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<SEC-DOCUMENT>0000943440-07-000192.txt : 20070413
<SEC-HEADER>0000943440-07-000192.hdr.sgml : 20070413
<ACCEPTANCE-DATETIME>20070413164608
ACCESSION NUMBER:		0000943440-07-000192
CONFORMED SUBMISSION TYPE:	10SB12G
PUBLIC DOCUMENT COUNT:		9
FILED AS OF DATE:		20070413

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			THIRD-ORDER NANOTECHNOLOGIES INC
		CENTRAL INDEX KEY:			0001325964
		IRS NUMBER:				820497368
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10SB12G
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-52567
		FILM NUMBER:		07766332

	BUSINESS ADDRESS:	
		STREET 1:		2601 ANNAND DR STE 16
		CITY:			WILMINGTON
		STATE:			DE
		ZIP:			19808
		BUSINESS PHONE:		302-998-8824

	MAIL ADDRESS:	
		STREET 1:		2601 ANNAND DR STE 16
		CITY:			WILMINGTON
		STATE:			DE
		ZIP:			19808

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	THIRD-ORDER NANOTECHNOLOIES INC
		DATE OF NAME CHANGE:	20070222

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PSI TEC HOLDINGS INC
		DATE OF NAME CHANGE:	20050503
</SEC-HEADER>
<DOCUMENT>
<TYPE>10SB12G
<SEQUENCE>1
<FILENAME>form-10sb.txt
<TEXT>

                              United States
                    Securities and Exchange Commission
                          Washington, D.C. 20549

                               FORM 10-SB


                 GENERAL FORM FOR REGISTRATION OF SECURITIES
                         OF SMALL BUSINESS ISSUERS

      Under Section 12(b) or (g) of The Securities Exchange Act of 1934

                       THIRD-ORDER NANOTECHNOLOGIES, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

          Nevada                                            82-049-7368
- -------------------------------                         -------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)


       2601 Annand Dr., Suite #16, Wilmington, Delaware        19808
       ------------------------------------------------      ----------
          (Address of principal executive offices)           (Zip Code)

Issuer's telephone number (302) 998-8824
                         -----------------

Securities to be registered under Section 12(b) of the Act:

       Title of each class                    Name of each exchange on which
       to be so registered                    each class is to be registered

       ______________________________         ______________________________

       ______________________________         ______________________________

Securities to be registered under Section 12(g) of the Act:

                     Common Stock, $0.001 Par Value
                     ------------------------------
                             (Title of class)

                     ------------------------------
                             (Title of class)

<PAGE>



            INFORMATION REQUIRED IN REGISTRATION STATEMENT

               Note Regarding Forward-Looking Statements

     This registration statement contains forward-looking statements.
These statements relate to future events or future financial
performance and involve known and unknown risks, uncertainties and
other factors that may cause our company or its industry's actual
results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity,
performance or achievements expressed or implied by the forward-
looking statements.

     In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," or
the negative of these terms or other comparable terminology. These
statements are only predictions. Actual events or results may differ
materially. Although our Company believes that the expectations
reflected in the forward-looking statements are reasonable, our
Company cannot guarantee future results, levels of activity,
performance or achievements. The forward-looking statements are based
on our beliefs, assumptions and expectations of our future
performance, taking into account information currently available to
us. These beliefs, assumptions and expectations can change as a result
of many possible events or factors, including those events and factors
described by us in "Description of Business-Risk Factors," not all of
which are known to us. Our Company is under no duty to update any of
the forward-looking statements after the effective time of this date
of this registration statement to conform its prior statements to
actual results.

     Further, this registration statement contains forward looking
statements that involve substantial risks and uncertainties. Such
statements include, without limitation, all statements as to
expectation or belief and statements as to our future results of
operations, the progress of any research and product development, the
need for, and timing of, additional capital and capital expenditures,
partnering prospects, the protection of and the need for additional
intellectual property rights, effects of regulations, the need for
additional facilities and potential market opportunities. Our company'
actual results may vary materially from those contained in such
forward-looking statements because of risks to which our company is
subject, such as lack of available funding, competition from third
parties, intellectual property rights of third parties, regulatory
constraints, litigation and other risks to which our Company is
subject.

    You should not place undue reliance on these forward-looking
statements. Statements regarding the following subjects are forward-
looking by their nature:

    *    Our business strategy.
    *    Our future operating results.
    *    Our ability to obtain external financing.
    *    Our understanding of our competition.
    *    Industry and market trends.
    *    Future capital expenditures.
    *    The impact of technology on our products, operations and
         business.


                               2
<PAGE>

Item 1.   Description of Business.

                    Our Business Development

     PSI-TEC Corporation ("PSI-TEC") was founded in 1991 and
incorporated under the laws of the State of Delaware on September 12,
1995. PSI-TEC was founded in Upland, Pennsylvania by Dr. Frederick J.
Goetz where he established a laboratory with a small amount of private
funding.  PSI-TEC subsequently moved its operations to laboratory
space provided by the U.S. Army on the Aberdeen Proving Grounds in
cooperation with a division of the Department of Defense for the
advancement of ultra wide-bandwidth satellite telecommunications.
Thereafter, PSI-TEC commenced operations of its own organic synthesis
and thin-films laboratory in Wilmington, Delaware.

     In order to become a publicly-traded corporation, in July 2004
PSI-TEC reorganized with  our Company pursuant to a reorganization
agreement between PSI-TEC and all of its shareholders, and our
Company's sole officer, director and majority shareholder. Pursuant to
the reorganization agreement, (i) our Company changed its name from
Eastern Idaho Internet Services, Inc. to PSI-TEC Holdings, Inc.; (ii)
our Company acquired all of the issued and outstanding shares of PSI-
TEC stock; (iii) PSI-TEC became the wholly-owned operating subsidiary
of our Company; and (iv) our Company's then sole officer and director
resigned, PSI-TEC's nominees were elected to our Company's board of
directors and new management was appointed. For accounting purposes,
this acquisition transaction was accounted for as a reverse-
acquisition, whereby PSI-TEC was deemed to have purchased our Company.
As a result, the historical financial statements of PSI-TEC became the
historical financial statements of our Company.

     Immediately prior to the time of the reorganization transaction,
our Company was a development stage company seeking other business
opportunities; it had no substantive business operations. Our Company
was originally incorporated under the laws of the State of Nevada on
June 24, 1997 as Eastern Idaho Internet Services, Inc. to operate as
an Internet services marketing firm. It was unsuccessful in this
venture, and in June 1998 it ceased its operations and sold all of its
operating assets.

     On October 20, 2006, PSI-TEC Holdings, Inc. and PSI-TEC Corp.
merged; PSI-TEC Holdings, Inc. survived and changed its name to Third-
Order Nanotechnologies, Inc. Unless the context otherwise requires,
all references to the "Company," "we," "our" or "us" and other similar
terms means Third-Order Nanotechnologies, Inc., a Nevada corporation.

     Our principal executive office is located at 2601 Annand Dr.,
Suite #16, Wilmington, Delaware 19808, and our telephone number is
(302) 998-8824. Our website address is www.third-order.com. No
information found on our website is part of this registration
statement. Also, this registration statement includes the names of
various government agencies and the trade names of other companies.
Use or display by us of such other parties' names and trade names in
this registration statement is not intended to and does not imply a
relationship with, or endorsement or sponsorship of us by, any of
these other parties.

                               3
<PAGE>


                           Overview

     We are a development stage research and development company. We
have developed and are continuing to develop high-activity, high-
stability electro-optic polymers which we believe could have a broad
range of applications in the electro-optic device market.

     Electro-optic devices convert data from electric signals into
optical signals for use in communications systems and in optical
interconnects for high-speed data transfer. We expect our patented and
patent-pending technologies when completed and tested to be utilized
by electro-optic device manufacturers, such as telecommunications
component and systems manufacturers, networking and switching
suppliers, semiconductor companies, aerospace companies and government
agencies.

     Our electro-optic polymers (plastics) are property-engineered at
the molecular level (nanotechnology level) to meet the exacting
thermal, environment and performance specifications demanded by
electro-optic devices. We believe that our patented technologies will
enable us to design electro-optic polymers that are free from the
numerous diverse inherent flaws that plague competitive polymer
technologies employed by other companies and research groups. We
engineer our polymers with the intent to have temporal, thermal,
chemical and photochemical stability within our patented molecular
architectures.

     Our patented molecular architectures are based on a well-
understood chemical and quantum mechanical occurrence known as
aromaticity. Aromaticity provides a high degree of molecular
stability. Aromaticity is what will enable our core molecular
structures to maintain stability under a broad range of polymerization
conditions that otherwise appear to affect other current polymer
molecular designs.  Polymers, polymer-based devices and the processes
used to create them are often patentable, which can provide the
developers of such technology with a significant competitive
advantage. We consider our proprietary intellectual property to be
unique.

          Glossary of Select Technology Terms Used Herein

All-optical devices. All-optical devices convert data in the form of
- -------------------
input light signals to a secondary light data stream. The future
market of all-optic devices is expected to include all-optical
transistors.

All-optical transistors. All-optical transistors are devices currently
- -----------------------
underdevelopment that use an input light signal to switch a secondary
light signal. All-optical transistors are expected to enable the
fabrication of an entirely new high-speed generation of computers that
operate on light instead of electricity, which in turn should
significantly improve computation speeds.

Aromaticity. Aromaticity causes an extremely high degree of molecular
- -----------
stability. It is a molecular arrangement wherein atoms combine into a
ring or rings and share their electrons among each other.  Aromatic
compounds are extremely stable because the electronic charge
distributes evenly over a great area preventing hostile moieties, such
as oxygen and free radicals, from finding an opening to attack.


