Forward-looking statements

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report on Form 10-Q. This quarterly report on Form 10-Q contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this discussion, including, without limitation, statements containing the words "believes," "anticipates," "expects" and the like, constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, as we issue "penny stock," as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained herein to reflect future events or developments.

Currency and exchange rate

Unless otherwise noted, all currency figures quoted as "U.S. dollars", "dollars" or "$" refer to the legal currency of the United States. References to "MYR" are to the Malaysian Ringgit, the legal currency of Malaysia. Throughout this report, assets and liabilities of the Company's subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders' equity.

Overview

History

We were incorporated in the state of Nevada on January 26, 2009, to serve as a holding company for our former smart home business, which was conducted through our former subsidiary, Home Touch Limited, a Hong Kong Special Administrative Region of China corporation, or HTL. We acquired HTL on January 26, 2009, through a share exchange transaction in which we exchanged 40,000,000 shares of our Common Stock for 10,000 shares of HTL common stock. HTL was originally organized under the name Lexing Group Limited in July 2004 and was renamed Home Touch Limited in 2005.

On July 15, 2010, we effectuated a 1-for-20 reverse stock split, or the Reverse Split, of all issued and outstanding shares of the Company's Common Stock in connection with our plans to attract additional financing and potential business opportunities. As a result of the Reverse Split, our issued and outstanding shares decreased from 40,000,000 to 2,000,000.

Change in Control, Disposition of Smart Home Business, Acquisition of M-Commerce Business and Name Change

On November 15, 2010, we consummated the sale to certain accredited investors of an aggregate of 80,000,000 shares of our Common Stock at a per share price of $0.01, or $800,000 in the aggregate, and experienced a change of control. David Ng and Stella Wai Yau resigned from their positions as President and Chief Executive Officer of the Company, and as Chief Financial Officer, Chief Operating Officer and Secretary of the Company, and the following individuals were appointed to serve as executive officers and directors of the Company effective November 15, 2010:

Name Office
Weng Kung Wong Chief Executive Officer, Director Liong Tat Teh Chief Financial Officer, Director Sek Fong Wong Secretary, Director

On December 6, 2010, we acquired Union Hub Technology Sdn. Bhd., or UHT, a company organized under the laws of Malaysia that was engaged in the design, development and operation of technologies to enable a community of users to engage in social networking, research and e-commerce on a mobile platform, or the m-commerce business, in consideration of 16,500,000 shares of our common stock, par value $0.001 per share. Wooi Khang Pua and Kok Wai Chai, the former shareholders of UHT, are current directors of UHT, and each beneficially owns 4.98% of our issued and outstanding common stock.

Concurrently with the acquisition of UHT, we sold to Up Pride Investments Limited, a British Virgin Islands limited liability company owned by David Gunawan Ng, and Magicsuccess Investments Limited, a British Virgin Islands limited liability company owned by Stella Wai Yau, all of the issued and outstanding securities of HTL for cash consideration of $20,000. In connection with the sale, Mr. Ng and Ms. Yau, our former founders and executive officers, resigned from their positions on our board of directors. Our smart home business was conducted through HTL, and as result of the sale, we ceased our smart home business operations.

On January 25, 2011, we changed our name to Prime Global Capital Group Incorporated and increased our authorized capital to 1,000,000,000 shares of common stock and 100,000,000 shares of preferred stock.

Transition to Oilseeds Business

Our initial business plan broadly encompassed the development, distribution and operation of mobile and online social networking, ecommerce and search products and services. To generate revenue, in July 2010 we began providing IT consulting, programming and website development services to related and unrelated customers located in Malaysia and one customer in Singapore, all of whom were generated through the personal relationships of our executive officers. We were not able to launch our m-commerce platform in fiscal year 2011 and, excluding the provision of IT, programming and web development services, did not generate any revenue from our m-commerce business.

