the financing giving rise to the breach of this Agreement at the rates set forth in Section 1.2 hereof.


SECTION 2. CONDUCT OF THE OFFERING.

SECTION 2.1 OFFERING DOCUMENTS. The Company shall utilize a Series 1 Bridge Note Purchase and Security Agreement (the "Purchase Agreement"), including the Exhibits referred to therein, substantially in the form approved to by the Company. Agent previously has furnished to the Company and its counsel proposed drafts of such documents (collectively, the "Transaction Agreements"), and the Company and its counsel have reviewed, commented upon, and approved the Transaction Agreements.

SECTION 2.2 PUBLIC INFORMATION. The Company, within a reasonable amount of time prior to any Closing, shall provide each prospective purchaser with a copy of all information required by Rule 502(b)(2)(ii) of Regulation D promulgated pursuant to the Securities Act (collectively, the "SEC Documents"). As used in this Agreement, the term "Offering Documents" means collectively the SEC Documents and the Transaction Agreements, and all amendments, exhibits, and supplements thereto, together with any other documents which are provided to Agent by, or approved for Agent's use by, or on behalf of, the Company for this Offering.


SECTION 2.3 ACCURACY OF OFFERING DOCUMENTS. The Company represents, warrants and covenants to Agent that (a) at the time of delivery to each prospective investor, the SEC Documents conformed in all material respects with the requirements, to the extent applicable, of the Securities and Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder ("Rules and Regulations"), and none of the Offering Documents included any untrue statement of a material fact, or omitted to state any material fact required to be stated therein, or necessary, to make the statements therein, in light of the circumstances under which they were made, not misleading, and (b) at each Closing, the SEC Documents will contain conform in all material respects with the applicable Rules and Regulations, and none of the Offering Documents will include at the time of Closing any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Agent has no responsibility for the contents, accuracy or adequacy of the Offering Documents, or for the compliance of the Offering Documents, with the requirements of Rule 502(b)(2)(ii) of Regulation D promulgated pursuant to the Securities Act.

SECTION 2.4 DUTY TO AMEND. If, at any time during the Offering, any event occurs as a result of which the SEC Documents or any of the other Offering Documents as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time after the date hereof to amend or supplement the SEC Documents to comply with the Exchange Act or the applicable Rules and Regulations, the Company shall forthwith notify Agent thereof and shall prepare such further amendment or supplement to the SEC Documents or the other Offering Documents as may be required and shall furnish and deliver to Agent and to others, whose names and addresses are designated by Agent, all at the cost of the Company, a reasonable number of copies of the amendment or supplement or of the amended or supplemented SEC Documents or the other Offering Documents which, as so amended or supplemented, will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the SEC Documents or the other Offering Documents not misleading in the light of the circumstances when it is delivered to a purchaser or prospective purchaser, and in order that the SEC Documents will comply in all respects with the requirements (to the extent applicable) of the Exchange Act and the applicable Rules and Regulations.

SECTION 2.5 ESCROW OF FUNDS. Pursuant to the Escrow Agreement, executed by the Company, the person named as escrow agent in the Escrow Agreement (the "Escrow Agent"), and the prospective investors who have executed signature pages to the Purchase Agreement, the Registration Rights Agreement and the Escrow Agreement (the "Purchasers"), the purchase price for the Securities to be purchased as reflected on the Purchaser Signature Page to the Purchase Agreement shall be wired to the Escrow Agent to be held by the Escrow Agent as provided in the Escrow Agreement.

SECTION 2.6 APPROVAL OF PURCHASERS. Prior to each Closing, the Company shall have the right to approve each Purchaser. If the Company withholds approval of any Purchaser, the purchase price wired to the Escrow Agent by such Purchaser shall be returned to such Purchaser along with the Purchase Agreement and any other agreements signed by such Purchaser. The right to withhold approval of any Purchaser shall be deemed to have been waived if the Company authorizes the Escrow Agent to disburse funds provided by any Purchaser at any Closing.

SECTION 2.7 DELIVERY OF SECURITIES. Securities in such form that, subject to applicable transfer restrictions as described in the Purchase Agreement, they can be negotiated by the holders


thereof (issued in such denominations and in such names as the Purchasers may request shall be delivered by the Company to the counsel for Agent, with copies made available to Agent for checking at least one (1) full business day prior to the Closing Date, it being understood that the directions from Agent to the Company shall be given at least two (2) full business days prior to the Closing Date. The Securities shall be delivered at the Initial Closing and at each Subsequent Closing.

SECTION 2.8 INITIAL CLOSING. The Initial Closing (the "Initial Closing") shall occur at such time as (a) the Purchasers have delivered to the Company (care of Warshaw Burstein Cohen Schlesinger & Kuh, LLP, counsel for Agent) executed counterpart Purchaser Signature Pages to each of the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement and such other documents as may be required to be delivered at the Closing, (b) the Company has not withheld approval of such Purchasers, and (c) all other conditions to the obligation of such Purchasers and the Company to close the transactions contemplated by the Purchase Agreement have been satisfied or waived.

SECTION 2.9 SUBSEQUENT CLOSINGS. In the event that the Initial Closing shall be for an amount of Securities that is less than the amount of the Offering, the Offering may be continued, and additional Closings may be held (each a "Subsequent Closing") throughout the Offering Period; provided, however, that (a) the Purchasers have delivered to the Company (care of Warshaw Burstein Cohen Schlesinger & Kuh, LLP, counsel for Agent) executed counterpart Purchaser Signature Pages to each of the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement and such other documents as may be required to be delivered at the Closing, (b) the Company has not withheld approval of such Purchasers, and (c) all other conditions to the obligation of such Purchasers and the Company to close the transactions contemplated by the Purchase Agreement have been satisfied or waived.

SECTION 2.10 DISBURSEMENTS AT CLOSING. At each Closing, the Company shall execute a release notice that authorizes Escrow Agent to transmit to Agent its fee and expenses of the Offering in the amounts specified, and effect a wire transfer of the net proceeds of such Closing to the Company or another entity designated therein by the Company. The authorization of the Company to release the funds held by Escrow Agent is the Company's authorization to release the executed Transaction Agreements and Securities to the Purchasers. One complete set of executed Transaction Documents will be delivered by Escrow Agent to the Company.

SECTION 2.11 TIME AND PLACE OF CLOSINGS. The Initial Closing and any Subsequent Closing shall be held at the offices of Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New York 10017, at 10:00
a.m. on such dates as are fixed in accordance with this Agreement and the Purchase Agreement. The Closing Date may be changed by mutual agreement of Agent and the Company. The Company agrees to rely on faxed signature pages from the Purchasers, without the requirement of obtaining an originally signed version of any of the Transactions Agreements to which a Purchaser is a party.

SECTION 3. CONDITIONS OF AGENT'S OBLIGATIONS.

Agent's obligations hereunder shall be subject to the accuracy, as of the Closing Date, of the representations and warranties on the part of the Company contained in this Agreement, to the


fulfillment of, or compliance by the Company with, all covenants herein and conditions hereof, and to the following additional conditions:

(a) There shall be no outstanding objection to any Transaction Agreement by the Company or its counsel or any Purchaser or its counsel.

(b) The Company shall not have disclosed that the Offering Documents, or any amendment or supplement thereto, contains an untrue statement of fact, which, in the opinion of counsel to Agent, is material, or omits to state a fact, which, in the opinion of such counsel, is material and is required to be stated therein, or is necessary to make the statements therein, under the circumstances in which they were made, not misleading.

(c) Between the date hereof and the Closing, the Company shall not have sustained any loss on account of fire, explosion, flood, accident, calamity or any other cause of such character as would materially adversely affect its business or property, considered as an entire entity, whether or not such loss is covered by insurance.

(d) There shall be no litigation instituted or overtly threatened against the Company, and there shall be no proceeding instituted or threatened against the Company before or by any federal or state commission, regulatory body, or administrative agency, or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision, or finding would materially adversely affect the business, franchises, license, permits, operations, or financial condition or income of the Company considered as an entity.

(e) Except as contemplated herein or as set forth in the Offering Documents, during the period subsequent to the most recent financial statements contained in the Offering Documents, if any, and prior to the Closing Date, the Company (i) shall have conducted its business only in the usual and ordinary manner as the same was being conducted prior to such time, and (ii) except in the ordinary course of business, the Company shall not have incurred any liabilities or obligations (direct or contingent) or disposed of any assets, or entered into any material transaction, or suffered or experienced any substantially adverse change in its condition, financial or otherwise. At the Closing Date, the equity account of the Company shall be substantially the same as reflected in the most recent balance sheet contained in the Offering Documents without considering the proceeds from the sale of the Securities, other than as may be set forth in the Offering Documents.

(f) The authorization of the Securities by the Company and all proceedings and other legal matters incident thereto and to this Agreement shall be reasonably satisfactory in all respects to Agent and its counsel.

(g) The Company shall have furnished to Agent the opinion, dated the Initial Closing, addressed to Agent, from counsel to the Company, as required by the Purchase Agreement, along with a letter stating that Agent may rely on such opinion as if it was addressed to it,.

(h) The Company shall have furnished to Agent a copy of the Compliance Certificate and the Secretary Certificate each dated as of the Closing Date.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.


For the purpose of inducing Agent to enter into this and perform this Agreement, the Company represents and warrants to, and agrees with, Agent as follows:

SECTION 4.1 CORPORATION CONDITION. The Company's condition is as described in its most recent SEC Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not in the aggregate materially adverse to the Company. The SEC Documents, taken as a whole, present fairly the business and financial position of the Company as of the Closing Date.

SECTION 4.2 NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or contemplated by the Offering Documents, subsequent to the dates as of which information is given in the Offering Documents, and prior to the Closing Date, there shall not have been any material adverse change in the condition, financial or otherwise, or in the results of operations of the Company or in its business taken as a whole.

SECTION 4.3 NO DEFAULTS. Except as disclosed in the Offering Documents or in writing to Agent, the Company is not in default in any material respect in the performance of any material obligation, agreement, or condition contained in any debenture, note or other evidence of indebtedness or any indenture or loan agreement of the Company. The execution and delivery of this Agreement, and the consummation of the transactions herein contemplated, and compliance with the terms of this Agreement, will not conflict with, or result in a breach of, any of the terms, conditions, or provisions of, or constitute a default under, the Certificate of Incorporation or bylaws of the Company (in any respect that is material to the Company), any note, indenture, mortgage, deed of trust, or other agreement or instrument which is material to the Company and to which the Company is a party or by which the Company or any property of the Company is bound, or, to the Company's knowledge, any existing law, order, rule, regulation, writ, injunction or decree of any government, governmental instrumentality, agency or body, arbitration tribunal or court, domestic or foreign, having jurisdiction over the Company or any property of the Company. The consent, approval, authorization, or order of any court or governmental instrumentality, agency or body is not required for the consummation of the transactions herein contemplated except such as may be required under the Securities Act or under the blue sky or securities laws of any state or other applicable jurisdiction.

SECTION 4.4 INCORPORATION AND STANDING. The Company is, and at the Closing Date will be, duly formed and validly existing in good standing as a corporation under the laws of the State of Nevada and with full power and authority (corporate and other) to own its properties and conduct its business, present and proposed, as described in the Offering Documents; the Company, has full power and authority to enter into this Agreement; and the Company is duly qualified and in good standing as a foreign entity in each jurisdiction in which the failure to so qualify would have a material adverse effect on the Company or its properties.