                               4
<PAGE>


Electro-optic devices. Electro-optic devices convert data from
- ---------------------
electric signals into optical signals for use in communications
systems and in optical interconnects for high-speed data transfer.

Electro-optic materials. Electro-optic materials are materials that
- -----------------------
are engineered at the molecular level. Molecular level engineering is
commonly referred to as Nanotechnology.

Electro-optic modulators. Electro-optic modulators are electro-optic
- ------------------------
devices that perform electric-to-optic conversions within the
infrastructure of the Internet.

Nanotechnology. Nanotechnology refers to the development of products
- --------------
and production processes at the molecular level, which is a scale
smaller than 100 nanometers (a nanometer is one-billionth of a meter).

Plastics/Polymers. Polymers, also known as plastics, are large carbon-
- -----------------
based molecules that bond many small molecules together to form a long
chain. Polymer materials can be engineered and optimized using
nanotechnology to create a system in which unique surface, electrical,
chemical and electro-optic characteristics can be controlled.
Materials based on polymers are used in a multitude of industrial and
consumer products, from automotive parts to home appliances and
furniture, as well as scientific and medical equipment.

Polymerization. Polymerization is a molecular engineering process that
- --------------
provides the environmental and thermal stability necessary for
functional electro-optical devices. Polymer materials can be
engineered and optimized using nanotechnology to create a system in
which unique surface, electrical, chemical and electro-optic
characteristics can be controlled.

                         Our Business

     Third-Order Nanotechnologies, Inc. is developing a new
generation of advanced electro-optic plastics that convert high-speed
electronic signals into optical (light) signals. Electro-optic
material is the core active ingredient in high-speed fiber-optic
telecommunication systems. Utilizing our proprietary technology, we
are in the process of engineering advanced electro-optic plastics
which we believe may lead to significant performance advancements,
component size and cost reduction, ease of processing, and thermal and
temporal stability.  We believe that polymer materials engineered at
the molecular level may have a significant role in the future
development of commercially significant electro-optic related
products.

     In order to transmit digital information over long or
intermediate distances at extremely high-speeds (wide bandwidth),
electrical signals, such as those produced by a computer or telephone,
must be converted into optical signals for transmission over long-
distance fiber-optic cable.  Within the infrastructure of the
Internet, a device known as an electro-optic modulator performs the
electric-to-optic conversion. Within the electro-optic modulator, an
electro-optic material performs the actual conversion of electricity
to an optical signal. These materials change their optical properties
in the presence of an electric field at extremely high frequencies
(wide bandwidths).


                               5
<PAGE>

     Currently, the core electro-optic material contained in most mod-
ulators is a crystalline material, such as lithium niobate or gallium
arsenide, which must be manufactured in strict dust-free conditions
since even slight contamination can render them inoperable. As a
result, these crystalline materials are expensive to produce. Current
electro-optic crystals are limited to telecommunication speeds that
are less than 40Gb/s (40 billion digital bits of data per second).
Lithium niobate devices require large power levels (modulation volt-
ages) to operate and are large in size -- typically measuring about
four inches long. Considering that most integrated circuits are
literally invisible to the naked eye, these devices are enormous.
Additionally, it is important to note that these crystalline-based
electro-optic modulators require expensive mechanical packaging
(housings) generally comprised of materials, such as gold-plated
Kovar, in order to assure operational integrity over required time and
operating temperature ranges.

     Unlike crystals, electro-optic plastics appear to be capable of
being tailored at the molecular level for optimal performance
characteristics. Additionally, electro-optic plastics are inexpensive
to manufacture and demand significantly lower power requirements
(modulation voltages).  The electro-optic plastics have demonstrated
the ability to perform many times faster (>100Gb/s) than existing
crystalline technology.

     We consider electro-optic plastics to be the most feasible tech-
nology for future high-speed (wide bandwidth) electronic-optical
conversion. Due to the ease of processing afforded by electro-optic
plastics, as well as their capacity to foster component size
reduction, we believe electro-optic plastics have the potential to
replace existing high-speed fiber-optics components that are used
today in many commercial and military applications.

     We also believe that the extreme miniaturization provided by
advanced electro-optic plastics may allow for the successful
fabrication of chip-to-chip (backplane) optical interconnect devices
for computers that create the high-speed data transmission necessary
for extremely high-speed computations. Additional potential
applications, in our opinion, for electro-optic plastics include
phased array radar, cable television (CATV), electronic counter
measure (ECM) systems, ultra-fast analog-to-digital conversion, land
mine detection, radio frequency photonics, spatial light modulation
and all-optical (light-switching-light) signal processing.

Our Electro-Optic Technology

     For the past two decades, diverse corporate interests, including,
to our knowledge, IBM, Lockheed Martin, DuPont, AT&T Bell Labs,
Corning, Honeywell and 3M, as well as numerous universities and U.S.
Government Agencies, have been attempting to produce high-performance,
high-stability electro-optic plastics for high-speed (wide bandwidth)
telecommunication applications. These efforts have largely been
unsuccessful due, in our opinion, to the industry's singular adherence
to an industry pervasive engineering model known as the Bond Length
Alternation ("BLA") theory model. The BLA model, like all other
current industry-standard molecular designs, consists of molecular
designs containing long strings of atoms called polyene chains. Longer
polyene chains provide higher electro-optic performance, but are also
more susceptible to environmental threats, which result in
unacceptably low-performing, thermally unstable electro-optic
plastics.


                               6
<PAGE>


     As a result, high frequency modulators engineered with electro-
optic plastics designed on the BLA model or any other polyene chain
design model are  unstable over typical operating temperature ranges,
and often exhibit performance degradation within days, hours or even
minutes. Similarly, lower frequency modulators exhibit comparable
failings, but to a lesser extent. These flaws have prevented commerc-
ial quality polymer-based modulators operating at 10-40 Gb/s from
entering the commercial marketplace. The thermal stability of these
devices does not generally meet the minimum Telcordia GR-468 operating
temperature range (-40 degrees Celsius to +85 degrees Celsius) much
less the more harsh MILSPEC 883D (military specification) range of
- -55 degrees Celsius to 150 degrees Celsius.

      None of our molecular designs rely on the BLA polyene chain
design model. Our proposed solution lies in a far less mainstream, yet
firmly established scientific, phenomenon called aromaticity.
Aromaticity causes a high degree of molecular stability. It is a
molecular arrangement wherein atoms combine into multi-membered rings
and share their electrons among each other. Aromatic compounds are
stable because the electronic charge distributes evenly over a great
area preventing hostile moieties, such as oxygen and free radicals,
from finding an opening to attack. To our knowledge, no one has
previously been able to demonstrate molecular designs that could
effectively exploit aromaticity in the design of a high-performance
electro-optic plastic.

     Our research and findings in this area resulted in our Company
being awarded the 2006 Electro-Optic Materials Technology Innovation
of the Year Award by Frost & Sullivan. Frost & Sullivan's Technology
Innovation of the Year Award is bestowed upon candidates whose
original research has resulted in innovations that have, or are
expected to bring, significant contributions to multiple industries in
terms of adoption, change, and competitive posture. This award
recognizes the quality and depth of our Company's research and
development program as well as the vision and risk-taking that enabled
us to undertake such an endeavor.

Our Patents

       We hold one patent and five pending patent applications in the
field of nonlinear optic chromophore design as follows:

6,041,157   -  Environmentally sensitive compositions of matter based
               on 3H-fluoren-3-ylidenes and process for making same;
60/622,160  -  Tricyclic Spacer Systems for Nonlinear Optical
               Devices;
60/623,454  -  Heterocyclical Chromophore Architectures;
60/623/487  -  Heterocyclical Anti-Aromatic Chromophore Architectures;
60/623,204  -  Heterocyclical Chromophore Architectures;
60/667,625  -  Heterocyclical Chromophore Architectures with Novel
               Electronic Acceptor Systems.

Heterocyclical Anti-Aromatic Systems. Two of our provisional patents
- ------------------------------------
cover heterocyclical anti-aromatic electronic conductive pathways,
which are the heart of our high-performance, high-stability molecular
designs. The completely heterocyclical nature of our molecular designs
"lock" conductive atomic orbitals into a planar (flat) configuration,
which provides improved electronic conduction and a significantly


                               7
<PAGE>

lower reaction to environmental threats (e.g. thermal, chemical,
photochemical, etc.) than the BLA design paradigm employed by other
competitive electro-optic polymers.

The anti-aromatic nature of these structures dramatically improves the
"zwitterionic-aromatic push-pull" of the systems, providing for low
energy charge transfer.  Low energy charge transfer is  important for
the production of extremely high electro-optic character.

Heterocyclical Steric Hindering System. This patent describes a
- --------------------------------------
nitrogenous heterocyclical structure for the integration of steric
hindering groups that are necessary for the nanoscale material
integration.  Due to the [pi]-orbital configuration of the nitrogen
bridge, this structure has been demonstrated not to interfere with the
conductive nature of the electronic conductive pathway and thus is
non-disruptive to the electro-optic character of the core molecular
construction.  The quantum mechanical design of the system is designed
to establish complete molecular planarity (flatness) for optimal per-
formance.

Totally Integrated Material Engineering System. This patent covers
- ----------------------------------------------
material integration structures under a design strategy known as
Totally Integrated Material Engineering. These integration structures
provide for the "wrapping" of the core molecule in sterically hinder-
ing groups that maximally protect the molecule from environmental
threats and maximally protect it from microscopic aggregation (which
is a major cause of performance degradation and optical loss) within a
minimal molecular volume.  These structures also provide for the
integration of polymerizable groups for integration of materials into
a highly stable cross-linked material matrix.