As a result of the challenges we experienced in implementing our m-commerce business plan, we began seeking business opportunities in the oilseeds industry in fiscal year 2011 with a specific focus on the acquisition, lease or management of existing castor seed and oil palm plantations located in Asia. In August 2011, we entered into a binding Memorandum of Understanding to acquire a mature palm oil plantation through the acquisition of VSSB, our VIE. We expect to consummate the acquisition of the palm oil plantation and VSSB by the third quarter of 2012.

We also entered into a trial planting arrangement with Srira Cha province, Thailand, for the cultivation of castor plants in December 2011. Upon a successful trial planting, we anticipate entering into a five year contract farming arrangement with Srira Cha province involving up to 500,000 Rai of land with the goal of building and operating two castor processing plants during such five year period. We hope to commence trial planting by the third quarter of 2012.

Anticipated Real Estate Business

On March 30, 2012, we purchased a 99-year leasehold covering 21.8921 hectares (54.10 acres) of vacant land in Kuala Lumpur, Malaysia through public auction. We intend to develop the land for commercial and or residential purposes upon the consummation of the sale. We are required to consummate the purchase within 120 days of March 30, 2012. The leasehold expires July 30, 2100.

In April 2012, we agreed to acquire Dunford Corporation Sdn. Bhd., or Dunford, for RM 55,000,000. Dunford's primary assets consist of two parcels of vacant land located in Selangor, Malaysia and assets related to Dunford's insurance agency and secretarial services businesses. Upon the consummation of the acquisition, we intend to dispose of the insurance agency and secretarial services business. We hope to consummate the Dunford acquisition during the third quarter of 2012.

We also acquired for nominal consideration a dormant company Max Trend International Limited, a Hong Kong limited liability company, or Max Trend. Max Trend owns Shenzhen Max Trend Green Energy Company Limited, a wholly foreign owned enterprise under the laws of the People's Republic of China, or SMTG, which is also dormant. We hope to operate a portion of our anticipated real estate business through Max Trend or SMTG.

We intend to commence development of commercial and or residential projects upon the consummation of our land purchases. We hope that our real estate projects will become a significant source of revenue for us in the future. There can be no assurance, however, that we will be able to successfully consummate such acquisitions or develop such properties in the near future.

We will require approximately $10,000 to initiate trial planting of castor plants and $19.9 to consummate our real estate purchases. Our cash balance as of April 30, 2012, was approximately $9.2 million. Consistent with past practice, we hope to obtain the necessary additional financing from our shareholders, executive officers and directors or through external financing. We are currently conducting internal discussions to obtain the necessary financing, however, there can be no assurance that we will be able to obtain sufficient funds on acceptable terms to timely meet our obligations.

Approval to Initiate Uplisting Process and Transition to Large Accelerated Filer Status

On December 12, 2011, our board of directors approved, authorized and directed our officers to initiate the process for listing shares of the Company's common stock on one or more U.S. national securities exchanges including the NYSE Amex Equities Exchange.

As of April 30, 2012, we became a large accelerated filer.

Results of Operations

In response to our challenges in implementing our m-commerce business plan, we elected to cease all m-commerce activities except for the provision of IT consulting, programming and website development services in 2011. We also decided to limit distribution of consumer goods to opportunities that are readily available. As a result, during the three and six months ended April 30, 2012, we did not generate revenue from our distribution business and derived all of our revenue from: (i) the provision of IT consulting, programming and website development services; and (ii) our oilseeds business.

We expect this trend to continue until such time as we consummate our anticipated real estate purchases and begin our real estate business. At such point, we anticipate generating revenue from real estate related activities. If we are not able to replace the lost income through our oilseeds business, and if begun, our real estate business, our revenues, operating results and financial condition may be materially and adversely affected. In fiscal year ended October 31, 2011, software and consumer goods sales accounted for approximately 77% and 20% of our total net revenue.

Comparison of the three months ended April 30, 2012 to the three months ended April 30, 2011

The following table shows our revenues by type for the three months ended April 30, 2012, compared to the three months ended April 30, 2011.

