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Optical components

PSI-TEC Issues Update

WILMINGTON, Delaware -- PSI-TEC Corporation, wholly owned subsidiary of PSI-TEC Holdings, Inc. (PTHO.PK), today announced that its President and Chairman, Frederick J. Goetz, has issued a Special Letter to Shareholders in an effort to update its investors on the Company's recent performance and future growth strategy.

Following is the text of the letter:

Dear Stockholder,

PSI-TEC Corporation has gone through many stages in its development since we initially launched our business plan. It has been a complex and challenging developmental process for everyone, and I believe that many of our stockholders have felt both caution and some uncertainty concerning these essential stages of growth. In numerous conversations with our investors, we have found that many of our stockholders do not fully understand the importance and potential of the company in which they are invested. The complex nature of the science has always made communication of this nature extremely difficult, and I hope that I can help to relay some of our enthusiasm to you today in terms that are more accessible. For those of you who have stuck with us through this period, we thank you for your support and hope that this faith will be rewarded.

Since scientific details of our technology tend to cause more confusion than comfort, I don't think that it's very useful to go into too much detail regarding how we do what we do; certainly what everyone is most interested is the ultimate market potential of our technology. Broken down into perhaps the simplest of terms, our initial market goal is to increase the speed of the worldwide telecommunications network by four to ten times while simultaneously decreasing the cost-per-bit of information transfer by one-half to a quarter of the current market price. Some of our most important and fundamental achievements regarding this have occurred during the last six months.

PSI-TEC Corporation has been developing a technology that has been referred to as "the holy-grail" of telecommunications in scientific journals. Over the past two decades, numerous large and heavily invested industrial interests have unsuccessfully attempted to fabricate materials such as those which we believe we have recently demonstrated over the past four months.

I don't believe the importance of this achievement can be overstated! It is also perhaps important to remember that our unique technology is the result of nearly a decade of "outside-the-box" development efforts in cooperation various branches of the U.S. Government. We have protected this technology with numerous patents and patent pendings, and based upon the current scientific landscape, we believe that we are at least a decade ahead of other developmental efforts in this field.

In order to more fully explore market opportunities as well as satisfy our stockholders' concerns, we have contracted with Triple Play Communications (TPC), a market consulting company, in order to detail opportunities within various markets for application of our technology. Following this introduction, I have included a brief summary of an initial market analysis prepared by TPC; at times this analysis can be somewhat technical but I believe that the financial predictions speak for themselves. As you may know, PSI-TEC's CEO, Ron Genova, previously led AT&T/Lucent in the development of what is today the current standard in high-speed telecommunications; Mr. Genova grew this market from zero to a $1.2B/year business in just 3 years. The market opportunities detailed by TPC suggest that the market for future higher speed telecommunication systems will soon reach similar proportions.

Before I relay some of these market forecasts, let me take a few moments to describe the tremendous growth that PSI-TEC has undergone in the past six months alone. Perhaps our most exciting recent achievement in the last four months, as of mid-June 2006, we have received independent third-party verification of our technology by the University of Arizona, one of the leading universities in the field of photonics. In these tests, PSI-TEC technology has demonstrated its potential to operate over 700% faster and more effectively than similar commercially available technologies! Shortly after receiving these truly unprecedented performance figures, PSI-TEC expanded its operations to establish a pre-production line in order to test and integrate our materials into waveguide devices and system prototypes as a first step toward product commercialization. Our new laboratories include a full suite of fabrication facilities capable of producing commercial quantities of precision micro-optic devices such as high-speed telecom modulators, optical filters, and optical interconnects important to military and civilian global information.

Over the past few weeks, our scientists have not only demonstrated the company's technology under extreme operation/processing conditions (i.e. high temperature stability) but we are extremely proud that our scientific achievements have been recognized by the prestigious market analysis firm of Frost & Sullivan (www.frost.com). I should emphasize recipients of this award do not apply for this honor but are sought out by Frost & Sullivan's worldwide market analysts. Our company and its technology underwent a rigorous review process, and we are all extremely excited that our company's achievements have received this level of recognition within the global marketplace.

Finally, based upon our recent technological achievements over the past few months, PSI-TEC has been in communication with several large companies in relation to potential strategic partnerships and co-development efforts. Although we cannot disclose who these movers are at this point, our discoveries are so new and exciting that we hope to find a strong and appropriately positioned strategic partner to help us take our technology to the next level in the near future.

Thank you,

Frederick Goetz

President, PSI-TEC Corporation

PSI-TEC Corp.

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