SECTION 4.5 LEGALITY OF SECURITIES. Prior to the Closing Date, the Securities will have been duly and validly authorized and issued, will be valid, binding and enforceable against the Company in accordance with their terms, and will conform in all material respects to the statements with regard thereto contained in the Offering Documents.

SECTION 4.6 LEGALITY OF CONVERSION SHARES. The Common Stock into which the Securities are convertible, when converted in accordance with the Securities will be duly and validly issued and outstanding, fully paid and non-assessable and conform in all material respects to the statements with regard thereto contained in the Offering Documents.


SECTION 4.7 LITIGATION. Except as set forth in the Offering Documents, there is now, and at the Closing Date there will be, no action, suit or proceeding before any court or governmental agency, authority or body pending or, to the knowledge of the Company, threatened, which might result in judgments against the Company not adequately covered by insurance or which collectively might result in any material adverse change in the condition (financial or otherwise) or business of the Company or which would materially adversely affect the properties or assets of the Company.

SECTION 4.8 FINDERS. The Company does not know of any outstanding claims for services in the nature of a finder's fee or origination fees with respect to the sale of the Securities hereunder for which Agent may be responsible, and the Company will indemnify Agent from any liability for such fees by any party who has a claim for such compensation from the Company and for which person Agent is not legally responsible.

SECTION 4.9 TAX RETURNS. The Company has properly completed in all material respects and filed all federal and state tax returns which are required to be filed, and has paid all taxes shown on such returns and on all assessments received by it to the extent such taxes have become due. All taxes with respect to which the Company is obligated have been paid or adequate accruals have been set up to cover any such unpaid taxes.

SECTION 4.10 AUTHORITY. The execution and delivery by the Company of this Agreement have been duly authorized by all necessary action, and this Agreement is the valid, binding, and legally enforceable obligation of the Company subject to standard qualifications as to the availability of equitable remedies, the effect of bankruptcy and other laws relating to the protection of debtors and public policy opinions promulgated by the Securities and Exchange Commission with respect to indemnification against liabilities under the Securities Act.

SECTION 4.11 ACTIONS BY THE COMPANY. The Company will not take any action which is not contemplated by this Agreement and the Offering Documents or which will impair the effectiveness of the transactions contemplated by this Agreement.

SECTION 5. COVENANTS OF THE COMPANY.

The Company covenants and agrees with Agent that:

SECTION 5.1 RESTRICTIONS ON AMENDMENTS. After the date hereof, the Company will not at any time, prepare and distribute any amendment or supplement to the Offering Documents, of which amendment or supplement Agent shall not previously have been advised and Agent and its counsel furnished with a copy within a reasonable time period prior to the proposed adoption thereof, or to which Agent shall have reasonable objected in writing on the ground that it is not in compliance with the Securities Act, the Exchange Act or any applicable rules and regulations thereunder.

SECTION 5.2 EXPENSES OF OFFERING. The Company will pay, whether or not the transactions contemplated by the Transaction Agreements are consummated, all costs and expenses incident to the Transaction Agreements, including all expenses incident to the authorization of the Securities, their issue and delivery to Escrow Agent, any original issue taxes in connection therewith, all transfer taxes, if any, incident to the initial sale of the Securities, the fees and expenses of Agent's and the Company's counsel (except as provided below) and accountants, and the cost of reproduction and furnishing to Agent copies of the Offering Documents as herein provided, provided, however,


that the Company shall not be responsible for the payment of fees and expenses incurred by Agent's counsel with respect to any Purchaser, if Agent is unable to procure Purchaser Signature Pages to the Transaction Agreements from such Purchaser that the Company was willing to accept.

SECTION 5.3 AVAILABILITY OF INFORMATION. Prior to the Closing Date, the Company will cooperate with Agent in such investigation as it may make or cause to be made of all of the properties, business and operations of the Company in connection with the Offering of the Securities. The Company will make available to Agent and its counsel in connection therewith such information in its possession as Agent may reasonably request and will make available to Agent such persons as Agent shall deem reasonably necessary and appropriate in order to verify or substantiate any such information so supplied.

SECTION 5.4 REPORTS AND FILINGS. The Company shall be responsible for making any and all filings required by the blue sky authorities and filings required by the laws of the jurisdictions in which the subscribers who are accepted for purchase of Securities are located, if any. Agent shall assist the Company in this respect, but such filings shall be the responsibility, and at the cost of, the Company.

SECTION 5.5 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS, OR CIRCUMSTANCES. The Company's condition is as described in its Offering Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not individually or in the aggregate materially adverse to the Company. The Offering Documents, taken as a whole, will present fairly the business and financial position of the Company as of each Closing Date.

SECTION 5.6 NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or contemplated by the Offering Documents, subsequent to the dates as of which information is given in the Offering Documents, and prior to each Closing Date, there shall not have been any material adverse change in the condition, financial, or otherwise, or in the results of operations of the Company or in its business taken as a whole.

SECTION 6. INDEMNIFICATION.

SECTION 6.1 INDEMNIFICATION OF AGENT. The Company agrees to indemnify and hold harmless Agent, its affiliates and their respective officers, directors, employees, agents and controlling persons (collectively, the "Indemnified Parties"), from and against any losses, claims, damages and liabilities, joint or several, related to or arising in any manner out of the Offering or any transaction, financing, proposal or any other matter (collectively, the "Matters") contemplated by this Agreement hereunder, and will promptly reimburse the Indemnified Parties for all reasonable expenses (including reasonable fees and expenses of legal counsel) as incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim related to or arising in any manner out of any Matter contemplated by the engagement of Agent hereunder, or any action or proceeding arising therefrom (collectively, "Proceedings"), whether or not such Indemnified Party is a formal party to any such Proceeding. Notwithstanding the foregoing, the Company shall not be liable in respect of any losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final judgment resulted from the gross negligence or willful misconduct of an Indemnified Party. The Company further agrees that it will not, without the prior written consent of Agent, settle, compromise or consent to the entry of any judgment in any pending or threatened Proceeding in respect of which indemnification may be sought hereunder (whether or not Agent or any Indemnified Party is an actual or potential party to such Proceeding), unless such


settlement, compromise or consent includes an unconditional release of Agent and each other Indemnified Party hereunder from all liability arising out of such Proceeding.

SECTION 6.2 NOTICE OF CLAIMS. The Indemnified Parties shall promptly give the Company notice (the "Indemnification Notice") of any matter which the Indemnified Parties have determined has given or could give rise to a right of indemnification under this agreement, provided that a failure on the part of an Indemnified Party to notify the Company will not relieve the Company from any liability that the Company may have on account of this indemnity or otherwise, except to the extent that the Company shall have been materially prejudiced by such failure. If, promptly after its receipt of the Indemnification Notice, the Company acknowledges its obligation to indemnify the Indemnified Parties hereunder against any losses that may result from such claim, then the Company shall be entitled to assume and control the defense of such claim at its expense and through counsel of its choice unless such counsel is reasonably unsatisfactory to Agent. Any Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Company shall have failed promptly to assume the defense thereof and employ counsel, or (ii) the named parties to such action (including impleaded parties) include such Indemnified Party and the Company and such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or in addition to those available to the Company; provided that the Company shall not in any event be responsible hereunder for the fees and expenses of more than one firm of separate counsel in connection with any action in the same jurisdiction, in addition to any local counsel. In the event that the Company exercises the right to undertake any such defense against any such claim, the Indemnified Parties shall cooperate with the Company in such defense and make available to the Company all witnesses, pertinent records, materials and information in the Indemnified Parties possession or under the Indemnified Parties' control relating thereto as is reasonably required by the Company

SECTION 6.3 CONTRIBUTION. The Company agrees that if any indemnification or reimbursement sought pursuant to this Agreement were for any reason not to be available to any Indemnified Party or insufficient to hold it harmless as and to the extent contemplated by this letter, then the Company shall contribute to the amount paid or payable by such Indemnified Party in respect of losses, claims, damages and liabilities in such proportion as is appropriate to reflect the relative benefits to the Company and its stockholders on the one hand, and Agent on the other, in connection with the Matters to which such indemnification or reimbursement relates or, if such allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties as well as any other equitable considerations. It is hereby agreed that the relative benefits to the Company and/or its stockholders and to Agent with respect to Agent's engagement shall be deemed to be in the same proportion as (i) the total value paid or received or to be paid or received by the Company and/or its stockholders pursuant to the Matters (whether or not consummated) for which Agent is engaged to render financial advisory services bears to (ii) the fees paid (or agreed to be paid if the transaction would be consummated) to Agent in connection with such engagement. In no event shall the Indemnified Parties contribute or otherwise be liable for an amount in excess of the aggregate amount of fees actually received by Agent pursuant to such engagement (excluding amounts received by Agent as reimbursement of expenses).

SECTION 6.4 LIMITATION OF LIABILITY OF AGENT. The Company further agrees that no Indemnified Party shall have any liability (whether direct of indirect, in contract or tort or otherwise) to the Company for or in connection with Agent's engagement hereunder except for losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final


judgment resulted from the gross negligence or willful misconduct of such Indemnified Party. The indemnity, reimbursement and contribution obligations of the Company shall be in addition to any liability which the Company may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party.

The indemnity, reimbursement, contribution provisions set forth herein shall remain operative and in full force and effect regardless of (i) any withdrawal, termination or consummation of or failure to initiate or consummate any Matter referred to herein, (ii) any investigation made by or on behalf of any party hereto or any person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange) any party hereto, (iii) any termination or the completion or expiration of this letter or Agent's engagement and (iv) whether or not Agent shall, or shall not be called upon to, render any formal or informal advice in the course of such engagement.

SECTION 7. TERMINATION.

SECTION 7.1 TERMINATION BY AGENT. This Agreement may be terminated at any time during the Offering Period by Agent by written notice to the Company, if the Company shall have failed or been unable to comply with any of the terms, conditions or provisions of the Transaction Agreements to be performed, complied with or fulfilled by the Company within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by Agent in writing.

SECTION 7.2 TERMINATION BY COMPANY. This Agreement may be terminated by the Company at the conclusion of the Offering Period by notice to Agent if Agent shall have failed or been unable to comply with any of the terms, conditions or provisions of this Agreement to be performed, complied with or fulfilled by Agent within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by the Company in writing.

SECTION 7.3 TERMINATION FOR FORCE MAJEURE EVENTS. This Agreement may be terminated by Agent by notice to the Company at any time, if, in the reasonable, good faith judgment of Agent, payment for and delivery of the Securities is rendered impracticable or inadvisable because: (a) additional material governmental restrictions not in force and effect on the date hereof shall have been imposed upon trading in securities generally; (b) a war or other national calamity shall have occurred; or (c) the condition of the market (either generally or with reference to the sale of the Securities to be offered hereby) or the condition of any matter affecting the Company or any other circumstance is such that it would be undesirable, impracticable or inadvisable, in the judgment of Agent, to proceed with this Agreement or with the Offering.

SECTION 7.4 TERMINATION WITHOUT LIABILITY. Any termination of this Agreement pursuant to this Section 7 shall be without liability of any character (including, but not limited to, loss of anticipated profits or consequential damages) on the part of any party thereto, except that the Company shall remain obligated to pay the costs and expenses provided to be paid by it specified in Sections 1.3 and 5.2, and the Company and Agent shall be obligated to pay, respectively, all losses, claims, damages or liabilities, joint or several, under Section 6.1 in the case of the Company and Section 6.2 in the case of Agent.

SECTION 8. MISCELLANEOUS.