                                        For the Three Months Ended
                                                April 30,                   $             %
                                          2012              2011          Change        Change

Net Revenues                          $  614,728       $   496,456     $  118,272         23.8 %
  Software sales                          10,739           487,662       (476,923 )      (97.8 %)
  Product sales                                -             8,794        (8,794)         (100 %)
  Plantation sales                       603,989                 -        603,989           NM
Total cost of revenue                   (129,037 )        (117,865 )      (11,172 )        9.5 %
  Related party                                -           (97,623 )      (97,623 )        100 %
  Unrelated party                       (129,037 )         (20,242 )     (108,795 )      500.5 %
Gross profit                             485,691           378,591        107,100         28.3 %
General and administrative expenses     (312,417 )        (146,211 )     (166,206 )      113.7 %
Income before income taxes               455,172           231,884        223,288         96.3 %
Income tax expense                      (107,657 )         (64,559 )      (43,098 )      (66.8 %)
Net income                               347,515           167,325        180,190        107.7 %

*NM means not meaningful

Our m-commerce and consumer distribution products businesses are operated through UHT. Our oilseeds business is operated through Virtual Setup Sdn. Bhd., or VSSB, our VIE., and Max Trend International Limited, or Max Trend. Our anticipated real estate business will be operated through PGCG Assets Holdings Sdn. Bhd., a wholly owned subsidiary of UHT.

Revenue.We generated net revenue of $614,728 for the three months ended April 30, 2012 with plantation sales accounting for $603,989, or approximately 98.3% of net revenues, and software sales accounting for $10,739, or approximately 1.7% of net revenues. For the same period ended April 30, 2011, we generated net revenue of $496,456 with software sales accounting for $487,662, or approximately 98.2% of net revenues, and product sales accounting for $8,794, or approximately 1.8% of net revenues. The decrease in net revenue from our software and product distribution businesses is a direct result of our shift away from these business segments and our focus on our oilseeds business. We expect this trend to continue on a going forward basis.

Cost of Revenue. Our cost of revenue as a percentage of net revenue was approximately 21% for the three months ended April 30, 2012, as compared to approximately 24% for the same period in 2011. The slight decrease is primarily attributable to the reduction in our product distribution business as offset by our increased focus on our oilseeds business. Cost of revenue consisted primarily of the costs related to the palm oil business such as rental on plantation land, material supplies and subcontracting costs incurred for planting, fertilizing and harvesting the palm oil tree. Shipping and handling costs associated with the distribution of fresh fruit bunches to the customers are also included in cost of revenues. We expect our cost of revenue to increase in the near future as we enter into harvest season and begin distribution of castor seeds.

Gross Profit. We achieved a gross profit of $485,691 for the three months ended April 30, 2012, as compared to $378,591 for the same period in 2011. The increase is attributable to the increase in revenues generated by our oilseeds business during the three months ended April 30, 2012.

General and Administrative Expenses ("G&A"). We incurred G&A expenses of $312,417 for the three months ended April 30, 2012, representing an increase of $166,206, as compared to $146,211 for the three months ended April 30, 2011. The increase in G&A is primarily attributable to the marketing expenses incurred to promote our oilseeds business, consultancy fees incurred for uplisting process and fees incurred in connection with our annual shareholders meeting. G&A as a percentage of net revenue was approximately 50.8% for the three months ended April 30, 2012.

Other Income (Expense). We incurred other income of $281,898 for the three months ended April 30, 2012, as compared to an expense of $496 for the three months ended April 30, 2011. The increase in other income is attributable primarily to realized gain on sale of marketable securities of $327,157 and interest income of $5,672.

Income Tax Expense. We recorded income tax expense of $107,657 for the three months ended April 30, 2012, as compared to $64,559 for the same period ended April 30, 2011. The increase is primarily attributable to the increase in revenue generated from our operations during the three months ended April 30, 2012.

Comparison of the six months ended April 30, 2012 to the six months ended April 30, 2011

The following table shows our revenues by type for the six months ended April 30, 2012, compared to the six months ended April 30, 2011.

