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 completed a 1-for-20 reverse stock split, or the Reverse Split, of all issued and our outstanding shares of 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:

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 and Scale Back of M-Commerce Business

Our initial business plan broadly encompassed the development, distribution and operation of mobile and online social networking, ecommerce and search products and services. However, 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. On May 29, 2012, we consummated our acquisition of VSSB and the palm oil plantation and VSSB became our wholly owned subsidiary.

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 first quarter of 2013.

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. SMTG began operations during the quarter ended July 31, 2012 and sells castor seeding and provides technical know-how under a bundled sales arrangement.

We scaled back our m-commerce activities except for the provision of IT consulting, programming and website development services related to software previously sold. We expect to continue to engage in limited after sales consulting/website development activities and to engage in future sales activities only if such opportunities become readily available.

We expect to continue distributing consumer goods only if such opportunities become readily available. We do not expect to invest significantly in our consumer product distribution operations and, accordingly, have not generated any revenue from this business segment during the nine months ended July 31, 2012.

Our Real Estate Business

In March 2012, we began our real estate business operations which consist of the acquisition, development, management, operation and sale of commercial and residential real estate properties located in Malaysia, primarily in Kuala Lumpur and Selangor. We anticipate generating revenues from sales of developed properties and from rental income from our commercial properties. Developed property sales can include condominium units, individual villas and bungalows at our future Shah Alam 2 Eco Residential development project and Bandar Sungai Long High Grade Villas development project located in Selangor, Malaysia. We may also sell properties under development, undeveloped properties or commercial properties, if opportunities arise that we believe will maximize overall asset values.

Recent Acquisitions and Anticipated Purchases

On July 26, 2012, PGCG Assets Holdings Sdn. Bhd., (a wholly owned subsidiary of our wholly owned subsidiary Union Hub Technology Sdn. Bhd.), or PGCG Assets, consummated the purchase of 21.8921 hectares (54.10 acres) of vacant development land located in Selangor, Malaysia, or the Land. PCGC Assets was the successful bidder at a public auction held on March 30, 2012, in Kuala Lumpur, Malaysia, for the Land, which was acquired on an "As Is Where Is" basis. The land is subject to a 99-year leasehold, expiring July 30, 2100, and was sold for MYR12,660,000.

In April 2012, we agreed to acquire Dunford Corporation Sdn. Bhd., or Dunford, for MYR55,000,000. Dunford's primary assets consist of two parcels of undeveloped land located in Selangor, Malaysia aggregating approximately 31 acres (the "Dunford Parcels") and assets related to Dunford's insurance agency and secretarial services businesses. On or prior to the consummation of the acquisition, we expect the insurance agency and secretarial services business to be transferred out of Dunford or otherwise disposed. We intend to develop the Dunford Parcels land for commercial and residential purposes and hope to consummate this purchase by the end of calendar year 2012.

In August 2012, we executed Sales and Purchase Agreements to purchase a 15 story commercial building located at Geran 10010, Lot 238 Section 43, Town and District of Kuala Lumpur, Wilayah Persekutuan, Kuala Lumpur, Malaysia at a purchase price of US MYR81,500,000 and a 12 story commercial building located at Megan Avenue 1, No. 189, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia at an aggregate purchase price of US MYR12,300,000. We expect to consummate these purchases within the next six months .

Shah Alam 2 Eco Residential Development

Our initial project will be the development of the Land into the Shah Alam 2 Eco Residential Development Project. Currently, no infrastructure or development work has begun on the property. There is no assurance that the undeveloped acreage will be developed because of the nature and cost of the approval and development process and market demand for a particular use.

Shah Alam 2 is an existing third party development covering 1,163 acres of prime land within Bandar Puncak Alam. It is located in Selangor in the burgeoning Klang Valley area in which Malaysia's capital is also situated. Upon completion, it is anticipated to be an integrated and self-contained township approximately 10 times the size of Subang Jaya, one of Malaysia's most celebrated suburb, with a population of approximately 500,000. We believe that Shah Alam 2 may rival even Shah Alam, the Selangor state capital, in terms of size and dynamism.

Our project, the Shah Alam 2 Eco Residential Development Project, will be located within the Shah Alam 2 development. Encompassing 54.1 acres, our project will feature garden view bungalows, semi-detached villas, high-end condominiums and commercial areas with an environment-friendly theme emphasizing the importance of a sustainable lifestyle. We intend to devote up to 50% of the project's land area to trees and parks for an anticipated greening rate of approximately 50%.