SECTION 8.1 NOTICES. Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to Company: Providential Holdings, Inc. 8700 Warner Avenue Fountain Valley, California 92708 Attn: Chief Executive Officer Telephone: (714) 849-1503 Facsimile: (714) 596-0252

With a copy (which shall not constitute notice) to:

                Dieterich & Associates
                11300 W. Olympic Blvd
                Suite 800
                Los Angeles, CA 90064-1637
                Attention: Christopher H. Dieterich, Esq.
                Tel: (310) 312-6888
                Fax: (310) 312-6680

If to Agent:    Sovereign Capital Advisors, LLC
                3340 Peachtree Road, N.E.
                Suite 1965
                Atlanta, Georgia 30326
                Attention: Don Odom
                Tel: (404) 814-3737
                Fax: (404) 812-3738

With a copy (which shall not constitute notice) to:
Warshaw Burstein Cohen Schlesinger & Kuh, LLP 555 Fifth Avenue New York, New York 10017 Attention: Michael D. Schwamm, Esq.

Tel: (212) 984-7700
Fax: (212) 972-9150;

Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number

SECTION 8.2 BENEFIT. This Agreement is made solely for the benefit of Agent and the Company, their respective officers and directors and any controlling person referred to in Section 15 of the Securities Act and their respective successors and assigns, and no other person may acquire or have any right under or by virtue of this Agreement, including, without limitation, the holders of any


Securities. The term "successor" or the term "successors and assigns" as used in this Agreement shall not include any purchasers, as such, of any of the Securities.

SECTION 8.3 SURVIVAL. The respective indemnities, agreements, representations, warranties, covenants and other statements of the Company and Agent or the officers, directors or controlling persons of the Company and Agent as set forth in or made pursuant to this Agreement and the indemnity agreements of the Company and Agent contained in Section 6 hereof shall survive and remain in full force and effect, regardless of (a) any investigation made by or on behalf of the Company or Agent or any such officer, director or controlling person of the Company or of Agent; (b) delivery of or payment for the Securities; or (c) the Closing Date, and any successor of the Company or Agent or any controlling person, officer or director thereof, as the case may be, shall be entitled to the benefits hereof.

SECTION 8.4 GOVERNING LAW. The validity, interpretation and construction of this Agreement will be governed by the laws of the State of New York, without regard to conflicts of law principles. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

SECTION 8.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which may be deemed an original and all of which together will constitute one and the same instrument.

SECTION 8.6 CONFIDENTIAL INFORMATION. All confidential financial or business information (except publicly available or freely usable material otherwise obtained from another source) respecting either party will be used solely by the other party in connection with the within transactions, be revealed only to employees or contractors of such other party who are necessary to the conduct of such transactions, and be otherwise held in strict confidence.

SECTION 8.7 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, neither party will issue any public announcement concerning the within transactions without the approval of the other party.

SECTION 8.8 FINDERS. The parties acknowledge that no person has acted as a finder in connection with the transactions contemplated herein and each will agree to indemnify the other with respect to any other claim for a finder's fee in connection with the Offering.


SECTION 8.9 RECITALS. The recitals to this Agreement are a material part hereof, and each recital is incorporated into this Agreement by reference and made apart of this Agreement.

SECTION 8.10 DEFINITIONS. Capitalized terms used in this Agreement but not otherwise define herein shall have the meanings assigned to such terms in the Purchase Agreement.

IN WITNESS WHEREOF, the parties hereto have duly caused this agreement to be executed as of the day and year first above written.


COMPANY SIGNATURE PAGE
TO
PLACEMENT AGENT AGREEMENT

THE COMPANY:

PROVIDENTIAL HOLDINGS, INC.

By: /s/  Henry Fahman
   ------------------
Name: Henry Fahman
Title:   President and Chief
         Executive Officer


AGENT SIGNATURE PAGE
TO
PLACEMENT AGENT AGREEMENT

AGENT:

SOVEREIGN CAPITAL ADVISORS, LLC

By: /s/  Paul Hamm
   ---------------

Paul Hamm, President


EXHIBIT 10.3

FORM OF GUARANTY AGREEMENT

GUARANTY AGREEMENT (this "Agreement"), dated as of March 28, 2000, between Henry Fahman (individually, a "Guarantor" and collectively the "Guarantors") and SovCap Equity Partners, Ltd, a corporation organized under the laws of the Bahamas, as Agent (the "Agent") for the purchasers (the "Purchasers") listed on the Purchaser Signature Pages to the Purchase Agreement (as hereinafter defined).

A. Providential Holdings, Inc., a Nevada corporation (the "Company") and the Purchasers are parties to a Series 1 Bridge Note and Security Agreement dated as of the date hereof (as modified and supplemented and in effect from time to time, the "Purchase Agreement"), providing, subject to the terms and conditions thereof, for the issuance and sale by the Company of up to $4,000,000 principal amount of Series 1 Secured Convertible Bridge Notes (the "Bridge Notes").

B. To induce the Purchasers to enter into the Purchase Agreement and to purchase the Bridge Notes thereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantors have agreed to, jointly and severally, guarantee the Guaranteed Obligations (as hereinafter defined) on the terms and conditions set forth in this Agreement and to secure the Guaranteed Obligations by a pledge of shares of capital stock pursuant to the terms of a Pledge Agreement dated as of the date hereof between the Guarantors and the Agent, as agent for the Purchasers (the "Pledge Agreement").

Accordingly, the parties hereto hereby agree as follows:

Section 1. DEFINITIONS. All capitalized terms used herein but not defined herein shall have the meanings set forth in the Purchase Agreement. As used herein, the following terms shall have the following meanings.

Section 2. THE GUARANTEE.

2.01. THE GUARANTEE.

(a) The Guarantors, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantee to each Purchaser and the Agent the full and prompt payment when due, whether at maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise, and at all times thereafter, of all Obligations, including, without limitation, all amounts owing by the Company to any Purchaser or the Agent under this Guaranty, the Pledge Agreement, the Purchase Agreement or any other Transaction Agreement, whether for principal or interest (including, without limitation, interest accruing before, during or after any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding, and, if interest ceases to accrue by operation of law by reason of any such proceeding, interest which otherwise would have accrued in the absence of such proceeding), and in each case whether or not recovery may be or hereafter may


become barred by any statute of limitations, whether enforceable or unenforceable as against the Company, now or hereafter existing, or due or to become due (collectively, together with the Costs (as hereinafter defined), the "Guaranteed Obligations").

(b) Each Guarantor further agrees to pay, upon demand, all costs and expenses ("Costs"), including, without limitation, all court costs and reasonable attorneys' fees and expenses, paid or incurred by the Agent (a) in endeavoring to collect all or any part of the Guaranteed Obligations from, or in prosecuting any action against, any Guarantor or (b) in endeavoring to realize upon (whether by judicial, nonjudicial or other proceedings) any collateral securing any Guarantor's liabilities under this Guaranty. The term "Guaranteed Obligations" as used herein shall include all such Costs.

(c) Notwithstanding the foregoing provisions of this Section 2.01, the Agent agrees that it will look solely to the Pledge Stock (as defined in the Pledge Agreement) for the repayment of the Guaranteed Obligations, without recourse against the personal assets of the Guarantors and that the Guarantors shall not be personally liable to the Agent or the Purchasers for any amounts payable under this Agreement.

2.02 OBLIGATIONS UNCONDITIONAL. The obligations of each Guarantor under
Section 2.01 hereof are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the Purchase Agreement, the Bridge Notes or any other agreement or instrument (including, without limitation, any other Transaction Agreement) referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations or for the obligations of any Guarantor hereunder, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 2.02 that the obligations of each Guarantor hereunder shall be absolute and unconditional, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder which shall remain absolute and unconditional as described above:

(a) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(b) any of the acts mentioned in any of the provisions of the Purchase Agreement or the Bridge Notes or any other agreement or instrument referred to herein or therein (including, without limitation, any other Transaction Agreement) shall be done or omitted;

(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under the Purchase Agreement or the Bridge Notes or any other agreement or instrument referred to herein or therein (including, without limitation, any other Transaction Agreement) shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or

(d) any lien, security interest or other encumbrance or charge (collectively, a "Lien") granted to, or in favor of, the Agent or any Purchaser or Purchasers as security for any of the Guaranteed


Obligations or as security for the obligations of the Guarantor hereunder shall be released, exchanged, enforced or shall fail to be perfected.

Except as expressly provided in this Agreement, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Agent or any Purchaser exhaust any right, power or remedy to proceed against the Company under the Purchase Agreement or the Bridge Notes or any other agreement or instrument referred to herein or therein (including, without limitation, any other Transaction Agreement), or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations or any of the obligations of any Guarantor hereunder.

2.03 REINSTATEMENT. The obligations of each Guarantor under this
Section 2 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Company in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Agent and each Purchaser on demand for all reasonable costs and expenses (including, without limitation, reasonable fees of counsel) incurred by the Agent or such Purchaser in connection with any such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. The provisions of this Section 2.03 shall survive the termination of this Agreement.

2.04 SUBROGATION. Each Guarantor hereby waives all rights of subrogation or contribution, whether arising by contract or operation of law (including, without limitation, any such right arising under the Federal Bankruptcy Code) or otherwise by reason of any payment by such Guarantor pursuant to the provisions of this Section 2 and further agrees with the Company for the benefit of each of such Guarantor's creditors (including, without limitation, each Purchaser and the Agent) that any such payment by such Guarantor shall constitute a contribution of capital by such Guarantor to the Company.

2.05 REMEDIES. Each Guarantor agrees that, as between such Guarantor and the Purchasers, the obligations of the Company under the Purchase Agreement and the Bridge Notes may be declared to be forthwith due and payable as provided in the Purchase Agreement (and shall be deemed to have become automatically due and payable in the circumstances provided therein) for purposes of Section 2.01 hereof notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Company and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Company) shall forthwith become due and payable by the Guarantor for purposes of said Section 2.01.

2.06 CONTINUING GUARANTEE. The guarantee in this Section 2 is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.

2.07 INTEREST ON DEFAULTED GUARANTEED OBLIGATIONS. If any Guarantor fails to pay any amount when due pursuant to Section 2.01 hereof, such Guarantor agrees to pay interest on the amount of such payment not so paid from said due date until such payment shall be paid in full at a rate per annum equal to the Default Rate (as defined in the Bridge Notes), payable on demand of the Agent.


2.08 APPLICATION OF PAYMENTS. The cash at the time held by the Agent shall be applied by the Agent in the following order:

(a) to the expenses incurred in effecting such recovery or in enforcing any right or remedy under this Agreement or any of the other Transaction Agreements, and any other expenses theretofore incurred by the Agent and not previously reimbursed by the Company;

(b) to accrued interest, payable by the Company, according to Purchaser's Proportionate Share of the accrued interest on the Bridge Notes; and

(c) to the unpaid principal of the Bridge Notes with each Purchaser receiving such Purchaser's Proportionate Share of such principal.

(d) after all amounts required to be paid pursuant to Section 2.01 hereof have been paid in full, to the payment to the Guarantors or their heirs, executors, administrators, successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

2.10 FURTHER ASSURANCES. Each Guarantor agrees that, from time to time upon the written request of the Agent, such Guarantor will execute and deliver such further documents and do such other acts and things as the Agent may reasonably request in order fully to effect the purposes of this Agreement.

Section 3. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and warrants to the Purchasers and the Agent that:

3.01 NO BREACH. None of the execution and delivery of this Agreement, the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which any Guarantor is a party or by which any Guarantor is bound or to which any Guarantor is subject, or constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any Guarantor's earnings or assets pursuant to the terms of any such agreement or instrument.