Our Latest Tests and Results

      Prior to our recent experimental results, in 2004, quantum
mechanical calculations were independently performed on our novel
electro-optic plastic designs at government laboratories located at
the Naval Air Warfare Center Weapons Division in China Lake,
California. The results of these calculations suggest that our initial
aromatic molecules perform two and a half (2.5) to three and three-
tenths (3.3) times more efficiently than currently available telecom
grade electro-optic plastics. Logical extensions of this novel
molecular design paradigm further suggest even greater performance
improvements.  Subsequently, top scientists and engineers at Wright-
Patterson Air Force Base reviewed these calculations and concluded
that our molecular designs show promise of a five to ten times
improvement over existing commercial polymeric architectures. Our
conclusion is that performance improvements of this magnitude indicate
a significant breakthrough in the field of fiber-optic
telecommunication.

      In May and June of 2006, we initiated performance evaluations of
one of our first extremely high-performance electro-optic materials.
The initial tests were performed by electro-optic expert, Dr. C.C.
Teng, co-inventor of the renowned Teng-Man test, the industry-wide
standard method of evaluating the material performance of electro-
optic plastics, and subsequently confirmed by the University of
Arizona's College of Optical Sciences, one of the most respected and
fastest growing optical sciences departments in the world.  Under
identical laboratory conditions at low molecular loadings, one of our
recent molecular designs outperformed one of the industry's highest


                               8
<PAGE>

performance electro-optic systems by a factor as high as 650%.

      We believe recent results of the Teng-Man test have established
the validity of our novel, patented molecular design paradigm known as
CSC (Cyclical Surface Conduction) theory. We believe the success of
CSC theory has the potential to establish the fundamental blueprint of
electro-optic material design for decades to come, and to have broad
application in commercial and military telecommunication and advanced
computational systems.

      On September 25, 2006 we obtained independent laboratory results
that confirmed the thermal stability of our Perkinamine electro-optic
materials. Thermal stability as high as 350 degrees Celsius was
confirmed, significantly exceeding many other commercially available
high performance electro-optic materials, such as CLD-1 which exhibits
thermal degradation in the range of 250 degrees Celsius to 275 degrees
Celsius. This high temperature stability of our materials eliminates a
major obstacle to vertical integration of electro-optic polymers into
standard microelectronic manufacturing processes (e.g. wave/vapor-
phase soldering) where thermal stability of at least 300 degrees
Celsius is required. In independent laboratory tests, ten-percent
material degradation, a common evaluation of overall thermal
stability, did not occur until our Perkinamine material base was
exposed to temperatures as high as 350 degrees Celsius, as determined
by Thermo-Gravimetric Analysis (TGA).

      The test results supported our Company's progress to introduce
our materials into commercial applications such as optical
interconnections, high-speed telecom and datacom modulators, and
military/aerospace components.

                The Electro-Optic Device Market

General

     Electro-optic devices such as fiber-optic modulators translate
electric signals into optical signals. Such devices are used in
communication systems to transfer data over fiber-optic networks.
Optical data transfer is significantly faster and more efficient than
transfer technologies using only electric signals, permitting more
cost-effective use of bandwidth for broadband Internet and voice
services.

     Two distinct technologies currently exist for the fabrication of
fiber-optic devices, such as fiber-optic modulators. The first, which
is the more traditional technology, utilizes an electro-optically
active inorganic core crystalline material (e.g. lithium niobate). The
second, which is the up-and-coming technology, involves the
exploitation of electro-optic plastics.

      According to a market survey by Triple Play Communications
Corporation, a design and market consulting company we contracted
with, the 40Gb optical modulator market, alone, is expected to grow to
$440 million by 2011, and industry experts speculate that the 100Gb
data modulator market may exceed $500 million in revenues by 2011.


                               9
<PAGE>

Traditional Technology - Inorganic Crystals

     Traditional technology translates electric signals into optical
signals generally relying upon electro-optic materials, such as
lithium niobate or gallium arsenide. Six of the largest inorganic
fiber-optic component manufactures hold approximately 85% of the
electro-optic modulator component market. They are JDS Uniphase,
Sumitomo, Avanex, Covega, Fujitsu, and Bookham. These companies are
heavily invested in the production of crystalline-based electro-optic
modulator technologies, as well as the development of novel
manufacturing techniques and integrated laser/modulator designs. While
each company possesses their own modulator design and processing
patents, the underlying core constituents (lithium niobate, gallium
arsenide, indium phosphide) occur in nature and as such cannot be pat-
ented.

New Technology - Organic Plastics

     Our developing technology that translates electric signals into
optical signals relies upon organic electro-optic materials, such as
electro-optic plastics. Electro-optic plastics involve the material
integration of specifically engineered organic (carbon-based)
compounds. The molecular designs of these compounds are precise and do
not occur naturally; thus they may be protected under patent law.

     Plastic-based electro-optic modulators may provide considerable
advantages over traditional inorganic fiber-optic technology in terms
of:

     *    Costs.
     *    Size and versatility.
     *    Modulating/switching speed.
     *    Optical transmission properties.
     *    Lower operating voltages.

     Other than our own Company, we are aware of only one other group,
Lumera Corporation ("Lumera"), in collaboration with the University of
Washington, which has designed and patented potentially commercially
feasible electro-optic plastics. Prior to our own technological
developments, Lumera held an exclusive monopoly on this area of tech-
nology because Lumera holds an exclusive present and future license to
all electro-optic polymeric technology developed within the University
of Washington. Lumera has yet, to our knowledge, to publicly
demonstrate a robust, stable commercial modulator capable of low cost
volume production.

     As a result, no significant commercial market developments have
occurred with electro-optic plastic devices. This is because all
previously known electro-optic polymer design strategies incorporate
molecular structures that adversely react to the requisite
polymerization processes that thermally-stabilize the material matrix.
This inherent design flaw causes the polymer to melt at unreasonably
low temperatures, which corrupts the polymer's electro-optic
performance.


                               10
<PAGE>


     Our Company holds an extensive amount of internally developed
intellectual property in the field of electro-optic molecular design
that, as a whole, attempts to fundamentally solve these and other
problems associated with these molecular structures. We believe our
provisional patents describe broad, highly unique techniques for novel
paradigms in molecular design.

     Our innovative solution lies in a very well-known scientific
phenomenon called aromaticity, which causes a high degree of molecular
stability. Aromaticity is a molecular arrangement wherein atoms
combine into multi-membered rings and share their electrons among each
other.  Aromatic compounds are extremely stable because the electronic
charge distributes evenly over a great area preventing hostile
moieties, such as oxygen and free radicals, from finding an opening to
attack. Until now, to our knowledge, no one has been able to propose
molecular designs that could effectively exploit aromaticity in the
design of a high-performance electro-optic plastic.

     We believe now that we have fabricated electro-optic molecular
architectures that do in fact exhibit extremely high thermal sta-
bility, our technologies may soon replace inorganic electro-optic
materials in the marketplace due to their considerable advantages over
traditional inorganic fiber-optic materials.

                       Our Target Markets

     Our proprietary electro-optic plastics are designed at the
molecular level for potentially superior performance, stability and
cost-efficiency and we believe may have the potential to replace more
expensive, lower-performance materials used in fiber-optic ground,
wireless and satellite communication networks. Our electro-optic
plastics may have broad applications in civilian and military
telecommunications and advanced computational systems. Potential
future applications, in our opinion, include: (i) telecommunications;
(ii) backplane optical interconnects; (iii) entertainment; (iv)
medical applications; (iv) satellite reconnaissance; (vi) navigational
systems; (vii) radar applications; and (viii) all-optical transistors.

Telecommunications

     Telecommunications is the primary initial target application for
electro-optic plastics.  Electro-optic plastics could not only
simplify the device design of key components, such as modulators,
significantly reducing packaging costs, but could also provide for
higher speed devices with greater system miniaturization. Current
crystalline (e.g. lithium niobate) fiber-optic modulators are
difficult and expensive to manufacture due to the complexities of
producing single crystalline ingots of sufficient diameter (3 to 5
inches). Also, strict environmental controls must be enforced during
the growth of the core crystalline material. Plastics are not
inherently costly to produce nor do they require such strict
environmental conditions. Due to their material flexibility (e.g.
ability to more easily mold into specific topologies) they are
expected to enable smaller, cheaper, faster, less expensive, and more
integrated network components.  In many laboratory tests, electro-
optic polymers have demonstrated substantial (3-10x) transmission data
speed improvements over crystalline technologies (lithium niobate,
gallium arsenide, indium phosphide).


                               11
<PAGE>

Backplane Optical Interconnects

     It is reported that backplane optical interconnects are
envisioned by members within leading corporations (including IBM,
Intel and Agilent Technologies) as the future of high-speed
computation. These components could speed the transmission of informa-
tion within an integrated circuit, among integrated circuit chips in a
module, and across circuit boards at speeds unattainable with
traditional metallic interconnections and bus structures. In the
future, all-optical (light switching light) signal processing could
become possible using the third-order effect of our materials.

Entertainment

     Entertainment applications, including CATV and Internet, are a
highly important potential application subdivision of the
telecommunication market.  The ever-increasing number of entertainment
services such as VOD (video on demand) and digital cable, as well as
the future ability to download television and movies real-time from
the Internet, drives the demand for ever-increasing bandwidth.
Flexible displays utilizing organic light emitting diodes are
inherently compatible with our polymer waveguides.

Medical Applications

     Medical Applications for electro-optic plastics have been
proposed for many varied applications, including dentistry, oncology
and protein identification.  Although experimental, it is believed
that the successful fabrication of high-stability electro-optic
plastics could open up many future applications such as these.  Other
medical applications such as the higher-speed transmission of medical
records, X-ray and MRI scans over the Internet would be improved by
the broadening of Internet bandwidths.