 Types of properties   Block(s)       Floor(s)/       Total Units  Built-up area
                                  Units per floor /                Per Unit ( sq.
                                      Land size                         ft.)
High-end condominiums  3 Blocks   8 floors per block      240          1,200
                                  10 Units per floor
Luxury Duplex  floor   3 Blocks  2 floors per block       60           2,400
                                  10 units per floor
Shop lots              30 Blocks  3 floors per block      90           3,400
Semi-detached villa       NA           40'x80'            250          4,000
Garden villa              NA           70'x100'           70           6,000
Garden view bungalows     NA           70'x100'           30           7,000

We have commenced development planning and intend to commence Phase I of Land development in early 2013 with completion occurring in 2017. Upon completion, we expect our Shah Alam 2 Eco Residential Development project to comprise the following types of properties:

Bandar Sungai Long High Grade Villas Community

Upon consummation of the acquisition of the Dunford Parcels, we intend to develop the parcels into the Bandar Sungai Long High Grade Villas Community. We have begun initial development planning and hope to obtain the development order by the first quarter of calendar year 2013 with completion to occur in 2015. Currently, no infrastructure or development work has begun on the property. There is no assurance that the undeveloped acreage will be developed because of the nature and cost of the approval and development process and market demand for a particular use.

Bandar Sungai Long High Grade Villas Community will feature 3½-story stand-alone hilltop villas located in a gated community consisting of approximately 32 acres of manicured land. These architectural masterpieces will have freehold status and their proud owners will be delighted by the panoramic hilltop views. We intend to devote up to 45% of the project's land area to trees and parks for an anticipated greening rate of approximately 45%.

Upon completion, we expect the Bandar Sungai Long High Grade Villas Community to include the following types of properties:

        Types of properties      Land Size    Total Units  Built-up area
                                                           (per sq. ft.)
        31/2 floor stand alone   70'x100'     150          6,500
        garden villa

Deferral of 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. In light of our recent real estate acquisitions and development plans, we anticipate deferring implementation of our uplisting plans until the end of calendar year 2013 to allow us to focus on implementing our business plan.

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 began our oilseeds and real estate businesses and scaled back our m-commerce activities except for the provision of IT consulting, programming and website development services related to software previously sold. To date, we have acquired a parcel of vacant land in Malaysia and are parties to agreements to acquire two commercial buildings and an additional 31 acres of vacant land in Malaysia. We will require approximately $42.4 million, however, to consummate our real estate purchases. As of July 31, 2012, our cash balance was approximately $2.3 million. As a result of our capital commitments, there is a substantial doubt about our ability to continue as a going concern.

Going forward, we expect to continue providing after sales consulting/website development services on a limited basis. We may also engage in future sales of software products and consumer goods only if such opportunities become readily available. We do not expect to invest significantly in our software or consumer product distribution businesses.

Duringthe three and nine months ended July 31, 2012, we did not generate revenue from our distribution business and derived all of our revenue from: (i) the provision of after sales IT consulting, programming and website development services; and (ii) our oilseeds business. We have not yet generated revenue from our real estate business.

We expect this trend to continue until such time as we can generate revenue from our real estate business. If we are not able to replace the lost income from our software and consumer goods distribution businesses through our oilseeds and real estate businesses, 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 July 31, 2012 to the three months ended July 31, 2011

The following table shows our revenues by type for the three months ended July 31, 2012, compared to the three months ended July 31, 2011.

                                  For the Three Months Ended July 31,             $               %
                                     2012                    2011              Change          Change
Net Revenues                   $         553,535       $         300,569     $   252,966           84.2%
Software sales                             4,632                 295,987        (291,355 )       (98.4%)
Product sales                                  -                   4,582          (4,582 )        (100%)
Plantation sales                         548,903                       -         548,903               -
Total cost of revenue                     49,684                  14,764          34,920          236.5%
Related party                                  -                     594            (594 )        (100%)
Unrelated party                           49,684                  14,170          35,514          250.6%
Gross profit                             503,851                 285,805         218,046           76.3%
General and administrative
expenses                                (576,656 )              (280,680 )      (295,976 )        105.4%
Income before income taxes               307,246                  12,791         294,455           2302%
Income tax expense                      (101,669 )               (64,721 )       (36,948 )         57.1%
Net income (Loss)                        205,577                 (51,930 )       257,507          495.9%

*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, and SMTG. Our real estate business is operated through PGCG Assets Holdings Sdn. Bhd., a wholly owned subsidiary of UHT.

Revenue. We generated net revenue of $553,535 for the three months ended July 31, 2012 with plantation sales accounting for $548,903, or approximately 99.2% of net revenues, and software sales accounting for $4,632, or approximately 0.8% of net revenues. For the same period ended July 31, 2011, we generated net revenue of $300,569 with software sales accounting for $295,987, or approximately 98.5% of net revenues, and product sales accounting for $4,582, or approximately 1.5% of net revenues. The decrease in net revenue from our software and product distribution businesses is a direct result of our shift in focus from the software and product distribution business segments to our oilseeds and real estate businesses. We expect this trend to continue in the future.

Cost of Revenue. Our cost of revenue as a percentage of net revenue was approximately 9% for the three months ended July 31, 2012, as compared to approximately 4.9% for the same period in 2011. The increase is primarily attributable to the operations of 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 $503,851 for the three months ended July 31, 2012, as compared to $285,805 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 July 31, 2012.