3.02 BINDING OBLIGATION. This Agreement has been duly and validly executed and delivered by each Guarantor and constitutes his legal, valid and binding obligation, enforceable in accordance with its terms.

3.03 APPROVALS. No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by any Guarantor of this Agreement or for the validity or enforceability hereof.

3.04 TAXES. Each Guarantor has filed all federal income tax returns and all other material tax returns which are required to be filed by such Guarantor and has paid all taxes due and payable by such Guarantor except for any such taxes the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.

Section 4. COVENANTS. Each Guarantor agrees that, until the payment and satisfaction in full of the Guaranteed Obligations:


4.01 TAXES. Each Guarantor will pay and discharge all taxes, assessments and governmental charges or levies imposed on him or upon his earnings or assets.

4.02 LITIGATION AND OTHER NOTICES. Each Guarantor will promptly give to each Purchaser notice of the following:

(a) all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, affecting the Guarantor; and

(b) any business or organization in which the Guarantor becomes engaged in, or otherwise directly or indirectly becomes employed by, or acts as a consultant or Purchaser to, or becomes a director, officer, employee, owner, or partner of, other than the ownership or not more than 5% of the outstanding common stock of a corporation, if, at the time of its acquisition by the Guarantor such stock is listed on a national securities exchange or the Nasdaq Stock Market.

Section 5. MISCELLANEOUS.

5.01 NO WAIVER. No failure on the part of the Agent to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Agent preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Agent and the Purchasers shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by such parties.

5.02 GOVERNING LAW. This Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

5.03 ENTIRE AGREEMENT; WAIVER OF JURY TRIAL, ETC.

(a) This Agreement and the other Transaction Agreements constitute the entire contract between the parties hereto relative to the subject matter hereof. Any previous agreement among the


parties hereto with respect to the transactions contemplated by the Purchase Agreement is superseded by this Agreement, the Purchase Agreement and the other Transaction Agreements. Except as expressly provided herein or in the other Transaction Agreements, nothing in this Agreement or in the other Transaction Agreements, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement the other Transaction Agreements.

(b) Except as prohibited by law, each party hereto hereby waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement and the other Transaction Agreements.

(c) Except as prohibited by law, each party hereto hereby waives any right it may have to claim or recover in any litigation referred to in paragraph
(b) of this Section 5.04 any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages.

(d) Each party hereto (i) certifies that no representative, agent or attorney of the Agent or any Purchaser has represented, expressly or otherwise, that the Agent or such Purchaser would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that it has been induced to enter into this Agreement or the other Transaction Agreements, as applicable, by, among other things, the mutual waivers and certifications herein.

5.04 NOTICES. Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:,

(a) if to Henry Fahman, c/o Providential Holdings, Inc., 8700 Warner Avenue, Fountain Valley, California 92708, Facsimile: (714) 596-0252, in each case with a copy (which shall not constitute notice) to Dieterich & Associates, 11300 W. Olympic Blvd, Suite 800, Los Angeles, CA 90064-1637, attention:
Christopher H. Dieterich, Esq., Fax: (310) 312-6680.

(b) if to the Agent, c/o Sovereign Capital Advisors, LLC, 3340 Peachtree Road, N.E., Suite 1965, Atlanta, Georgia 30326, Attention: Paul Hamm, Facsimile: (404) 812-3738; with a copy (which shall not constitute notice) to Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New York 10017, Attention: Michael D. Schwamm, Esq.; and

(c) if to any Purchaser, at the address set forth below its name on such Purchaser's Signature Page to the Purchase Agreement with a copy (which shall not constitute notice) to the such Purchaser's legal counsel as set forth on such Purchaser's Signature Page to the Purchase Agreement.

Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number.


5.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, successors and permitted assigns of each Guarantor, the Agent and the Purchasers.

5.06 WAIVERS, AMENDMENTS, ETC. The provisions contained herein are for the benefit of the Purchasers and their respective successors and assigns and may not be rescinded or canceled or modified in any way, nor, unless otherwise expressly provided for herein, may any provision of this Agreement be waived or changed without the express prior written consent thereto of the Agent.

5.07 FURTHER ASSURANCES. Each Guarantor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Agent may at any time reasonably request in connection with the administration and enforcement of this Agreement or in order better to assure and confirm unto the Agent its rights and remedies hereunder.

5.08 SURVIVAL. All covenants, agreements, representations and warranties made by each Guarantor herein and in the certificates or other instruments prepared or delivered in connection with this Agreement shall be considered to have been relied upon by the Purchasers and shall survive the purchase by the Purchasers of Bridge Notes and the execution and delivery to the Purchasers of the Purchase Agreement.

5.09 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective when copies hereof which, when taken together, bear the signatures of each of the parties hereto shall be delivered to the Agent. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed signature page hereto.

5.10 SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the remaining provisions contained herein shall not in any way be affected or impaired.

5.11 JOINT AND SEVERAL OBLIGATIONS. The obligations of each of the Guarantors contained herein shall be joint and several.

5.12 SECTION HEADINGS. Section headings used herein are for convenience of reference only and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

5.13 TERMINATION. This Agreement shall terminate when all the Bridge Notes and any other Guaranteed Obligations have been fully and indefeasibly paid in cash.

IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed and delivered as of the day and year first above written.


GUARANTOR SIGNATURE PAGE
TO
GUARANTY AGREEMENT

GUARANTORS:

/s/  Henry Fahman
-----------------
Henry Fahman


AGENT SIGNATURE PAGE
TO
GUARANTY AGREEMENT

AGENT:

SOVCAP EQUITY PARTNERS, LTD, AS AGENT

By: /s/  Barry W. Herman
   ---------------------

Barry W. Herman, President


Exhibit 10.4

FORM OF PLEDGE AGREEMENT

PLEDGE AGREEMENT, dated as of March 28, 2000, among, Henry Fahman (each sometimes referred to herein as a "Grantor" and collectively as the "Grantors") and SovCap Equity Partners, Ltd, a corporation organized under the laws of the Bahamas, as Agent (the "Agent") for the purchasers (the "Purchasers") listed on the Purchaser Signature Pages to the Purchase Agreement (as hereinafter defined).

A. The Purchasers have agreed to purchase Secured Convertible Series 1 Bridge Notes (the "Bridge Notes") from Providential Holdings, Inc., a Nevada corporation (the "Company") pursuant to, and subject to the terms and conditions of, a Series 1 Bridge Note and Security Agreement (the "Purchase Agreement").

B. The obligations of the Company under the Bridge Notes are secured pursuant to the terms of a by a guaranty agreement (the "Guaranty") dated of the date hereof between from the Grantors and the Agent, as agent for the Purchasers, of the obligations of the Company under the Bridge Notes.

C. The obligation of the Purchasers to purchase the Bridge Notes is conditioned upon, among other things, the execution and delivery by the Grantors of a pledge agreement to secure the Guaranteed Obligations (as defined in the Guaranty).

D. Capitalized terms used herein and not defined herein shall have the respective meanings assigned to such terms in the Purchase Agreement.

Accordingly, the Grantors and the Agent hereby agree as follows:

1. PLEDGE. As security for the payment and performance in full of the Guaranteed Obligations, each Grantor hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over, endorses over, and delivers unto the Agent, and grants to the Agent, for the benefit of the Purchasers, a security interest in, (a) the shares of capital stock listed in Schedule I annexed hereto next to such Grantor's name (the "Initial Pledged Stock") and any additional shares of common stock of the issuer listed in Schedule I annexed hereto obtained in the future by the Grantors (collectively, the Initial Pledged Stock together with all such additional shares pledged in the future, the "Pledged Stock"), and (b) subject to Section 5 below, all proceeds of the Pledged Stock, including, without limitation, all cash, securities or other property at any time and from time to time receivable or otherwise distributed in respect of or in exchange for any of or all such Pledged Stock (the items referred to in clauses (a) and (b) being collectively called the "Collateral"). Upon delivery to the Agent, any securities now or hereafter included in the Collateral including, without limitation, the Pledged Stock (the "Pledged Securities") shall be accompanied by undated stock powers duly executed in blank or other instruments of transfer satisfactory to the Agent and by such other instruments and documents as the Agent may reasonably request. Each delivery of Pledged


Securities shall be accompanied by a schedule showing a description of the securities theretofore and then being pledged hereunder, which schedule shall be attached hereto as Schedule I and made a part hereof. Each schedule so delivered shall supersede any prior schedules so delivered.

2. DELIVERY OF COLLATERAL. Each Grantor agrees to deliver promptly or cause to be delivered to the Agent any and all Pledged Securities, and any and all certificates or other instruments or documents representing any of the Collateral (together with any necessary endorsement).

3. REPRESENTATIONS WARRANTIES AND COVENANTS. Each Grantor hereby represents, warrants and covenants to and with the Agent that:

(a) except for the security interest granted to the Agent, each Grantor
(i) is and, subject to the provisions of the Purchase Agreement, will at all times continue to be the direct owner, beneficially and of record, of the Pledged Securities that it is pledging hereunder, (ii) holds the Collateral that it is pledging hereunder free and clear of all Liens, charges, encumbrances and security interests of every kind and nature, (iii) will make no assignment, pledge, hypothecation or, subject to the provisions of the Purchase Agreement, transfer of, or create any security interest in, the Collateral that it is pledging hereunder, and (iv) subject to Section 5 below, will cause any and all Collateral, whether for value paid by a Grantor or otherwise, to be forthwith deposited with the Agent and pledged or assigned hereunder;

(b) each Grantor (i) has good right and legal authority to pledge the Collateral it is pledging hereunder in the manner hereby done or contemplated,
(ii) will not amend, modify or supplement any Pledged Security without the prior written consent of the Agent, and (iii) will defend its title or interest thereto or therein against any and all attachments, liens, claims, encumbrances, security interests or other impediments of any nature, however arising, of all persons whomsoever;

(c) no consent or approval of any governmental body or regulatory authority or any securities exchange was or is necessary to the validity of the pledge effected hereby;

(d) by virtue of the execution and delivery by each Grantor of this Agreement, when the certificates, instruments or other documents representing or evidencing the Collateral are delivered to the Agent in accordance with this Agreement, the Agent will obtain a valid and perfected first lien upon and security interest in such Collateral as security for the repayment of the Guaranteed Obligations, prior to all other liens and encumbrances thereon and security interests therein;

(e) the pledge effected hereby is effective to vest in the Agent the rights of the Agent in the Collateral as set forth herein; and

(f) all representations, warranties and covenants of the Grantors contained in this Agreement shall survive the execution, delivery and performance of this Agreement until the termination of this Agreement pursuant to Section 14 hereof.

4. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right (in its sole and absolute discretion with subsequent notice to the Grantors) to transfer to or to register the Pledged Securities in its own name or the name of its nominee. In addition, the Agent shall at all times have the right to exchange


the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

5. VOTING RIGHTS; DIVIDENDS; ETC.

(a) Unless and until an Event of Default hereunder shall have occurred and be continuing:

(i) Each Grantor shall be entitled to exercise any and all voting and/or consensual rights and powers accruing to an owner of Pledged Securities or any part thereof for any purpose not inconsistent with the terms of this Agreement and the Purchase Agreement provided that such action would not adversely affect the rights inuring to the Agent or the Purchasers under this Agreement or the Purchase Agreement or adversely affect the rights and remedies of the Agent or the Purchasers under this Agreement or the Purchase Agreement or the ability of the Agent or the Purchasers to exercise the same.