Satellite Reconnaissance

     Satellite reconnaissance applications include a specific target
market within the Department of Defense, the 14-member Intelligence
Community and their contractors.  Electro-optic plastics have
historically been seen as attractive for potential application in this
market due to the constant need for the fastest bandwidth transmission
to meet the needs of national security.

Navigational Systems

     Navigational systems for both advanced aerial and missile
guidance require the use of electro-optic gyroscopes.  These devices
are currently fabricated out of lithium niobate or similar electro-
optic materials; the application of electro-optic plastics would
facilitate the development of more accurate and architecturally simple
device designs.

Radar Applications

     Radar Applications, specifically phased array radar, has been
traditionally understood as a potential application for successful
electro-optic material designs, along with electronic counter measure


                               12
<PAGE>


systems (ECM) systems, ultra-fast analog-to-digital conversion, land
mine detection, radio frequency photonics and spatial light
modulation.

All-Optical Transistors

     All-optical transistors are expected to be included in the future
market of all-optic devices. All-optical devices convert data in the
form of input light signals to a secondary light data stream. Some
experts anticipate that all-optical transistors will replace
traditional transistors used today in microprocessors. All-optical
transistors are expected to enable the fabrication of an entirely new
high-speed generation of "plastic" computers that operate on light
instead of electricity, which in turn should significantly improve
computation speeds.

                      Our Business Strategy

     Our economic model anticipates that our revenue stream will be
derived from one or some combination of the following: (i) technology
licensing for specific product application; (ii) joint venture
relationships with significant industry leaders; or (iii) the
production and direct sale of our own electro-optic device components.
Our objective is to be a leading provider of proprietary technology
and know-how in the electro-optic device market. In order to meet this
objective, we intend, subject to successful testing of our technology
and having available financial resources, to:

     *    Develop electro-optic product devices.
     *    Continue to develop proprietary intellectual property.
     *    Streamline our product development process.
     *    Develop a comprehensive marketing plan.
     *    Maintain/develop strategic relationships with government
          agencies, private firms, and academic institutions.
     *    Attract seasoned executives to join in senior management
          positions.
     *    Expand into a state-of-the-art development, testing and
          manufacturing facility.

Develop Electro-Optic Product Devices

     We intend to utilize our proprietary technology to create an
initial portfolio of commercially feasible electro-optic plastic
product devices and applications for various markets, including
telecommunications and government.  We expect our initial product
device line to include high speed 40Gb/s modulators and system
applications.

Continue to Develop Proprietary Intellectual Property

     We plan to advance our core competence in electro-optic plastic
technology by continuing to develop proprietary materials, processes,
designs and devices. We also plan to protect our technology by filing
patent applications where appropriate, obtaining exclusive technology
rights where available, and taking other appropriate steps to secure
and protect our intellectual property.


                               13
<PAGE>


Streamline Our Product Development Process

     We intend to streamline our development process and to design,
test and fabricate potential electro-optic plastic devices in order to
position our Company to take advantage of emerging market
opportunities.

Develop a Comprehensive Marketing Plan

     We intend to build a sales and marketing organization dedicated
to developing customers and multiple distribution channels for our
products. We plan to aggressively pursue sales of our potential
products through the use of industry-specific sales representation
organizations, such as electro-optic component distributors. In
addition, we plan to target market leaders as initial customers and to
leverage relationships with these market leaders to obtain future
contracts and sales references.

      In August 2006 we contracted with Triple Play Communications
Corporation, a design and market consulting company, to deliver a
comprehensive market opportunity assessment report for high speed
40Gb/s (commercial) & 100Gb/s + (military/aerospace) modulators and
system applications. The report was completed in November 2006, and
according to the report, the global high-speed optical equipment
market has performed better in the second quarter of 2006 than it has
in the past four years, rising to $3B.  More than $1B was spent in
North America alone as carriers expanded capacity of their metro and
backbone networks to make room for video traffic.

      The report focused on the emerging 40Gb/s telecommunications
market, one of our primary target markets for our polymer modulator
technology.  The report noted that this market segment alone is
projected to approach $1B in cumulative sales between now and 2011.

Maintain/Develop Strategic Relationships with Government Agencies,
Private Firms, and Academic Institutions

     Almost since our inception, we have had beneficial strategic
relationships with various government agencies that have provided us
with funding and access to important technology. We intend to re-
establish our relationship with DARPA, the Defense Advance Research
Project Agency (the agency in the Intelligence Community credited with
the origination of the Internet), by sharing the technical data and
test results on our aromatic molecular materials. DARPA previously
provided our Company with funding in order to advance of our
technologies and to bring them to the public market, but due to a
change in focus at DARPA our funding was not renewed.

     As we advanced towards the commercialization phase of our
strategic plan, we commenced discussions with several potential
strategic alliance partners ranging from micro-electronic component
firms to large-scale computer companies, as well as petrochemical
companies having very large volume production capabilities. We believe
strategic alliances and/or technology licensing will be a crucial step
in commercializing our novel technologies and achieving competitive
advantages. We recently entered into a memorandum of understanding


                               14
<PAGE>

with Photon-X, LLC, a technology solutions provider for polymer
waveguides that works in conjunction with various government agencies.

     We have also developed an excellent relationship with the
University of Delaware, an institution well known for excellence in
chemical engineering, which we intend to maintain and strengthen.

Attract Seasoned Executives to Join in Senior Management Positions

      Since we reached certain in-house technological milestones with
respect to our aromatic polyheterocyclical ring molecule, we are
recruiting seasoned executive managers to assist our Company with
product commercialization. From September 2005 to February 2007, we
engaged the services of Mr. Ronald Genova as our Interim Chief
Executive Officer. Mr. Genova is the former Vice-President of JDS
Uniphase's Telecom Optical Modules division and has nearly 30 years in
optoelectronics and semiconductor industries. In March 2007 we engaged
Mr. Harold R. Bennett, a corporate restructuring advisor, to join our
board of directors in anticipation of an internal restructuring of our
entire corporate management team that will be required to successfully
incorporate our technology into functional commercial products. We
subsequently named him as our chief executive officer.

Expand Into A State-Of-The-Art Development, Testing and Manufacturing
Facility

      We plan to expand into a state-of-the-art development, testing
and manufacturing facility in order to advance our technology
platforms, attract additional key industry talent, streamline our
product development processes and minimize our time to market. We have
already begun to integrate our operations with respect to streamlining
our product development process and minimizing the time to market for
our potential products through a multifaceted approach to material
development. We are able to accomplish this because our technology
provides us with the flexibility to create tailored material
properties for a multitude of specific applications, and also to allow
for the specific tailoring of materials for compatibility with
silicon, glass, metals or many plastics.

      In August 2006, we executed a co-location agreement with a New
Jersey-based micro-optics company, InPlane Photonics, that allowed our
scientists to advance our organic material development. The agreement
with InPlane was terminated in early 2007 in favor of a strategic
alliance formed in December, 2006 with Photon-X, LLC, a Pennsylvania-
based company that has significant experience in polymer waveguide
production. Photon-X is working as a strategic ally with our Company
to establish a pre-production line in order to test and integrate our
organic materials into waveguide devices and system prototypes as a
first step toward product commercialization.  The agreement affords
our Company access to a full suite of fabrication facilities capable
of producing commercial quantities of precision micro-optic devices
such as high-speed 40Gb/s telecom modulators, optical filters, and
optical interconnects important to military and civilian global
information movement and management markets. Photon-X is participating
as a strategic supplier to our Company in a proposal we've made to a
major US defense contracting company for a project involving analog
optical processing for national security and Homeland Defense.


                               15
<PAGE>


               Our Research and Development Process

     Our research and development process consists of the following
steps:

     *   We develop novel polymer materials utilizing our patented
         technology to meet certain performance specifications. We
         then develop methods to synthesize larger quantities of such
         material.

     *   We conduct a full battery of tests at the completion of the
         synthesis of each new polymer material to evaluate its
         characteristics. We also create development strategies to
         optimize materials to meet specifications for specific
         applications.

     *   We integrate data from the material characterization and
         test results to fabricate devices. We analyze device-testing
         results to refine and improve fabrication processes and
         methods. In addition, we investigate alternative material
         and design variations to possibly create more efficient
         fabrication processes.

     *   We create an initial device design using simulation
         software. Following device fabrication, we run a series of
         optical and electronic tests on the device.


                  Our Current Strategic Partners

Photon-X, LCC

     As mentioned above, we recently entered into a memorandum of
understanding with Photon-X, LLC, a technology solutions provider for
polymer waveguides that works in conjunction with various government
agencies. In connection therewith, we will provide Photon-X with our
unique polymeric material to be tested and used on certain niche
devices for anticipated military and commercial applications.  If the
tests are successful, our management believes that our alliance with
Photon-X will serve to simultaneously lead its commercialization as
well as publicly validate its scientific findings, creating a new
standard in electro-optic polymers.

Universal Capital Management, Inc.

    We have an advisory relationship with Universal Capital
Management, Inc. ("Universal"), a Delaware based Business Development
Company. Universal is a public venture capital company that invests
largely in start-up or mature stage companies that demonstrate
significant upside potential. Universal provides us with both capital
and managerial experience, and is assisting us in creating an
awareness of our developing technology in both the government and
commercial markets as we move closer to the commercialization phase of
our strategic plan. Universal's professionals participate in selected
Company's planning and operations by providing us with managerial,
strategic and financial expertise.

Others

     We also entered into a development agreement with Triple Play
Communications Corporation, a design and market consulting company,
and we are currently in discussions with other potential partners.