                                         For the Six Months Ended
                                                 April 30,                   $             %
                                          2012              2011           Change        Change

Net Revenues                          $  863,124       $  1,240,461     $ (377,337 )      (30.4 %)
  Software sales                         209,897            487,984       (278,087 )        (57 %)
  Product sales                                -            752,477       (743,683 )       (100 %)
  Plantation sales                       653,227                  -        653,227           NM
Total cost of revenue                   (193,401 )         (704,114 )     (510,713 )      (72.5 %)
  Related party                                -            (97,623 )      (97,623 )       (100 %)
  Unrelated party                       (193,401 )         (606,491 )     (413,090 )      (68.1 %)
Gross profit                             669,723            536,347         26,276           17 %
General and administrative expenses     (616,989 )         (256,538 )      360,451        140.5 %
Income before income taxes               400,685            278,828        121,857         43.7 %
Income tax expense                      (119,366 )          (88,497 )       30,869         34.9 %
Net (loss) income                        281,319            190,331         90,988         47.8 %

*NM means not meaningful

Revenue.We generated net revenue of $863,124 for the six months ended April 30, 2012 with plantation sales accounting for $653,227, or approximately 75.7% of net revenues and software sales accounting for $209,897, or approximately 24.3% of net revenues. For the same period ended April 30, 2011, we generated net revenue of $1,240,461 with product sales accounting for $752,477, or approximately 60.7% of net revenues, and software sales accounting for $487,984, or approximately 39.3% of net revenues. The decrease in net revenue from our software and product distribution businesses is a direct result of our shift away from these business segments and our focus on our oilseeds business. We expect this trend to continue on a going forward basis.

Cost of Revenue. Our cost of revenue as a percentage of net revenue was approximately 22.4% for the six months ended April 30, 2012, as compared to approximately 56.8% for the same period in 2011. The decrease is primarily attributable to the reduction in our product distribution business. Cost of revenue consisted primarily of the costs related to the palm oil business such as rental on plantation land, material supplies and subcontracting costs incurred for planting, fertilizing and harvesting the palm oil tree. Shipping and handling costs associated with the distribution of fresh fruit bunches to the customers are also included in cost of revenues.

Gross Profit. We achieved a gross profit of $669,723 for the six months ended April 30, 2012, as compared to $536,347 for the same period in 2011. The increase is attributable to the reduction in our product distribution business during the six months ended April 30, 2012.

General and Administrative Expenses ("G&A"). We incurred G&A expenses of $616,989 for the six months ended April 30, 2012, representing an increase of $360,451, as compared to $256,538 for the six months ended April 301, 2011. The increase in G&A is primarily attributable to the marketing expenses incurred to promote our oilseeds business, consultancy fees incurred for uplisting process and fees incurred in connection with our annual shareholders meeting. G&A as a percentage of net revenue was approximately 71,5% for the six months ended April 30, 2012.

Other Income (Expense). We incurred other income of $347,951 for the six months ended April 30, 2012, as compared to an expense of $981 for the six months ended April 30, 2011. The increase in other income is attributable primarily to realized gain on sale of marketable securities of $386,030 and interest income derived from cash held in our brokerage account of $10,458.

Income Tax Expense. We recorded income tax expense of $119,366 for the six months ended April 30, 2012, as compared to $88,497 for the same period ended April 30, 2011. The increase is primarily attributable to the increase in income generated from our operations during the six months ended April 30, 2012.