(ii) The Agent shall execute and deliver to the Grantors, or cause to be executed and delivered to the Grantors, all such proxies, powers of attorney, and other instruments as the Grantors may reasonably request for the purpose of enabling the Grantors to exercise the voting and/or consensual rights and powers which they are entitled to exercise pursuant to subparagraph (i) above.

(iii) The Grantors shall be entitled to receive and retain any and all cash dividends paid on the Pledged Securities only to the extent that such cash dividends are permitted by, and otherwise paid in accordance with the terms and conditions of, Section 7.3 of the Purchase Agreement and applicable laws. Any and all (a) noncash dividends, (b) stock or dividends paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, and
(c) instruments, securities, other distributions in property, return of capital, capital surplus or paid-in surplus or other distributions made on or in respect of Pledged Securities (other than dividends permitted by this Section 5(a)(iii)), whether paid or payable in cash or otherwise, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Collateral, and, if received by the Grantor, shall not be commingled by any Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Agent and the Purchasers and shall be forthwith delivered to the Agent in the same form as so received (with any necessary endorsement).

(b) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to receive any dividends which such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all such rights shall thereupon become vested in the Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends. All dividends which are received by any Grantor contrary to the provisions of this Section 5(b) shall be received in trust for the benefit of the Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Agent as Collateral in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Agent pursuant to the provisions of this Section 5 shall be retained by the Agent in an account to


be established by the Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 8 hereof.

(c) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to exercise the voting and consensual rights and powers which it is entitled to exercise pursuant to Section 5(a)(i) shall cease, and all such rights shall thereupon become vested in the Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers.

6. ISSUANCE OF ADDITIONAL STOCK. Each Grantor agrees that it will cause the Company not to issue any stock or other securities, whether in addition to, by stock dividend or other distribution upon, or in substitution for, the Pledged Securities or otherwise.

7. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have occurred and be continuing, the Agent may sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Agent shall deem appropriate. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Agent shall give the applicable Grantor 10 days' written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in New York on the date hereof) of the Agent's intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Agent may (in its sole and absolute discretion) determine. The Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Agent until the sale price is paid by the purchaser or purchasers thereof, but the Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public sale made pursuant to this Section 7, Agent or any Purchaser may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), with respect to the Collateral or any part thereof offered for sale and Agent or any such Purchaser may make payment on account thereof by using any claim then due and payable to Agent or any such Purchaser from such Grantor as a credit against the purchase price, and Agent or any such Purchaser may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Grantor therefor. For purposes hereof, a written


agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Agent shall be free to carry out such sale and purchase pursuant to such agreement, and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Guaranteed Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.

8. APPLICATION OF PROCEEDS OF SALE. The proceeds of any sale of Collateral, as well as any Collateral consisting of cash, shall be applied by the Agent in the following order:

(a) to the expenses incurred in effecting such recovery or in enforcing any right or remedy under this Agreement, the Guaranty or any of the other Transaction Agreements, and any other expenses theretofore incurred by the Agent and not previously reimbursed by the Company;

(b) to accrued interest, payable by the Company, according to Purchaser's Proportionate Share of the accrued interest on the Bridge Notes; and

(c) to the unpaid principal of the Bridge Notes with each Purchaser receiving such Purchaser's Proportionate Share of such principal.

(d) after all amounts required to be paid pursuant to this Agreement have been paid in full, to the payment to the Grantors or their heirs, executors, administrators, successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

9. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby appoints the Agent its attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Agent's name or in the name of such Grantor, to ask for, demand, sue for, collect, receive receipt and give acquittance for any and all moneys due or to become due and under and by virtue of any Collateral, to endorse checks, drafts, orders and other instruments for the payment of money payable to the applicable Grantor representing any interest or dividend, or other distribution payable in respect of the Collateral or any part thereof or on account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating the Agent or the Purchasers to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Agent or the Purchasers, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken by the Agent or the Purchasers or omitted to be taken with respect to the Collateral or any part thereof shall give rise to any defense, counterclaim or offset in favor of any Grantor or to any claim or action against the Agent or the Purchasers in the absence of the gross negligence or willful misconduct of the Agent or the Purchasers.


10. NO WAIVER. No failure on the part of the Agent to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Agent preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Agent and the Purchasers shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by such parties.

11. REGISTRATION, ETC. Each Grantor agrees that, upon the occurrence and during the continuance of an Event of Default hereunder, if for any reason the Agent desires to sell any of the Pledged Securities at a public sale, it will, at any time and from time to time, upon the written request of the Agent, take or to cause the issuer of such Pledged Securities to take such action and to prepare, distribute and/or file such documents, as are required or advisable in the opinion of counsel for the Agent to permit the public sale of such Pledged Securities. Each Grantor further agrees to indemnify, defend and hold harmless the Agent and the Purchasers and any underwriter and their respective officers, directors, affiliates and controlling persons (within the meaning of Section 20 of the Securities Exchange Act of 1934) from and against all loss, liability, expenses, costs, fees and disbursements of counsel (including, without limitation, a reasonable estimate of the cost to the Agent of legal counsel), and claims (including the costs of investigation) which they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same arises out of any untrue statement or omission based upon information furnished in writing to the applicable Grantor or the issuer of such Pledged Securities by the Agent, any Purchaser or the underwriter expressly for use therein. The Agent (with respect to such information furnished by it) or such Purchaser (with respect to such information furnished by it) shall indemnify, defend and hold harmless the Grantor or the issuer or such Pledged Securities and their respective officers, directors, affiliates and controlling persons (within the meaning of Section 20 of the Securities Exchange Act of 1934) upon the same terms as are applicable to the Grantor pursuant hereto. Each Grantor further agrees to use its best efforts to qualify, file or register, or cause the issuer of such Pledged Securities to qualify, file or register, any of the Pledged Securities under the blue sky or other securities laws of such states as may be requested by the Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. Each Grantor will bear all costs and expenses of carrying out its obligations under this Section 11. Each Grantor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this
Section 11 and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section 11 may be specifically enforced.

12. SECURITY INTEREST ABSOLUTE. All rights of the Agent hereunder, the grant of a security interest in the Collateral and all obligations of the Grantors hereunder, shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of any of the Transaction Agreements, any agreement with respect to any of the Guaranteed Obligations or any other agreement or instrument relating to any of the foregoing, (ii) any change in time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to any departure from any of the Transaction Agreements or any other agreement or instrument, (iii) any exchange, release or nonperfection of any other collateral, or any release or amendment or waiver of or consent to or departure from any guarantee,


for all or any of the Guaranteed Obligations or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Guaranteed Obligations or in respect of this Agreement.

13. AGENT'S FEES AND EXPENSES. The Grantors shall be jointly and severally obligated to, upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts or agents which the Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Agent hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof. In addition, Grantors jointly and severally indemnify and hold the Agent and the Purchasers harmless from and against any and all liability incurred by the Agent or the Purchasers hereunder or in connection herewith, unless such liability shall be due to the gross negligence or willful misconduct of the Agent or the Purchasers, as the case may be. Any such amounts payable as provided hereunder or thereunder shall be additional Guaranteed Obligations secured hereby and by the Purchase Agreement.

14. TERMINATION. This Agreement shall terminate when all the Bridge Notes and the other Guaranteed Obligations have been fully and indefeasibly paid in cash, at which time the Agent shall reassign and deliver to the Grantors, or to such person or persons as the Grantors shall designate, against receipt, such of the Collateral (if any) as shall not have been sold or as is otherwise still be held by it hereunder, together with appropriate instruments of reassignment and release; provided, however, that all indemnities of the Grantors contained in this Agreement shall survive, and remain operative and in full force and effect regardless of, the termination of this Agreement. Any such reassignment shall be without recourse to or warranty by the Agent and at the expense of the Grantors.

15. NOTICES. Any notice, consent, waiver, or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided, that a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

(a) if to Henry Fahman, c/o Providential Holdings, Inc., 8700 Warner Avenue, Fountain Valley, California 92708, Facsimile: (714) 596-0252, in each case with a copy (which shall not constitute notice) to Dieterich & Associates, 11300 W. Olympic Blvd, Suite 800, Los Angeles, CA 90064-1637, attention:
Christopher H. Dieterich, Esq., Fax: (310) 312-6680.

(b) if to the Agent, c/o Sovereign Capital Advisors, LLC, 3340 Peachtree Road, N.E., Suite 1965, Atlanta, Georgia 30326, Attention: Paul Hamm, Facsimile: (404) 812-3738; with a copy (which shall not constitute notice) to Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New York 10017, Attention: Michael D. Schwamm, Esq.; and

(c) if to any Purchaser, at the address set forth below its name on such Purchaser's Signature Page to the Purchase Agreement, with a copy (which shall not constitute notice) to the such Purchaser's legal counsel as set forth on such Purchaser's Signature Page to the Purchase Agreement.


Each party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number.

16. FURTHER ASSURANCES. Each Grantor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Agent may at any time reasonably request in connection with the administration and enforcement of this Agreement or with respect to the Collateral or any part thereof or in order better to assure and confirm unto the Agent its rights and remedies hereunder.

17. BINDING AGREEMENT; ASSIGNMENTS. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Grantor shall be permitted to assign this Agreement or any interest herein or in the Collateral, or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Collateral, or any part thereof, or any cash or property held by the Agent as Collateral under this Agreement.

18. GOVERNING LAW. This Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

19. ENTIRE AGREEMENT; WAIVER OF JURY TRIAL, ETC.

(a) This Agreement and the other Transaction Agreements constitute the entire contract between the parties hereto relative to the subject matter hereof. Any previous agreement among the parties hereto with respect to the transactions contemplated by the Purchase Agreement is superseded by this Agreement, the Purchase Agreement and the other Transaction Agreements. Except as expressly provided herein or in the other Transaction Agreements, nothing in this Agreement or in the other Transaction Agreements, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement the other Transaction Agreements.

(b) Except as prohibited by law, each party hereto hereby waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement and the other Transaction Agreements.


(c) Except as prohibited by law, each party hereto hereby waives any right it may have to claim or recover in any litigation referred to in paragraph
(b) of this Section 19, any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages.

(d) Each party hereto (i) certifies that no representative, agent or attorney of the Agent or any Purchaser has represented, expressly or otherwise, that the Agent or such Purchaser would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that it has been induced to enter into this Agreement or the other Transaction Agreements, as applicable, by, among other things, the mutual waivers and certifications herein.

20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, successors and permitted assigns of each Guarantor, the Agent and the Purchasers.

21. WAIVERS, AMENDMENTS, ETC. The provisions contained herein are for the benefit of the Purchasers and their respective successors and assigns and may not be rescinded or canceled or modified in any way, nor, unless otherwise expressly provided for herein, may any provision of this Agreement be waived or changed without the express prior written consent thereto of the Agent.

22. FURTHER ASSURANCES. Each Grantor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Agent may at any time reasonably request in connection with the administration and enforcement of this Agreement or in order better to assure and confirm unto the Agent its rights and remedies hereunder.

23. SURVIVAL. All covenants, agreements, representations and warranties made by each Grantor herein and in the certificates or other instruments prepared or delivered in connection with this Agreement shall be considered to have been relied upon by the Purchasers and shall survive the purchase by the Purchasers of Bridge Notes and the execution and delivery to the Purchasers of the Purchase Agreement.

24. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective when copies hereof which, when taken together, bear the signatures of each of the parties hereto shall be delivered to the Agent. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed signature page hereto.

25. SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the remaining provisions contained herein shall not in any way be affected or impaired.

26. JOINT AND SEVERAL OBLIGATIONS. The obligations of each of the Guarantors contained herein shall be joint and several.