                               16
<PAGE>

            Our Past Government Program Participation

    Our Company has been a participant in several vital government
sponsored research and development programs with various government
agencies that protect the interests of our country. The following is a
list of some of the various divisions of government agencies that have
provided us with advisory, financial and/or materials support in the
pursuit of high-speed electro-optic materials. We are not partnered
with, strategically related to, or financially supported by any
governmental agency at this time.

National Reconnaissance Office (NRO)

    During 1998 and 1999, we worked with the NRO to advance the
development of extremely high performance electro-optic polymers
pursuant to an unclassified Director's Innovative Initiative. The NRO
is a member of the Department of Defense Agency and plays a primary
role in achieving information superiority for the U.S. Government and
Armed Forces. The NRO designs, builds, and operates reconnaissance
satellites, assists in military operation preparedness, and monitors
the environment. NRO products are paramount to national security and
are provided to an expanding list of users including the Central
Intelligence Agency and the Department of Defense.

Army Research Laboratory (ARL)

    During 1998 through 2000, we were provided strong support for our
electro-optic materials development by the Process and Properties
Branch of the Army Research Laboratory on the Aberdeen Proving Grounds
in Aberdeen, Maryland. This support was in cooperation with other
government agencies and included the advisory support of the Army
Missile Command at Redstone Arsenal. The Army Research Laboratory
provided us with access to its highly advanced organic chemical
development laboratories and state-of-the-art analytic equipment. PSI-
TEC operated out of more than five laboratories at the Army Research
Laboratory. During the nascent stages of our technological
development, this support provided us with the strong foundations we
needed to progress electro-optic technology into its second
generation. The technically skilled members at Army Missile Command
provided our engineers instruction on the latest advancements of the
military's research and development in the area of polymeric materials
and device fabrication. Much of our initial work at the Army Research
Laboratory was based upon revolutionary advancements of our Chief
Technical Officer's (Dr. Frederick J. Goetz) highly unique electro-
optic polymeric design as exhibited in our U.S. Patent #6,041,157:
"Environmentally sensitive compositions of matter based on 3H-fluoren-
3-ylidenes and process for making same."

Defense Advance Research Project Agency (DARPA)

    DARPA, the agency in the Intelligence Community credited with the
origination of the Internet, provided our Company with funding for the
advancement of our technologies and bridging these technologies to the
public market. Under the auspices of DARPA initiatives, the MORPH
(Molecular Photonics) and C2OI (Chip-to-Chip Optical Interconnects)
programs, our advanced technologies were reviewed by the Naval Air
Warfare Center Weapons Division (NAVAIR) and the Air Force Research


                               17
<PAGE>

Laboratory (AFRL). DARPA works to maintain the technological
superiority of the U.S. military and to prevent technological surprise
from harming our national security by sponsoring revolutionary, high-
payoff research that bridges the gap between fundamental discoveries
and their military use.

Naval Air Warfare Center Weapons Division (NAVAIR)

    Under the auspices of the Defense Advance Research Projects
Agency (DARPA), high-level scientists at the Naval Air Warfare Center
Weapons Division in China Lake, California reviewed our electro-optic
molecular design paradigms in 2004. Computer calculations regarding
the quantum mechanical performance of our electro-optic molecular
designs were repeated and verified by NAVAIR staff. These calculations
suggest an improvement in electro-optic performance over the current
state-of-the-art.

    Our unique, proprietary technology was demonstrated through
detailed computer calculations to improve existing approaches in the
production of ultra fast frequencies (wide bandwidths). Calculations
performed at NAVAIR regarding our preliminary, first-stage next-
generation molecular architectures indicate an improvement of
hyperpolarizability (electro-optic character) of several times
existing state-of-the-art molecular designs.

    These computer calculations have recently been validated by
independent tests performed on our recently developed electro-optic
materials at the University of Arizona.

Air Force Research laboratory (AFRL)

    In cooperation with the Defense Advance Research Projects Agency
(DARPA), our molecular design technologies were reviewed by top-level
and senior engineers and scientists at the Air Force Research
Laboratory at Wright-Patterson Air Force Base in Dayton, Ohio. An Air
Force Research Laboratory senior scientist and engineer, in connection
with a National Science Foundation proposal and as a result of reviews
conducted under the Defense Advance Research Projects Agency's C2OI
(Chip-to-Chip Optical Interconnects) and MORPH (Molecular Photonics),
concluded that, "[our] molecular designs show promise of a five to ten
times improvement over existing commercial polymeric architectures."
In review of detailed calculations performed on our future material
designs, Air Force Research Laboratory personnel further note,
"Computer simulations and modeling indicate that [our] approach to
materials synthesis has the potential for realizing high nonlinearity
(i.e., high electro-optic performance). This, in turn, could result in
five to ten times lower drive voltages for devices." "Synthesis of
[our] materials to verify the properties predicted by the computer
models is essential for new NLO (electro-optic) polymer material
development.... This is a very novel and promising approach that has
the potential for high payoff."

    These predictions have recently been validated by independent
tests performed on our recently developed electro-optic materials at
the University of Arizona, which performed approximately seven times
better than other competitive technologies.


                               18
<PAGE>


    In regards to applications of our materials, an Air Force
Research Laboratory senior scientist states, "Highly active NLO
(electro-optic) polymer materials are key for the realization of next
generation electro-optic devices and render high application potential
for high-speed fiber-optic telecommunication (i.e., Internet, HDTV),
satellite reconnaissance (i.e., homeland security), and navigation and
guidance systems."

                         Our Competition

    The markets we are targeting for our electro-optic polymer
technology are intensely competitive. Among the largest fiber-optic
component manufactures are JDS Uniphase, Avanex, Sumitomo, Fujitsu,
Mitsubishi, Corning, Bookham, OpNext and FiBest.  Additional
significant domestic component manufacturers include Covega, Apogee,
Multiplex, and CyOptics. All of these companies are heavily invested
in the production of crystalline-based electro-optic modulator
technologies as well as the development of novel manufacturing
techniques and modulator designs.

    Other than our own Company, we are aware of only one other group,
Lumera Corporation ("Lumera") in collaboration with the University of
Washington, that has designed and patented a commercially feasible
electro-optic plastic. Prior to our own technological developments,
Lumera held an exclusive monopoly on this area of technology. Lumera
holds an exclusive present and future license to all electro-optic
polymeric technology developed within the University of Washington.

    We believe the principal competitive factors in our target
markets are:

    *    The ability to develop and commercialize highly stable
         polymer-based products, including obtaining appropriate
         patent and proprietary rights protection.

    *    Low cost, high production yield for these products.

    *    The ability to enable integration and implement advanced
         technologies.

    *    Strong sales and marketing channels for access to products.

    We believe that our current business planning will position our
Company to compete adequately with respect to these factors. Our
future success is difficult to predict because we are an early stage
company with all of our potential products still in development.

    Many of our existing and potential competitors have substantially
greater research and product development capabilities and financial,
scientific, marketing and human resources than we do. As a result,
these competitors may:

    *    Succeed in developing products that are equal to or
         superior to our potential products or that achieve greater
         market acceptance than our potential products.

    *    Devote greater resources to developing, marketing or
         selling their products.

    *    Respond more quickly to new or emerging technologies or
         scientific advances and changes in customer requirements,
         which could render our technologies or potential products
         obsolete.

    *    Introduce products that make the continued development of


                               19
<PAGE>


         our potential products uneconomical.

    *    Obtain patents that block or otherwise inhibit our ability
         to develop and commercialize our potential products.

    *    Withstand price competition more successfully than we can.

    *    Establish cooperative relationships among themselves or
         with third parties that enhance their ability to address
         the needs of our prospective customers.

    *    Take advantage of acquisition or other opportunities more
         readily than we can.

Our Laboratory Facilities

    Our Company operates an organic synthesis and thin-films
laboratory in Wilmington, Delaware. These facilities include state-of-
the-art equipment including NMR, IR, UV/VIS and HPLC analytical
systems, profilometry evaluation and electro-optic (r33) materials
characterization necessary to produce next generation fiber-optic
organic materials.  We also utilize an electro-optic test facility in
conjunction with local universities to perform critical evaluation
tests (eg. R33) on our polymer material films and future electro-optic
devices, such as our waveguides, modulators, and all-optical
transistors.

             Risk Factors Related To Our Business

     Investing in our common stock is risky. In addition to the other
information in this registration statement, you should consider
carefully the following risk factors in evaluating us and our
business. If any of the events described in the following risk factors
were to occur, our business, financial condition or results of
operations likely would suffer. In that event, the trading price of
our common stock could decline, and you could lose all or a part of
your investment.


We have incurred substantial operating losses since our inception and
will continue to incur substantial operating losses for the
foreseeable future.

    Since our inception, we have been engaged primarily in the
research and development of our polymer materials technologies and
potential products. As a result of these activities, we incurred
significant losses and experienced negative cash flow since our
inception. We incurred a net loss of $2,657,459 for the year ended
December 31, 2006 and $1,708,057 for the year ended December 31, 2005.
We anticipate that we will continue to incur operating losses through
at least 2007.

    We may not be able to generate significant revenue either through
development contracts from the U.S. government or government
subcontractors or through customer contracts for our potential
products or technologies. We expect to continue to make significant
operating and capital expenditures for research and development and to
improve and expand production, sales, marketing and administrative
systems and processes. As a result, we will need to generate
significant additional revenue to achieve profitability. We cannot
assure you that we will ever achieve profitability.


                               20
<PAGE>


    These conditions raise substantial doubt to our auditors about
our ability to continue as a going concern. Successful completion of
our research and development program and, ultimately, the attainment
of profitable operations is dependent upon future events, including
our ability to obtain adequate financing to fulfill our development
activities and achieving a level of sales adequate to support our
Company's cost structure.


We are subject to the risks frequently experienced by early stage
companies.