Liquidity and Capital Resources

Sources of Liquidity. For the six months ended April 30, 2012, we generated net income of $334,965 as compared to a net income of $190,331 for the same period ended April 30, 2011. During the six month period ended April 30, 2012, and up to the date of this Quarterly Report, we have financed our operations through private placements of our common stock as summarized below:

Private Placement Transactions                       Gross Proceeds
Sale of 667,780 shares of common stock on 2/16/2012      $2,000,000
Sale of 1,076,000 shares of common stock on 3/6/2012     $3,210,784
Sale of 628,000 shares of common stock on 4/3/2012        1,813,036
Sale of 540,000 shares of common stock on 5/2/2012        1,518,480
Total:                                                   $8,542,300

Net Cash Used in Operating Activities. For the six months ended April 30, 2012, net cash used in operating activities was $329,536, which consisted primarily of net income of $281,319, an increase in income tax payable of 112,644, depreciation of $28,051, and an increase in accrued liabilities and other payables of $19,010, offset by an decrease in deposits and other receivables of $441,492 and realized gain on sale of marketable securities of $386,030.

For the six months ended April 30, 2011, net cash provided by operating activities was $380,273, which consisted primarily of net income of $190,331, a decrease of accounts receivables of $106,506, an increase in income tax payable of $88,497, and depreciation of $17,451 offset by a decrease in accounts payable of $19,525, and a decrease in deposits and other receivables of $10,262.

Net Cash Used in Investing Activities. For the six months ended April 30, 2012, net cash used in investing activities was $1,547,555, consisting primarily of proceeds derived from the sale of marketable securities of $3,114,660, cash held by our newly acquired subsidiary Max Trend International and proceeds from the disposal of plant and equipment of $9,036, offset by the purchase of marketable securities of $2,653,208, payments made on investment deposits of $1,774,961
(which is the deposit made in connection with our anticipated Dunford purchase)
and deposits of $406,627 made in connection with our anticipated land purchases in Malaysia.

For the six months ended April 30, 2011, net cash used in investing activities was $1,037,451, $969,022 of which was attributable to the purchase of marketable securities and $68,429 to the purchase of plant and equipment.

Net Cash Provided By Financing Activities. For the six months ended April 30, 2012, net cash provided by financing activities was $8,529,453, consisting proceeds in the amount of $7,023,820 from the sale of our securities and advances from Mr. Wong, our Chief Executive Officer and director in the amount of $5,355, offset by advances to related parties made in connection with the formation of new subsidiaries in the amount of $2,758 and repayment of $4,151 on a finance lease.

For the six months ended April 30, 2011, net cash provided by financing activities was $4,843,544, consisting primarily of $4,800,000 from the sale of our common stock, $47,835 of advances from Mr. Wong, our Chief Executive Officer and director, and offset by repayments of $4,291 on a finance lease.

Funding Requirements. We incurred a conditional obligation of approximately $19.9 million related to the consummation of our real estate purchases. We have paid all amounts due to consummate our palm oil plantation acquisition and expect to acquire VSSB by the end of our third fiscal quarter. We also expect to consummate our real estate acquisitions by the end of the third calendar quarter of 2012.

We also expect our general and administrative expenses to increase as we expand our finance and administrative staff, add infrastructure, and incur additional costs related to being a large accelerated filer, including directors' and officers' insurance and increased professional fees.

Our cash balance as of April 30, 2012, was approximately $9.2 million. Consistent with past practice, we hope to obtain the necessary additional financing from our shareholders, executive officers and directors or through external financing. We are currently conducting internal discussions to obtain the necessary financing, however, there can be no assurance that we will be able to obtain sufficient funds on acceptable terms to consummate our real estate acquisitions.

If we fail to consummate the acquisition of our real estate parcels, we will forfeit our deposits of MYR 1,260,000 and 5,500,000. We believe that the net proceeds from our recent private placement transactions, together with our existing cash, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the end of calendar 2012 if we are not required to consummate our real estate acquisitions. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, especially if we acquire one or more businesses or choose to expand our product development efforts more rapidly than we presently anticipate. In addition, we may decide to raise additional funds even before we need them if the conditions for raising capital are favorable. In such event, we may finance our future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements. We may also seek to sell additional equity or debt securities or obtain one or more credit facilities. We do not currently have any commitments for future internal or external funding.

Off-Balance Sheet Arrangements

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following accounting policies are critical in the preparation of our financial statements.

l Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

l Basis of consolidation

. . .