27. SECTION HEADINGS. Section headings used herein are for convenience of reference only and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge Agreement as of the day and year first above written.

GRANTOR SIGNATURE PAGE
TO
PLEDGE AGREEMENT

GRANTORS:

/s/  Henry Fahman
-----------------
Henry Fahman


AGENT SIGNATURE PAGE
TO
PLEDGE AGREEMENT

AGENT:

SOVCAP EQUITY PARTNERS, LTD, AS AGENT

By: /s/  Barry W. Herman
------------------------

Barry W. Herman, President


EXHIBIT 10.5

PARTNERSHIP PURCHASE AGREEMENT

THIS PARTNERSHIP PURCHASE AGREEMENT (this "AGREEMENT") is made as of
September 22, 2000 by and among Providential Holdings, Inc. ("Buyer") and Daniel E. Collins, Inc. ("D. Collins"), Walter J. Bankovitch, Inc. ("Bankovitch"), the Estate of Robert M. Collins, ("R. Collins"), Samuel Rankin, Jr. ("Rankin") and Robert J. Solon ("Solon"), hereinafter collectively called "Sellers" or "Partners."

BASIC TRANSACTION

The Sellers have been and now are Partners doing business under the firm name of Holt & Collins, hereinafter referred to as "the Partnership," with principal place of business at Bayside Plaza, 188 The Embarcadero, Suite 760, San Francisco, California 94105-1298. Sellers entered into and have continued in the Partnership under the provisions of a written Restated General Partnership Agreement made on January 1, 1982. A copy of that agreement is attached as Exhibit 1. Except as provided herein, Sellers represent and warrant that no other person or entity has any interest or claim of right to a partnership interest in the partnership. The percentage interest of each partner is set forth in attached Exhibit 2. This Agreement contemplates a transaction in which, pursuant to the terms and subject to the conditions set forth herein, Buyer will purchase from the Sellers, and the Sellers will sell to Buyer, all of their interest in their Partnership, except as provided in this agreement, in exchange for cash, as set forth below. This Agreement also contemplates that the Buyer will assume and become liable for all of the debts, liabilities and

1

obligations of the Partnership, whether accrued, absolute or contingent, except as provided in this Agreement. The partners have the duty to disclose all debts, liabilities, and obligations of the partnership, and the Buyer will not assume any debts, liabilities and obligations of the Partnership unless they have been fully disclosed by the time of the definitive agreement signing.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

SECTION 1. PURCHASE AND SALE OF PARTNERSHIP.

(a) PURCHASE AND SALE. Pursuant to the terms and subject to the conditions set forth herein, at the Closing (as defined below), the Sellers shall sell and transfer to Buyer and Buyer shall purchase from the Sellers the Partner's interest in the Partnership for an aggregate purchase price as determined pursuant to Section 1(c) below.

(i) EXCLUDED ASSETS. Notwithstanding the foregoing, the assets of the Partnership not included in the transaction are listed in Exhibit 3 hereto. In addition, it is expresly agreed that the Partners, subsequent to the closing of the transaction but not earlier than December 31, 2000, shall retain the right to the name of the Partnership, i.e. Holt & Collins and the Partners' respective retail customers and customers lists which shall be assigned to Partners effective on or before December 31, 2000.

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(b) THE CLOSING.

(i) THE CLOSING DATE. The closing of the purchase and sale of the Partnership (the "CLOSING") shall take place at the offices of Dreher, Garfinkle & Watson at 8:00 a.m. local time on or before November 1, 2000, or as extended pursuant to this agreement, but no later than January 31, 2001. The date of the Closing hereunder is referred to herein as the "CLOSING DATE."

(ii) CLOSING PROCEDURES. Subject to the conditions set forth in this Agreement:

(A) at Closing, the Sellers shall deliver to Buyer possession of the assets of Holt & Collins transferred to Buyer under this agreement; and

(B) at Closing, Buyer shall deliver to the Sellers a cashier's or certified check, or wire transfer of immediately available funds to an account designated by the Sellers at least 2 days prior to the Closing Date, in the amount of $1,500,000.00 plus an amount equal to the net worth of Holt & Collins as calculated on May 31, 2000 or on the date of the most recently filed Focus Report on file with the NASD-Washington office, whichever date is later ("PRELIMINARY NET WORTH"). This payment will be reduced by any non-refundable deposits paid to Partners prior to closing. Sellers acknowledge receipt of a non-refundable deposit of $50,000.00 on June 2, 2000. Upon signing this Agreement, Buyer will deposit an additional

3

non-refundable deposit of $75,000.00 into an escrow account at the Bank of San Francisco to be paid to the Holt & Collins' partners if this transaction is terminated as provided herein. If for any reason the closing does not occur on or before December 31, 2000 or extended to January 31, 2001 as provided herein, this contract shall terminate and the partners shall be entitled to receive the $75,000.00 from the Bank of San Francisco and shall not be required to refund it to Buyer. Prior to December 31, 2000, Buyer shall have the option of extending the termination date of December 31, 2000 to January 31, 2001 by depositing an additional non-refundable deposit of $50,000.00 into the escrow account at the Bank of San Francisco to be paid to the Holt & Collins' partners if this transaction is terminated as provided herein. In the event that the Buyer exercises the option to extend the termination date to January 31, 2001, if for any reason the closing does not occur on or before January 31, 2001 this contract shall terminate and the partners shall be entitled to receive the additional $50,000.00 from the Bank of San Francisco and shall not be required to refund it to Buyer.

(c) THE PURCHASE PRICE. The purchase price for Partner's interest in the Partnership is $1,500,000.00 plus the net worth of Holt & Collins as of the Closing Date.

(i) Within 30 days after the Closing Date, Buyer will cause to be prepared and delivered to Sellers a draft statement (the "DRAFT CLOSING STATEMENT") setting forth the Net Worth as of the Closing Date immediately prior to giving

4

effect to the transactions contemplated hereby (the "CLOSING NET WORTH"). For purposes of this paragraph, "NET WORTH" means the total assets of the Partnership minus the total liabilities of the Partnership determined in accordance with generally accepted accounting principles. Any adjustments to the "Net Worth" of the Partnership must be agreed to in writing prior to the closing of the transaction (e.g. payment of subordinated debt and return of stock pledged).

(ii) If Sellers disagree with the computation of Closing Net Worth reflected on the Draft Closing Statement, Sellers may, within 15 days after receipt of the Draft Closing Statement, deliver a written notice (an "OBJECTION NOTICE") to Buyer setting forth Sellers' calculation of Closing Net Worth. The Objection Notice shall specifically state and shall only state those items or amounts as to which the Sellers disagree and the basis of such disagreement, and each Seller shall be deemed to have agreed with all other items and amounts contained in the calculation of Closing Net Worth on the Draft Closing Statement. If an Objection Notice is not delivered within such time period, then the amount of Closing Net Worth set forth in the Draft Balance Sheet shall be conclusive and binding upon the Parties.

(iii) If an Objection Notice is delivered within such time period, Buyer and Sellers shall, during the 15 days following the receipt by Buyer of such notice, use their reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Net Worth, but if they do not obtain a final resolution within 15 days after Buyer has received the

5

Objection Notice, Buyer and Sellers will jointly retain an independent accounting firm (the "FIRM") to resolve any remaining disagreements. Buyer and Sellers shall direct the Firm to render a determination within 30 days of its retention and the Parties and their respective employees shall cooperate with the Firm during its engagement. The Firm shall consider only those items and amounts in the Draft Balance Sheet set forth in the Objection Notice which Buyer and Sellers are unable to resolve. The Firm's determination shall be based on the definition of Closing Net Worth included herein. The determination of the Firm will be conclusive and binding upon the Parties. The cost of such review and report by the Firm shall be borne equally by Buyer and Seller.

(iv) Buyer and Sellers agree that they will, and agree to cause their respective independent accountants and Company to, cooperate and assist in the preparation of the Draft Closing Statement and the calculation of Closing Net Worth and in the conduct of the audits and reviews referred to in this Section, including without limitation, the making available to the extent necessary of books, records, work papers and personnel.

(d) THE POST-CLOSING ADJUSTMENT PAYMENT.

(i) PAYMENT BY BUYER. If the Closing Net Worth is greater than the Preliminary Net Worth, Buyer shall, within 3 days after the date the Closing Net Worth is determined under and in accordance with the above, deliver to the Sellers a check, or wire transfer of immediately available funds to an account designated by the Sellers, in an aggregate amount

6

equal to the excess of the Closing Net Worth over the Preliminary Net Worth.

(ii) PAYMENT BY THE SELLERS. If the Closing Net Worth is less than Preliminary Net Worth, the Sellers shall (in proportion to their interests sold), within 3 days after the date the Closing Net Worth is determined under and in accordance with the above, deliver to Buyer a check, or wire transfer of immediately available funds to an account designated by Buyer, in an aggregate amount equal to the excess of the Preliminary Net Worth over the Closing Net Worth.

SECTION 2. COVENANTS OF THE SELLERS.

(a) AFFIRMATIVE COVENANTS OF THE SELLERS. Prior to the Closing Date, each of the Sellers covenant and agree as follows:

(i) The Sellers will cause the Partnership to, and the Partnership will, conduct its business in the ordinary course of business. Without limiting the generality of the foregoing, the Sellers will cause the Partnership to maintain its books and records, pay expenses and payables, bill customers, collect receivables, purchase inventory, perform all maintenance and repairs necessary to maintain its facilities and equipment in good operating condition (normal wear and tear excepted), replace inoperable, worn out or obsolete assets with assets of comparable quality, maintain an appropriate level of insurance, in each case, in the ordinary

7

course of business in accordance with past custom and practice;

(ii) The Sellers will, and will cause the Partnership to, use reasonable best efforts to preserve present business relationships, to the extent such relationships are beneficial to the Partnership and its business, and, except as otherwise directed by Buyer, to encourage the Partnership's employees to continue their employment with the Partnership both before and after the Closing;

(iii) The Sellers will, and will cause the Partnership and its employees and agents (including attorneys and accountants) to, permit Buyer employees, agents, accounting and legal representatives and its and their representatives to have reasonable access at reasonable times to the Partnership's books, records, invoices, contracts, leases, personnel, facilities, equipment and other things reasonably related to the business and assets of the Partnership, wherever located;

(iv) The Partnership and each Seller will promptly (once it has knowledge thereof) inform Buyer in writing of any variances from the representations and warranties contained in this Agreement or any breach of any covenant hereunder by any of the Sellers or the Partnership;

(v) The Sellers will, and will cause the Partnership to, and the Partnership will, cooperate with Buyer and use their reasonable best efforts to make all filings and applications,

8

to give all notices and to obtain all Consents necessary for the consummation of the transactions contemplated by this agreement.

(b) NEGATIVE COVENANTS OF THE SELLERS. Prior to the Closing, without Buyer's prior written consent, the Sellers will not, and will not cause the Partnership to:

(i) except as expressly contemplated by this Agreement, take or omit to take any action which, individually or in the aggregate, could be reasonably anticipated to have a material adverse effect upon the business, financial condition, operating results, employee relations, customer relations, assets, operations, rights or business prospects of the Partnership; and

(ii) sell, lease, license or otherwise dispose of any interest in any of the Partnership's tangible or intangible assets other than in the ordinary course of business, or permit any of the Partnership's assets or property to be subjected to any Lien; and

(iii) except as expressly contemplated by this Agreement, terminate, modify or amend any material Contract or any Consent of, with or to any Governmental Entity or enter into any new material Contract, or amend the Partnership's documents or agreement.