    The likelihood of our success must be considered in light of the
risks frequently encountered by early stage companies, especially
those formed to develop and market new technologies. These risks
include our potential inability to:

    *    establish product sales and marketing capabilities;

    *    establish and maintain markets for our potential products;

    *    identify, attract, retain and motivate qualified personnel;

    *    continue to develop and upgrade our technologies to keep
         pace with changes in technology and the growth of markets
         using polymer materials;

    *    develop expanded product production facilities and outside
         contractor relationships;

    *    maintain our reputation and build trust with customers;

    *    improve existing and implement new transaction-processing,
         operational and financial systems;

    *    scale up from small pilot or prototype quantities to large
         quantities of product on a consistent basis;

    *    contract for or develop the internal skills needed to master
         large volume production of our products; and

    *    fund the capital expenditures required to develop volume
         production due to the limits of our available financial
         resources.


We are entering new markets, and if we fail to accurately predict
growth in these new markets, we may suffer substantial losses.

     We are devoting significant resources to engineer next-generation
electro-optic plastics for future applications to be utilized by
electro-optic device manufacturers, such as telecommunications
component and systems manufacturers, networking and switching
suppliers, semiconductor companies, aerospace companies and government
agencies. We expect to continue to develop products for these markets
and to seek to identify new markets. These markets change rapidly and
we cannot assure you that they will grow or that we will be able to


                               21
<PAGE>

accurately forecast market demand, or lack thereof, in time to respond
appropriately. Our investment of resources to develop products for
these markets may either be insufficient to meet actual demand or
result in expenses that are excessive in light of actual sales
volumes. Failure to predict growth and demand accurately in new
markets may cause us to suffer substantial losses. In addition, as we
enter new markets, there is a significant risk that:

     *   the market may not accept the price and/or performance of our
         products;

     *   there may be issued patents we are not aware of that could
         block our entry into the market or could result in excessive
         litigation; and

     *   the time required for us to achieve market acceptance of our
         products may exceed our capital resources which would require
         additional investment.


The establishment and maintenance of collaborative relationships is
critical to the success of our business.

     We expect to sell many of our products directly to commercial
customers or through potential industry partners. For example, we
expect to sell our electro-optic plastic products to electro-optic
device manufacturers, such as telecommunications component and systems
manufacturers, networking and switching suppliers, semiconductor
companies, aerospace companies and government agencies. Our ability to
generate revenues depends significantly on the extent to which
potential customers and other potential industry partners develop,
promote and sell systems that incorporate our products. Any failure by
potential customers and other potential industry partners to
successfully develop and market systems that incorporate our products
could adversely affect our sales. The extent to which potential
customers and other industry partners develop, promote and sell
systems incorporating our products is based on a number of factors
that are largely beyond our ability to control.


Our future growth will suffer if we do not achieve sufficient market
acceptance of our electro-optic plastic products.

     We are developing our electro-optic polymer products to be
utilized by electro-optic device manufacturers, such as
telecommunications component and systems manufacturers, networking and
switching suppliers, semiconductor companies, aerospace companies and
government agencies. All of our potential products are still in the
development stage, and we do not know when a market for these products
will develop, if at all. Our success depends, in part, upon our
ability to gain market acceptance of our products. To be accepted, our
products must meet the technical and performance requirements of our
potential customers. OEMs, suppliers or government agencies may not
accept polymer-based products. In addition, even if we achieve some
degree of market acceptance for our potential products in one
industry, we may not achieve market acceptance in other industries for
which we are developing products. If the markets we are targeting fail
to accept polymer-based products or determine that other products are
superior, we may not be able to achieve market acceptance of our
products.


                               22
<PAGE>

    Achieving market acceptance for our products will require
marketing efforts and the expenditure of financial and other resources
to create product awareness and demand by customers. We may be unable
to offer products that compete effectively due to our limited
resources and operating history. Also, certain large corporations may
be predisposed against doing business with a company of our limited
size and operating history. Failure to achieve broad acceptance of our
products by customers and to compete effectively would harm our
operating results.


Successful commercialization of our current and future products will
require us to maintain a high level of technical expertise.

    Technology in our target markets is undergoing rapid change. To
succeed in our target markets, we will have to establish and maintain
a leadership position in the technology supporting those markets.
Accordingly, our success will depend on our ability to:

    *   accurately predict the needs of our target customers and
        develop, in a timely manner, the technology required to
        support those needs;

    *   provide products that are not only technologically
        sophisticated but are also available at a price acceptable to
        customers and competitive with comparable products;

    *   establish and effectively defend our intellectual property;
        and

    *   enter into relationships with other companies that have
        developed complementary technology into which our products
        may be integrated.

We cannot assure you that we will be able to achieve any of these
objectives.


Two of our significant target markets are the telecommunications and
networking markets, which continue to be subject to overcapacity and
slow growth or decline.

    Two of our significant target markets are the telecommunications
and networking markets, and developments that adversely affect the
telecommunications or networking markets, including delays in traffic
growth and changes in U.S. government regulation, could slow down, or
even halt our efforts to enter into these markets. Reduced spending
and technology investment by telecommunications companies may make it
more difficult for our products to gain market acceptance. Such
companies may be less willing to purchase new technology such as ours
or invest in new technology development when they have reduced capital
expenditure budgets.


Many of our products will have long sales cycles, which may cause us
to expend resources without an acceptable financial return and which
makes it difficult to plan our expenses and forecast our revenues.

    Many of our products will have long sales cycles that involve
numerous steps, including initial customer contacts, specification
writing, engineering design, prototype fabrication, pilot testing,
device certification, regulatory approvals (if needed), sales and
marketing and commercial manufacture. During this time, we may expend


                               23
<PAGE>


substantial financial resources and management time and effort without
any assurance that product sales will result. The anticipated long
sales cycle for some of our products makes it difficult to predict the
quarter in which sales may occur. Delays in sales may cause us to
expend resources without an acceptable financial return and make it
difficult to plan expenses and forecast revenues.


We will require additional capital to continue to fund our operations.
If we do not obtain additional capital, we may be required to
substantially limit our operations.

     Our business does not presently generate the cash needed to
finance our current and anticipated operations. Based on our current
operating plan and budgeted cash requirements, we believe that we will
be able to fund our operations at least through August 2007. We will
require additional capital to continue to fund our operations in
future periods. We expect that we will need to seek additional funding
through public or private financings, including equity financings, and
through other arrangements, including collaborative arrangements. Poor
financial results, unanticipated expenses or unanticipated
opportunities could require additional financing sooner than we
expect. We currently have no plans or arrangements with respect to the
possible acquisition of additional financing, and such financing may
be unavailable when we need it or may not be available on acceptable
terms. Additional financing may not be available to us, due to, among
other things, our Company not having a sufficient credit history,
income stream, profit level, asset base eligible to be collateralized,
or market for its securities. If we raise additional funds by issuing
equity or convertible debt securities, the percentage ownership of our
existing stockholders may be reduced, and these securities may have
rights superior to those of our common stock. If adequate funds are
not available to satisfy either short-term or long-term capital
requirements, or if planned revenues are not generated, we may be
required to limit our operations substantially. These limitations of
operations may include reductions in capital expenditures and
reductions in staff and discretionary costs.


We may incur debt in the future that might be secured with our
intellectual property as collateral, which could subject our Company
to the risk of loss of all of our intellectual property.

     If we incur debt in the future, we may be required to secure the
debt with our intellectual property, including all of our patents and
patent pendings. In the event we default on the debt, we could incur
the loss of all of our intellectual property, which would materially
and adversely affect our Company and cause you to lose your entire
investment in our Company.


Our quarter-to-quarter performance may vary substantially, and this
variance, as well as general market conditions, may cause our stock
price to fluctuate greatly and potentially expose us to litigation.

     We have generated no sales to date and we cannot accurately
estimate future quarterly revenue and operating expenses based on
historical performance. Our quarterly operating results may vary
significantly based on many factors, including:

     *    fluctuating demand for our potential products and
          technologies;


                               24
<PAGE>


     *    announcements or implementation by our competitors of
          technological innovations or new products;

     *    amount and timing of our costs related to our marketing
          efforts or other initiatives;

     *    the status of particular development programs and the timing
          of performance under specific development agreements;

     *    timing and amounts relating to the expansion of our
          operations;

     *    product shortages requiring suppliers to allocate minimum
          quantities;

     *    announcements or implementation by our competitors of
          technological innovations or new products;

     *    the status of particular development programs and the timing
          of performance under specific development agreements;

     *    our ability to enter into, renegotiate or renew key agreements;

     *    timing and amounts relating to the expansion of our operations;

     *    costs related to possible future acquisitions of technologies
          or businesses; or

     *    economic conditions specific to our industry, as well as
          general economic conditions.

     Our current and future expense estimates are based, in large
part, on estimates of future revenue, which is difficult to predict.
We expect to continue to make significant operating and capital
expenditures in the area of research and development and to invest in
and expand production, sales, marketing and administrative systems and
processes. We may be unable to, or may elect not to, adjust spending
quickly enough to offset any unexpected revenue shortfall. If our
increased expenses are not accompanied by increased revenue in the
same quarter, our quarterly operating results would be harmed.

      In one or more future quarters, our results of operations may
fall below the expectations of investors and the trading price of our
common stock may decline as a consequence. We believe that quarter-to-
quarter comparisons of our operating results will not be a good
indication of our future performance and should not be relied upon to
predict the future performance of our stock price. In the past,
companies that have experienced volatility in the market price of
their stock have often been subject to securities class action
litigation. We may be the target of this type of litigation in the
future. Securities litigation against us could result in substantial
costs and divert our management's attention from other business
concerns, which could seriously harm our business.