General and Administrative Expenses ("G&A"). We incurred G&A expenses of $576,656 for the three months ended July 31, 2012, representing an increase of $295,976, or approximately 105.4%, as compared to $280,680 for the three months ended July 31, 2011. The increase in G&A is primarily attributable to nonrecurring fees incurred in connection with the acquisition of our palm oil plantation of approximately $250,000 and an increase in professional and consulting fees and salaries.

Other Income (Expense). We incurred other income of $307,246 for the three months ended July 31, 2012, as compared to $12,791 for the three months ended July 31, 2011. The increase in other income is attributable primarily to realized gain on sale of marketable securities of $255,778, dividend income of $89,406, other income of $30,954 consisting primarily of commission and rental income from our palm oil plantation and interest income of $4,390 derived from cash held in our brokerage account, offset by interest expense of $477.

Income Tax Expense. We recorded income tax expense of $101,669 for the three months ended July 31, 2012, as compared to $64,721 for the same period ended July 31, 2011. The increase is primarily attributable to the increase in revenue generated from our operations during the three months ended July 31, 2012.

Comparison of the nine months ended July 31, 2012 to the nine months ended July 31, 2011

The following table shows our revenues by type for the nine months ended July 31, 2012, compared to the nine months ended July 31, 2011.

                                   For the Nine Months Ended July 31,              $               %
                                      2012                    2011              Change          Change
Net Revenues                   $        1,416,659       $       1,541,030     $  (124,371 )        (8.1%)
Software sales                            214,529                 783,971        (569,442 )       (72.6%)
Product sales                                   -                 757,059        (757,059 )        (100%)
Plantation sales                        1,202,130                       -       1,202,130               -
Total cost of revenue                     243,085                 718,878        (475,793 )       (66.2%)
Related party                                   -                  98,217         (98,217 )        (100%)
Unrelated party                           243,085                 620,661        (377,576 )       (60.8%)
Gross profit                            1,173,574                 822,152         351,422           42.7%
General and administrative
expenses                               (1,193,645 )              (537,218 )      (656,427 )        122.2%
Income before income taxes                707,931                 291,619         416,312          142.8%
Income tax expense                       (221,035 )              (153,218 )       (67,817 )         44.3%
Net (loss) income                         486,896                 138,401         348,495          251.8%

*NM means not meaningful

Revenue. We generated net revenue of $1,416,659 for the nine months ended July 31, 2012 with plantation sales accounting for $1,202,130, or approximately 84.9% of net revenues and software sales accounting for $214,529, or approximately 15.1% of net revenues. For the same period ended July 31, 2011, we generated net revenue of $1,541,030 with software sales accounting for $783,971, or approximately 50.9% of net revenues, and product sales accounting for $757,059, or approximately 49.1% of net revenues. The decrease in net revenue from our software and product distribution businesses is a direct result of our shift in focus from the software and product distribution business segments to our oilseeds and real estate businesses. We expect this trend to continue in the future.

Cost of Revenue. Our cost of revenue as a percentage of net revenue was approximately 17.2% for the nine months ended July 31, 2012, as compared to approximately 46.6% 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 $1,173,574 for the nine months ended July 31, 2012, as compared to $822,152 for the same period in 2011. The increase is attributable to the increase in revenues generated by our oilseeds business during the nine months ended July 31, 2012.

General and Administrative Expenses ("G&A"). We incurred G&A expenses of $1,193,645 for the nine months ended July 31, 2012, representing an increase of $656,427, or approximately 122.2%, as compared to $537,218 for the nine months ended July 31, 2011. The increase in G&A is primarily attributable to nonrecurring fees incurred in connection with the acquisition of our palm oil plantation of approximately $250,000, an increase in professional and consulting fees and salaries, marketing expenses incurred to promote our oilseeds business, consultancy fees incurred for uplisting process and fees incurred in connection with our annual shareholders meeting.

Other Income (Expense). We incurred other income of $707,931 for the nine months ended July 31, 2012, as compared to $291,619 for the nine months ended July 31, 2011. The increase in other income is attributable primarily to realized gain on sale of marketable securities of $641,808, dividend income of $94,044, other income of $32,398 consisting primarily of commission and rental income from our palm oil plantation and interest income derived from cash held in our brokerage account of $14,848, offset by interest expense of $1,450 and loss on acquisition of $53,646.

Income Tax Expense. We recorded income tax expense of $221,035 for the nine months ended July 31, 2012, as compared to $153,218 for the same period ended July 31, 2011. The increase is primarily attributable to the increase in income generated from our operations during the nine months ended July 31, 2012.

Liquidity and Capital Resources

Sources of Liquidity. For the nine months ended July 31, 2012, we generated net income of $486,896 as compared to a net income of $138,401 for the same period ended July 31, 2011. During the nine month period ended July 31, 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
Sale of 760,000 shares of common stock on 6/28/2012       2,052,000
Sale of 920,000 shares of common stock on 7/17/2012       1,840,000
. . .