SECTION 3. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to consummate the transactions to be

9

performed by it in connection with the Closing is subject to the satisfaction of the following conditions as of the Closing:

(a) COMPLIANCE WITH LEGAL REQUIREMENTS. The consummation of the transactions contemplated by the transaction will not be prohibited by any Legal Requirement or subject Buyer or the Partnership to any penalty or liability or other onerous condition arising under any Legal Requirement or imposed by any Governmental Entity.

(b) CONSENTS. All filings, notices, licenses and other Consents of, to or with, any regulatory entity that are required for (i) the consummation of the transactions contemplated by the transaction; or (ii) for the conduct of the business of Partnership as heretofore conducted, will have been duly made or obtained by the Buyers and Sellers from, including but not limited to the National Association of Securities Dealers, National Securities Clearing Corporation/Depository Trust Company and Pacific Exchange. All filings, notices, licenses and other Consents, as the case may be, must be filed within 3 business days after the signing of this agreement. The parties will cooperate, in good faith, in providing all information to the regulatory entity or entities as is required. Further, it is agreed that time is of the essence in obtaining the required regulatory approvals. It is therefore agreed that if the regulatory entities request information and documentation from the parties, the requested information and documentation will be provided within 30 calender days from the date of the request from the regulatory entities. Buyer's failure to provide the requested information within 30 days will be a breach of this agreement and in this event, the non-refundable

10

deposits of $75,000.00 and $50,000.00 referred to in Section 1(b)(ii)(B) shall be immediately released by the Bank of San Francisco and paid to the Partners, unless otherwise extended by the Partners.

(c) EMPLOYMENT OR INDEPENDENT CONTRACTOR AGREEMENTS. The partners of Holt & Collins and Buyer will execute, on closing, agreements retaining the partners as employees or independent contractors of Buyer pursuant to the terms and conditions agreed to between the parties prior to closing.

(d) APPROVAL OF BOARD OF DIRECTORS OF BUYER. The board of directors of Buyer shall have approved the consummation of the transactions contemplated by this Agreement.

(e) DUE DILIGENCE. Buyer is satisfied in all material respects with the results of its business, legal, and accounting due diligence investigation and review of the Partnership.

SECTION 4. CONDITIONS TO OBLIGATION OF SELLERS. The obligation of the Sellers to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions as of the Closing:

(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer set forth in Section 6 shall be true and correct at and as of the Closing Date.

(b) PERFORMANCE OF COVENANTS. Buyer shall have performed in all material respects all of the covenants and agreements required

11

to be performed by it under this Agreement on or prior to the Closing Date.

(c) OFFICER'S CERTIFICATE. Buyer shall have delivered to the Sellers a certificate to the effect that each of the conditions specified in Section 4(a) and 4(b) have been satisfied.

(d) ASSUMPTION AGREEMENT. Buyer shall deliver to Seller an Assumption Agreement in the form of Exhibit 4 hereto.

The Sellers may waive any condition specified in this Section 4 if it executes a writing so stating at or prior to the Closing.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. As a material inducement to Buyer to enter into and perform its obligations under this Agreement, Sellers jointly and severally represent and warrant to Buyer that the statements contained in this Section 5 are true and correct as of the date hereof and will be true and correct as of the Closing Date.

(a) ORGANIZATION OF PARTNERSHIP. The Partnership is a California general partnership, duly organized and validly existing under the laws of the State of California.

(b) AUTHORIZATION; NO BREACH. The execution, delivery and performance of the transaction to which the Partnership or any of the Sellers is a party, have been duly authorized by the Partnership or the Sellers, as the case may be.

12

(c) FINANCIAL STATEMENTS. Attached hereto as Exhibit 5 is the unaudited balance sheets of the Partnership as of December 31, 1999 and March 31, 2000. The foregoing financial statements are consistent with the books and records of the Partnership (which, in turn, are accurate and complete in all material respects) and present fairly the financial condition of the Partnership in accordance with GAAP. Since the date of the Latest Balance Sheet, there has not been any material change in the business, assets, financial condition, operating results, employee relations, customer or manager relations or business prospects of the Partnership not otherwise disclosed.

(d) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set in Exhibit 6, the Partnership has no Liability and, to the knowledge of the Partnership and the Sellers, there is no basis for any proceeding, hearing, investigation, charge, complaint or claim with respect to any Liability, except for (i) Liabilities reflected on the face of Latest Balance Sheet, and (ii) Liabilities which have arisen since the date of the Latest Balance Sheet in the ordinary course of business (none of which relates to breach of contract, breach of warranty, tort, infringement, violation of or liability under any Legal Requirements, or any action, suit or proceeding and none of which is material individually or in the aggregate).

(e) ASSETS. Except as set forth on the attached Exhibit 7, the Partnership has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises or shown on the Latest Balance Sheet or acquired thereafter, free and clear of all Liens, except for properties and assets disposed of in the ordinary course of

13

business since the date of the Latest Balance Sheet for fair value and except for Liens disclosed on the Latest Balance Sheet (including any notes thereto) and Liens for current property taxes not yet due and payable.

(f) CONTRACTS AND COMMITMENTS.

(i) Except as expressly contemplated by this Agreement or as set forth on the attached Exhibit 8, the Partnership is not a party to or bound by any written or oral contract in excess of $10,000 individually or in the aggregate exceeding $50,000.

(ii) With respect to the Partnership's obligations thereunder and, with respect to the obligations of the other parties thereto, all of the Contracts set forth or required to be set forth on the attached Exhibit 8 or any other Schedule hereto are valid, binding and enforceable in accordance with their respective terms. The Partnership has performed all material obligations required to be performed by it under such Contracts and is not in default under or in breach of nor in receipt of any claim of default or breach under any such Contracts; no event has occurred which with the passage of time or the giving of notice or both would result in a default, breach or event of noncompliance by Partnership under any such Contracts; and, to the knowledge of Partnership and the Sellers, the Partnership is not a party to any Contract requiring it to purchase or sell goods or services or lease property above or below (as the case may be) prevailing market prices and rates.

14

(iii) A true, correct and complete copy of each of the written Contracts referred to on the attached Exhibit 8 have been made available to Buyer.

(g) LITIGATION, ETC. Except as set forth on the attached Exhibit 9 and except where the liability of which is fully covered by Partnership's insurance policies or programs, there are no actions, suits, proceedings, orders, investigations or claims pending or threatened against or affecting the Sellers or the Partnership (or pending or threatened against or affecting any of the employees of the Partnership with respect to the Partnership's businesses or proposed business activities), or pending or threatened by the Partnership or the Sellers against any third party, at law or in equity, or before or by any Governmental Entity (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by the transaction); neither the Sellers nor the Partnership are subject to any arbitration proceedings under collective bargaining Contracts or otherwise or, any governmental investigations or inquiries; and, there is no valid basis for any of the foregoing. Neither the Sellers nor the Partnership are subject to any judgment, order or decree of any court or other Governmental Entity, and neither the Sellers nor the Partnership have received any opinion or memorandum or legal advice from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage which may be material to its business.

(h) INSURANCE. The attached Exhibit 10 lists and briefly describes each insurance policy maintained for or on behalf of the Partnership with respect to its properties, assets and business.

15

All of such insurance policies are in full force and effect, and no default exists with respect to the obligations of the Partnership or the Sellers under any such insurance policies and neither the Sellers nor the Partnership has received any notification of cancellation of any of such insurance policies. The insurance coverage of the Partnership is of a type and amount customary for entities of similar size engaged in similar lines of business.

(i) EMPLOYEES. Except as set forth on the attached Exhibit 11 neither the Partnership nor the Sellers is aware that any executive or key employee of the Partnership or any group of employees of the Partnership has any plans to terminate employment with the Partnership. Neither the Partnership nor, to the Partnership's and the Sellers' knowledge, any of the Partnership's employees is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar Contracts relating to, affecting or in conflict with the present or proposed business activities of the Partnership.

(j) COMPLIANCE WITH LAWS. Except as set forth on the attached Exhibit 12, the Partnership has complied with and is currently in compliance with all applicable laws, ordinances, codes, rules, requirements, regulations and other Legal Requirements of all Governmental Entities relating to the operation and conduct of its businesses or any of its properties or facilities, including all Legal Requirements relating to employment of labor, and neither the Partnership nor any Seller has received notice of any violation of any of the foregoing.

(k) REAL PROPERTY. The Partnership does not own any Real

16

Property. The attached Exhibit 13 lists all real property leased by the Partnership (such property is referred to herein as the "LEASED PREMISES"). The Leased Premises is the only real estate leased by The Partnership. The lease under which Partnership leases the Leased Premises is in full force and effect has been reviewed by Buyer, and which Buyer agrees to assume prior to the closing of this transaction.

(l) LEGAL COMPLIANCE. The items described on Exhibit 14 constitute all of the permits, filings, notices, licenses, consents, authorizations, accreditation, waivers, approvals and the like of, to or with any Governmental Entity or any other Person (collectively, the "CONSENTS") which are required for the consummation of the transactions contemplated by the transaction or the ownership of the assets or the conduct of the business of the Partnership.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement to the Sellers to enter into and perform their respective obligations under this Agreement, Buyer represents and warrants that the statements contained in this Section 6 are true and correct as of the date hereof and will be true and correct as of the Closing Date.

(A) ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.

(B) AUTHORIZATION OF TRANSACTION. Buyer has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement

17

constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions.

(c) NONCONTRAVENTION. The execution, delivery and performance of the transaction to which Buyer is a party do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) require any authorization, consent, approval, exemption or other action by or declaration or notice to any Governmental Entity pursuant to, the charter or bylaws of Buyer or any material agreement, instrument or other document, or any material Legal Requirement, to which Buyer or its assets is subject.

SECTION 7. ADDITIONAL AGREEMENTS.

(a) EXPENSES. Except as otherwise provided herein, Buyer shall pay its own, and the Partnership shall prior to Closing pay the Seller's expenses (including fees and expenses of legal counsel, or other representatives and consultants) incurred in connection with or related to the sales process, the negotiation of this Agreement, the performance of its (and in the case of the Sellers, the Partnership's) obligations hereunder and thereunder, and the consummation of the transactions contemplated by this Agreement.

(b) ASSUMED LIABILITIES. Notwithstanding anything to the contrary in this Agreement, Buyer shall assume and become liable for all of the debts, liabilities or obligations of Seller, whether

18

accrued, absolute or contingent, whether known or unknown, whether due or to become due and regardless of when or by whom asserted (including but not limited to (i) the Lease at Bayside Plaza, 188 The Embarcadero, Suite 760, San Francisco, California 94105, which is hereby assigned by Seller and assumed by Buyer and (ii) accounts payable and other current liabilities as of the Closing Date incurred in the ordinary course of business of Partnership including, without limitation any debt, liability or obligation of Partnership arising out of or related to facts, events, transactions, circumstances or occurrences arising on or prior to the Closing Date.

(c) CONFIDENTIALITY. Each Party and each of its shareholders, partners, officers, directors and Affiliates shall keep confidential all information and materials regarding this Agreement and shall not be disclosed to anyone except to a required regulatory body as required herein.

SECTION 8. REMEDIES FOR BREACHES OF THIS AGREEMENT.

(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing.