                               25
<PAGE>


We cannot predict the pace of marketable products we may generate, and
any inability to generate a sufficient number of marketable products
would reduce our revenues and harm our business.

      Our future revenues and profitability are dependent upon our
ability to create marketable products, whether through our own
research and development efforts or through collaborations with
customers or industry partners. Because of the inherently uncertain
nature of research and development activities, we cannot predict the
pace of new product introductions. We must undertake additional
research and development before we are able to develop additional
products for commercial sale. Product development delays by us or
potential product development partners, or the inability to enter into
relationships with these potential partners, may delay or prevent us
from introducing products for commercial sale. In addition, our
product candidates may not result in products having the commercial
potential we anticipate. Any of these factors could reduce our
potential commercial sales and lead to inability to generate revenue
and attain profitability.


Our failure to compete successfully could harm our business.

     The markets that we are targeting for our electro-optic polymer
technology are intensely competitive. Most of our present and
potential competitors have or may have substantially greater research
and product development capabilities, financial, scientific,
marketing, manufacturing and human resources, name recognition and
experience than we have. As a result, these competitors may:

     *    succeed in developing products that are equal to or superior
          to our potential products or that will achieve greater market
          acceptance than our potential products;

     *    devote greater resources to developing, marketing or selling
          their products;

     *    respond more quickly to new or emerging technologies or
          scientific advances and changes in customer requirements,
          which could render our technologies or potential products
          obsolete;

     *    introduce products that make the continued development of our
          potential products uneconomical;

     *    obtain patents that block or otherwise inhibit our ability to
          develop and commercialize our potential products;

     *    withstand price competition more successfully than we can;

     *    establish cooperative relationships among themselves or with
          third parties that enhance their ability to address the needs
          of our prospective customers; and

     *    take advantage of acquisitions or other opportunities more
          readily than we can.


                               26
<PAGE>

The failure to compete successfully against these existing or future
competitors could harm our business.


We may be unable to establish sales and marketing capabilities
necessary to successfully commercialize our potential products.

     We currently have limited sales and marketing capabilities. To
date, we have relied upon our strategic partners to assist us in
creating an awareness of our developing technology in both the
government and commercial markets. We will need to either hire sales
personnel with expertise in the markets we intend to address or
contract with others to provide for sales support. Although our
potential products are all based on our polymer materials technology,
the potential products themselves address different markets and can be
offered through multiple sales channels. Addressing each market
effectively will require sales and marketing resources tailored to the
particular market and to the sales channels that we choose to employ.
In addition, the markets in which we operate are highly complex and
technical; we may not have the adequate expertise to adequately market
our products. We may be unable to establish marketing and sales
capabilities necessary to commercialize and gain market acceptance for
our potential products. Co-promotion or other marketing arrangements
with others to commercialize products could significantly limit the
revenues we derive from these products, and these parties may fail to
commercialize such products successfully.


We may be unable to obtain effective intellectual property protection
for our potential products and technology.

     Our intellectual property, or any intellectual property that we
have or may acquire, license or develop in the future, may not provide
meaningful competitive advantages. Our patents and patent
applications, including those we license, may be challenged by
competitors, and the rights granted under such patents or patent
applications may not provide meaningful proprietary protection. For
example, numerous patents held by third parties relate to polymer
materials and electro-optic devices. These patents could be used as a
basis to challenge the validity or limit the scope of our patents or
patent applications. A successful challenge to the validity or
limitation of the scope of our patents or patent applications could
limit our ability to commercialize our polymer materials technology
and, consequently, reduce our revenues.

     Moreover, competitors may infringe our patents or those that we
license, or successfully avoid these patents through design
innovation. To combat infringement or unauthorized use, we may need to
resort to litigation, which can be expensive and time-consuming and
may not succeed in protecting our proprietary rights. In addition, in
an infringement proceeding a court may decide that our patents or
other intellectual property rights are not valid or are unenforceable,
or may refuse to stop the other party from using the intellectual
property at issue on the ground that it is non-infringing. Policing
unauthorized use of our intellectual property is difficult and
expensive, and we may not be able to, or have the resources to,
prevent misappropriation of our proprietary rights, particularly in
countries where the laws may not protect these rights as fully as the
laws of the United States.


                               27
<PAGE>


     We also rely on the law of trade secrets to protect unpatented
technology and know-how. We try to protect this technology and know-
how by limiting access to those employees, contractors and strategic
partners with a need to know this information and by entering into
confidentiality agreements with these parties. Any of these parties
could breach the agreements and disclose our trade secrets or
confidential information to our competitors, or these competitors
might learn of the information in other ways. Disclosure of any trade
secret not protected by a patent could materially harm our business.


We may be subject to patent infringement claims, which could result in
substantial costs and liability and prevent us from commercializing
our potential products.

     Third parties may claim that our potential products or related
technologies infringe their patents. Any patent infringement claims
brought against us may cause us to incur significant expenses, divert
the attention of our management and key personnel from other business
concerns and, if successfully asserted against us, require us to pay
substantial damages. In addition, as a result of a patent infringement
suit, we may be forced to stop or delay developing, manufacturing or
selling potential products that are claimed to infringe a patent
covering a third party's intellectual property unless that party
grants us rights to use its intellectual property. We may be unable to
obtain these rights on terms acceptable to us, if at all. Even if we
are able to obtain rights to a third party's patented intellectual
property, these rights may be non-exclusive, and therefore our
competitors may obtain access to the same intellectual property.
Ultimately, we may be unable to commercialize our potential products
or may have to cease some of our business operations as a result of
patent infringement claims, which could severely harm our business.

     If our potential products infringe the intellectual property
rights of others, we may be required to indemnify customers for any
damages they suffer. Third parties may assert infringement claims
against our current or potential customers. These claims may require
us to initiate or defend protracted and costly litigation on behalf of
customers, regardless of the merits of these claims. If any of these
claims succeed, we may be forced to pay damages on behalf of these
customers or may be required to obtain licenses for the products they
use. If we cannot obtain all necessary licenses on commercially
reasonable terms, we may be unable to continue selling such products.


Our technology may be subject to government rights and retained
research institution rights.

     We may have obligations to government agencies or universities in
connection with the technology that we have developed, including the
right to require that a compulsory license be granted to one or more
third parties selected by certain government agencies. In addition,
academic research partners often retain certain rights, including the
right to use the technology for noncommercial academic and research
use, to publish general scientific findings from research related to
the technology, and to make customary scientific and scholarly
disclosures of information relating to the technology. It is difficult
to monitor whether our partners will limit their use of the technology
to these uses, and we could incur substantial expenses to enforce our
rights to our licensed technology in the event of misuse.


                               28
<PAGE>


The loss of certain of our key personnel, or any inability to attract
and retain additional personnel, could impair our ability to attain
our business objectives.

     Our future success depends to a significant extent on the
continued service of our key management personnel, particularly
Frederick J. Goetz, Jr. our president, Dr. Frederick J. Goetz, our
Chief Technical Officer and Andrew J. Ashton, our senior vice
president. We currently do not have written employment agreements with
any of our key management personnel, and we currently do not maintain
key person life insurance on any executive officer. Accordingly, the
loss of the services of any of these persons would adversely affect
our business and our ability to timely commercialize our products, and
impede the attainment of our business objectives.

     Our future success will also depend on our ability to attract,
retain and motivate highly skilled personnel. In particular, we will
need to hire seasoned executive managers to assist us with product
commercialization, in addition to a significant number of technical
personnel. Competition for highly educated qualified personnel in the
polymer industry is intense. If we fail to hire and retain a
sufficient number of qualified management, engineering, sales and
technical personnel, we will not be able to attain our business
objectives.


If we fail to develop and maintain the quality of our manufacturing
processes, our operating results would be harmed.

     The manufacture of our potential products is a multi-stage
process that requires the use of high-quality materials and advanced
manufacturing technologies. Also, polymer-related device development
and manufacturing must occur in a highly controlled, clean environment
to minimize particles and other yield and quality-limiting
contaminants. In spite of stringent quality controls, weaknesses in
process control or minute impurities in materials may cause a
substantial percentage of a product in a lot to be defective. If we
are not able to develop and continue to improve on our manufacturing
processes or to maintain stringent quality controls, or if
contamination problems arise, our operating results would be harmed.


We may utilize third parties to manufacture our current products and
our revenues could decline if these third parties do not timely
complete our orders and our reputation could suffer if we do not
maintain high quality standards.

     We may enter into manufacturing arrangements with third party
manufacturers and we intend to enter into agreements with additional
corporate partners, OEMs and other third parties. We expect to
contract with manufacturing companies to perform various portions of
our product manufacturing, testing, assembly and shipping and purchase
components to be used in our potential products from third-party
vendors. If these third parties do not timely complete our orders, or
do not properly manufacture our products, our reputation could be
harmed, and our revenues could decline. We cannot assure you that we
will be able to negotiate arrangements with these third parties on
acceptable terms, if at all, or that these arrangements will be
successful in yielding commercially viable products. If we cannot
maintain our current relationships or establish new arrangements, we
will require additional capital to undertake those activities on our


                               29
<PAGE>

own and will require manufacturing expertise that we do not currently
possess and that may be difficult to obtain.


If we decide to make commercial quantities of products at our
facilities, we will be required to make significant capital
expenditures to increase capacity.

     We lack the internal ability to manufacture products at a level
beyond the stage of early commercial introduction. To the extent we do
not have an outside vendor to manufacture our products, we will have
to increase our internal production capacity and we will be required
to expand our existing facilities or to lease or construct new
facilities or to acquire entities with additional production
capacities. These activities would require us to make significant
capital investments and may require us to seek additional equity or
debt financing. We cannot assure you that such financing would be
available to us when needed on acceptable terms, or at all. If we are
unable to expand internal production capacity on a timely basis to
meet increases in demand, we could lose market opportunities for
sales. Further, we cannot assure you that any increased demand for our
potential products would continue for a sufficient period of time to
recoup our capital investments associated with increasing our internal
production capacity.