(b) INDEMNIFICATION PROVISIONS. Except as provided herein, the partners of Holt & Collins will agree to protect, save, defend, indemnify, and hold harmless Buyer from and against any and all expenses, damages, claims, suits, action, judgments, and/or costs whatsoever, including attorney's fees, arising out of, or in any

19

way connected with, any claim or action arising out of Holt & Collins business activities prior to closing and/or performance under this Agreement. The provisions of this section shall survive any termination or expiration of this Agreement.

Buyer will agree to protect, save, defend, indemnify, and hold harmless the partners from and against any and all expenses, damages, claims, suits, action, judgments, and/or costs whatsoever, including attorney's fees, arising out of, or in any way connected with, any claim or action arising out of the Buyer's business activities of Holt & Collins subsequent to closing and/or performance under Agreement. The provisions of this section shall survive any termination or expiration of this Agreement.

(c) MANNER OF PAYMENT. Any indemnification of the Buyer Parties or the Sellers pursuant to this Section 8 shall be effected by cashier's or certified check or by wire transfer of immediately available funds from Buyer or the Sellers, as the case may be, to an account designated by Sellers or the Buyer, as the case may be, within 10 days after the determination of indemnification amounts. Any such indemnification payments shall include interest at the rate of 8% per annum from the date any such Adverse Consequence is suffered or sustained to the date of such payment is due pursuant to this Section 8.2(c) and interest at a rate of 10% thereafter until such Adverse Consequences are fully paid. Interest on any such unpaid amount shall be compounded semi-annually, computed on the basis of a 360-day year. Any indemnification payments made pursuant to this Agreement shall be deemed to be adjustments to the Purchase Price for tax purposes.

20

SECTION 9. DEFINITIONS.

"ADVERSE CONSEQUENCES" means, with respect to any Person, any diminution in value, consequential or other damage, Liability, demand, claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense, whether or not arising out of a third party claim, including all interest, penalties, reasonable attorneys' fees and expenses and all amounts paid or incurred in connection with any action, demand, proceeding, investigation or claim by any third party (including any Governmental Entity) against or affecting such Person or which, if determined adversely to such Person, would give rise to, evidence the existence of, or relate to, any other Adverse Consequences and the investigation, defense or settlement of any of the foregoing.

"CONTRACT" means any agreement, contract, instrument, commitment, lease, guaranty, indenture, license, or other arrangement or understanding between parties or by one party in favor of another party, whether written or oral.

"GAAP" means United States generally accepted accounting principles.

"GOVERNMENTAL ENTITY" means the United States of America, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

"LIABILITY" means any liability, debt, obligation, deficiency, Tax penalty, fine, claim, cause of action or other

21

loss, cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due or become due and regardless of when asserted.

"LEGAL REQUIREMENT" means any requirement arising under any law, rule or regulation or any determination or direction of any arbitrator or any Governmental Entity.

"ORDINARY COURSE OF BUSINESS" means the ordinary course of the Partnership's business consistent with past custom and practice, including as to frequency and amount.

"PARTY" means any party hereto.

SECTION 10. MISCELLANEOUS.

(a) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

(b) ENTIRE AGREEMENT. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes the letter of intent dated May 31, 2000, and any prior understandings, agreements or representations by or between the Parties, written or oral, that may have related in any way to the subject matter hereof.

(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their

22

respective successors and permitted assigns, but neither this Agreement nor any of the rights or obligations hereunder may be assigned (whether by operation of law, through a change in control or otherwise) by the Partnership or the Sellers without the prior written consent of Buyer, or by Buyer (except as otherwise provided in this Agreement) without the prior written consent of the Sellers. Buyer may (at any time prior to the Closing), at its sole discretion, assign, in whole or in part, its rights and obligations pursuant to this Agreement to one or more of its Affiliates. For purposes hereof, Buyer's "Affiliates" include Affiliates which may be organized subsequent to the date hereof. Buyer may assign all or any portion of this Agreement and the other agreements contemplated hereby (including rights hereunder and thereunder), including its rights to indemnification, to any of its or its Affiliates' (whether prior to or subsequent to the Closing) lenders as collateral security. After the Closing, Buyer may assign this Agreement and its rights and obligations hereunder in connection with a (i) merger or consolidation involving Buyer or any of its Affiliates, (ii) a sale of stock or assets of Buyer or any of its Affiliates or
(iii) dispositions of the business of the Partnership or any part thereof.

(d) COUNTERPARTS. This Partnership Purchase Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(e) HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

23

(f) NOTICES. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given when delivered personally to the recipient or sent to the recipient by telecopy (receipt confirmed) or by reputable express courier service (charges prepaid), and addressed to the intended recipients as set forth below:

If to the Sellers:

Daniel E. Collins
188 The Embarcadero, Suite 760
San Francisco, CA 94105-1298

Walter J. Bankovitch
188 The Embarcadero, Suite 760
San Francisco, CA 94105-1298

WITH A COPY TO:
Dreher, Garfinkle & Watson
44 Montgomery Street, Suite 3585
San Francisco, CA 94104

IF TO BUYER:

Providential Holdings, Inc.
8700 Warner Avenue
Fountain Valley, CA 92708

24

WITH A COPY TO:
Shivbir S. Grewal, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660

Any Party may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means, but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

(g) GOVERNING LAW AND ARBITRATION. This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of California. All disputes between Buyer and the Seller hereunder shall be settled by arbitration before a single arbitration pursuant to the rules of the American Arbitration Association, in San Francisco, California; provided, however, that
(a) the parties shall be permitted to have discovery in accordance with the Federal Rules of Civil Procedure and (b) any award pursuant to such arbitration shall be accompanied by a written opinion of the arbitrator giving the reasons for the award. A request for arbitration shall be evidenced by the party requesting arbitration giving notice of the intention to arbitrate

25

in accordance with the provisions of Section 10(f) hereof. The arbitrator shall be selected by the joint agreement of Buyer and Seller, but if they do not so agree within 20 days of the date of a request for arbitration, the selection shall be made pursuant to the rules of the American Arbitration Association. The award rendered by the arbitrator shall be final, conclusive and binding upon the parties hereto, and judgment upon the award rendered may be entered by a California Court having jurisdiction. Each party waives any right of appeal it may have. Nothing herein set forth shall prevent Buyer and Seller from settling any dispute by mutual agreement at any time.

(h) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Parties hereto. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

(i) INCORPORATION OF SCHEDULES. The Exhibits identified in this Agreement are incorporated herein by reference and made a part hereof.

(j) SEVERABILITY OF PROVISIONS. If any covenant, agreement, provision or term of this Agreement is held to be invalid for any reason whatsoever, then such covenant, agreement, provision or term will be deemed severable from the remaining covenants, agreements, provisions and terms of this Agreement and will in no way affect

26

the validity or enforceability of any other provision of this Agreement.

(k) SUCCESSOR LAWS. Any reference to any particular Code section or any other Legal Requirement will be interpreted to include any revision of or successor to that section regardless of how it is numbered or classified.

(l) DELIVERY BY FACSIMILE. This Agreement and any signed Contract entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original Contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such Contract, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such Contract shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or Contract was transmitted or communicated through the use of facsimile machine as a defense to the formation of a Contract and each such party forever waives any such defense.

(m) ATTORNEY FEE AND COST PROVISION. In the event that either party hereto shall commence any action or arbitration proceeding against the other party hereto arising out of or in connection with this Agreement, or contesting the validity of this Agreement or any provision hereof, the prevailing party shall be entitled to recover from the other party reasonable attorney's fees and related costs,

27

fees and expenses incurred by the prevailing party in connection with such action or proceeding.

(n) SOFTWARE. Upon signing of the definitive agreement, Holt and Collins consents and agrees to facilitate and allow the representatives of Providential to have access to Holt and Collins technical operations system. The purpose of the access is to test a software compatibility developed by Providential Technology, Inc. with the currently existing Holt & Collins back office software vendor. The details of the testing will be outlined under a separate agreement between the Parties. The closing of the transaction is not contingent on the software and/or hardware compatibility.

* * * * *

28

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

"Buyer":              Providential Holdings, Inc.



                      By:___________________________

                      Title:________________________



"Seller":             Daniel E. Collins, Inc.


                      By:___________________________

                      Title:________________________


                      Walter J. Bankovitch, Inc.


                      By:__________________________

                      Title:_______________________


                      Estate of Robert M. Collins


                      By: Margaret R. Collins
                      Title: Special Administrator


                      -----------------------------
                      Samuel Rankin, Jr.


                      -----------------------------
                      Robert J. Solon

29

LIST OF EXHIBITS

Exhibits            Description
--------            -----------
1                   Partnership Agreement
2                   % Interest
3                   Excluded Assets
4                   Assumption Agreement
5                   Financials
6                   Liability Disclosure
7                   Assets
8                   Contracts
9                   Litigation
10                  Insurance
11                  Employees
12                  Compliance With Law
13                  Leases
14                  Permits/Licenses

30

SUBSIDIARIES OF THE COMPANY

Providential Securities, Inc., a California corporation.

Providential Clearing, Inc., a California corporation


EXHIBIT 23.1

September 21, 2000

U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Providential Holdings, Inc. - Form SB-2

Dear Sir or Madame:

As an independent Certified Public Accountant, I hereby consent to the incorporation, by reference in this Registration Statement on Form SB-2, of my report dated March 27, 2000 on the fiscal year ended December 31, 1999 and 1998 for Providential Securities, Inc. and to all references to my firm included in this Registration Statement.

Sincerely,

/s/  Daniel J. Holland

Certified Public Accountant


EXHIBIT 23.2

[ADD SYCR CONSENT]

August 7, 2000

U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Providential Holdings, Inc. - Form SB-2

Dear Sir/Madame:

I have acted as counsel to Providential Holdings, Inc., a Nevada corporation ("Company"), in connection with its Registration Statement on Form SB-2 relating to the registration of 60,119,823 shares of its common stock ("Shares"), $0.04 par value per Share. I hereby consent to all references to my firm included in this Registration Statement, including the opinion of legality.

Sincerely,

/s/  Shivbir S. Grewal
----------------------

Shivbir S. Grewal, Esq.


ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED FINANCIAL STATEMENTS CONTAINED IN THIS FORM SB-2 FOR THE PERIOD ENDED JUNE 30, 1999 AND THE UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THIS FORM SB-2 FOR THE THREE MONTHS ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
MULTIPLIER: 1,000


PERIOD TYPE YEAR 3 MOS
FISCAL YEAR END JUN 30 1999 DEC 31 2000
PERIOD START JUL 01 1998 JAN 01 2000
PERIOD END JUN 30 1999 MAR 31 2000
CASH 1 844
SECURITIES 0 0
RECEIVABLES 1,202 1,749
ALLOWANCES 158 0
INVENTORY 0 7
CURRENT ASSETS 1,355 3,241
PP&E 349 2,019
DEPRECIATION 0 0
TOTAL ASSETS 2,306 34,335
CURRENT LIABILITIES 2,591 1,660
BONDS 0 0
PREFERRED MANDATORY 0 0
PREFERRED 1,150 615
COMMON 535 20
OTHER SE (1,955) 28,320
TOTAL LIABILITY AND EQUITY 2,306 34,335
SALES 1,814 2,641
TOTAL REVENUES 1,814 2,641
CGS 0 0
TOTAL COSTS 0 0
OTHER EXPENSES 3,059 3,580
LOSS PROVISION 0 0
INTEREST EXPENSE 1 35
INCOME PRETAX (1,246) (497)
INCOME TAX 0 179
INCOME CONTINUING (1,246) (676)
DISCONTINUED (64) 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET INCOME (1,310) (676)
EPS BASIC (.09) (.02)
EPS DILUTED (.10) (.02)