     In addition, we do not have experience manufacturing our
potential products in large quantities. In the event of significant
demand for our potential products, large-scale production might prove
more difficult or costly than we anticipate and lead to quality
control issues and production delays.


We may not be able to manufacture products at competitive prices.

     To date, we have produced limited quantities of products for
research, development and demonstration purposes. The cost per unit
for these products currently exceeds the price at which we could
expect to profitably sell them. If we cannot substantially lower our
cost of production as we move into sales of products in commercial
quantities, our financial results will be harmed.


We conduct significantly all of our research and development
activities at a single facility, and circumstances beyond our control
may result in considerable interruptions.

     We conduct significantly all of our research and development
activities at a single facility in Wilmington, Delaware. A disaster
such as a fire, flood or severe storm at or near this facility could
prevent us from further developing our technologies or manufacturing
our potential products, which would harm our business.


We could be exposed to significant product liability claims that could
be time-consuming and costly and impair our ability to obtain and
maintain insurance coverage.

     We may be subject to product liability claims if any of our
potential products are alleged to be defective or harmful. Product
liability claims or other claims related to our potential products,
regardless of their outcome, could require us to spend significant
time and money in litigation, divert our management's time and
attention from other business concerns, require us to pay significant


                               30
<PAGE>


damages, harm our reputation or hinder acceptance of our potential
products. Any successful product liability claim may prevent us from
obtaining adequate product liability insurance in the future on
commercially reasonable terms. Any inability to obtain sufficient
insurance coverage at an acceptable cost or otherwise to protect
against potential product liability claims could impair our ability to
commercialize our potential products.


We may be unable to effectively implement new transaction accounting,
operational and financial systems.

     To manage the expected growth of our operations and personnel, we
will be required to implement complex transaction accounting,
operational and financial systems, procedures and controls and to
retain personnel experienced in the use of these systems. Deficiencies
in the design and operation of our systems, procedures and controls,
including internal controls, could adversely affect our ability to
record, process, summarize and report material financial information.
We cannot assure you that our current and planned systems, procedures
and controls will be adequate to support our future operations.

Our failure to effectively manage and support our growth could
adversely affect our business.

     Failure to effectively manage and support our growth could
adversely affect our business. To date, substantially all of our
activities and resources have been directed at the research and
development of our technology and development of potential products.
The transition from research and development to a product vendor or
licensor will create significant additional demands on our
infrastructure and will require effective planning and management. We
cannot assure you that our resources will be adequate to support our
future growth. In addition, future expansion will be expensive and
will likely strain our management and other resources. In order to
effectively manage growth, we must:

     *   manage in-house our operating and financial control systems;

     *   continue to develop an effective planning and management
         process to implement our business strategy;

     *   hire, train and integrate new personnel in all areas of our
         business; and

     *   expand our facilities and increase our capital investments.

     We cannot assure you that we will be able to accomplish these
tasks effectively or otherwise effectively manage our growth.


We are subject to regulatory compliance related to our operations.

     We are subject to various U.S. governmental regulations related
to occupational safety and health, labor and business practices.
Failure to comply with current or future regulations could result in


                               31
<PAGE>


the imposition of substantial fines, suspension of production,
alterations of our production processes, cessation of operations, or
other actions, which could harm our business.


We may be unable to export our potential products or technology to
other countries, convey information about our technology to citizens
of other countries or sell certain products commercially, if the
products or technology are subject to United States export or other
regulations.

     We are developing certain polymer-based products that we believe
the United States government and other governments may be interested
in using for military and information gathering or antiterrorism
activities. United States government export regulations may restrict
us from selling or exporting these potential products into other
countries, exporting our technology to those countries, conveying
information about our technology to citizens of other countries or
selling these potential products to commercial customers. We may be
unable to obtain export licenses for products or technology if
necessary. We currently cannot assess whether national security
concerns would affect our potential products and, if so, what
procedures and policies we would have to adopt to comply with
applicable existing or future regulations.


We may incur liability arising from the use of hazardous materials.

     Our business and our facilities are subject to a number of
federal, state and local laws and regulations relating to the
generation, handling, treatment, storage and disposal of certain toxic
or hazardous materials and waste products that we use or generate in
our operations. Many of these environmental laws and regulations
subject current or previous owners or occupiers of land to liability
for the costs of investigation, removal or remediation of hazardous
materials. In addition, these laws and regulations typically impose
liability regardless of whether the owner or occupier knew of, or was
responsible for, the presence of any hazardous materials and
regardless of whether the actions that led to the presence were taken
in compliance with the law. In our business, we use hazardous
materials that are stored on site. We use various chemicals in our
manufacturing process that may be toxic and covered by various
environmental controls. The waste created by use of these materials is
transported off-site by an unaffiliated waste hauler. Many
environmental laws and regulations require generators of waste to take
remedial actions at an off-site disposal location even if the disposal
was conducted lawfully. The requirements of these laws and regulations
are complex, change frequently and could become more stringent in the
future. Failure to comply with current or future environmental laws
and regulations could result in the imposition of substantial fines,
suspension of production, alteration of our production processes,
cessation of operations or other actions, which could severely harm
our business.


Our plan to develop relationships with strategic partners may not be
successful.

     Part of our business strategy is to maintain and develop
strategic relationships with government agencies, private firms, and
academic institutions to conduct research and development of
technologies and products. For these efforts to be successful, we must
identify partners whose competencies complement ours. We must also
successfully enter into agreements with them on terms attractive to
us, and integrate and coordinate their resources and capabilities with
our own. We may be unsuccessful in entering into agreements with
acceptable partners or negotiating favorable terms in these
agreements. Also, we may be unsuccessful in integrating the resources
or capabilities of these partners. In addition, our strategic partners


                               32
<PAGE>


may prove difficult to work with or less skilled than we originally
expected. If we are unsuccessful in our collaborative efforts, our
ability to develop and market products could be severely limited.


As our business grows, if we need to establish global operations, we
will be subject to various risks.

     Many of the markets that we propose to address are global and may
require us to conduct foreign operations, including the establishment
of sales, manufacturing and possible research and development
facilities in other countries. While the specific risks that will
apply to these activities would depend on the circumstances, we could
become subject to risks relating to foreign currency fluctuations,
political and social unrest, local regulatory systems and varying
standards for the protection of intellectual property. The existence
of any of these risks will complicate our business and may lead to
unexpected and adverse effects on our business. If we are required to
conduct significant foreign operations, we will also need expertise in
such operations, which we do not presently have.


Our limited operating history makes financial forecasting difficult
for us and for others that may publish estimates of our future
financial results.

     As a result of our limited operating history, it is difficult to
accurately forecast our revenue and results, including product sales,
cost of revenue, research and development expenses, marketing, general
and administrative expenses and other financial and operating data. We
have a limited amount of meaningful historical financial data upon
which to base projected revenue or expenses. We base our current
expense levels and estimates of future expense levels on our operating
plans and estimates of future revenue, and our future expenses will be
dependent in large part upon our future levels of product sales. Sales
and results are difficult to forecast because we do not currently have
any commercial customers or government contracts, we are uncertain of
the extent of orders for our products and the mix, volume and timing
of any such orders. As a result, we may be unable to make accurate
financial forecasts of revenue or expenses. Financial analysts and
others that may seek to project our future performance face similar
difficulties. This inability to accurately forecast our revenue and
expenses could cause our financial results to differ materially from
any projected financial results and could cause a decline in the
trading price of our common stock.


          Risks Factors Related to Owning Our Common Stock

The market price of our shares may experience extreme price and volume
fluctuations for reasons over which we have little control.

     The trading price of our common stock has been, and is likely to
continue to be, extremely volatile. Over the past 12 months, the
closing price of our common stock as reported on the OTC has ranged
from a high of $2.22 to a low of $0.39. Our stock price could be


                               33
<PAGE>

subject to wide fluctuations in response to a variety of factors,
including, but not limited to, the risks relating to an investment in
our stock described above and the following:

     *    new products or services offered by us or our competitors;

     *    failure to meet any publicly announced revenue projections;

     *    actual or anticipated variations in quarterly operating
          results;

     *    changes in financial estimates by securities analysts;

     *    announcements of significant acquisitions, strategic
          partnerships, joint ventures or capital commitments by us
          or our competitors;

     *    issuances of debt or equity securities; and

     *    other events or factors, many of which are beyond our
          control.

     In addition, companies that trade their securities in the over-
the-counter markets experience extreme price and volume fluctuations
that are often unrelated or disproportionate to the operating
performance of these companies. A multitude of factors could
negatively affect the market price of our common stock, regardless of
our actual operating performance.


Our Company's securities are subject to the United States Securities
and Exchange Commission's penny stock regulations, which may cause our
stockholders to experience difficulties in reselling their securities.

      Our securities are subject to the United States Securities and
Exchange Commission's (the "SEC" or "Commission") rules that regulate
broker-dealer practices in connection with transactions in "penny
stocks." Generally, penny stocks are equity securities traded over-
the-counter with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange
or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document prepared by the
Commission that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in
the transaction, and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from such rules the broker-dealer must make
a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the secondary
market for a stock that is subject to the penny stock rules. Since our
securities are subject to the penny stock rules, stockholders in our
Company may encounter some difficulties while selling their shares of
common stock.


                               34
<PAGE>


Shares eligible for sale in the future could depress the market price
of our common stock and impair our ability to raise additional capital
through the sale of our equity securities.

     All but approximately 3,748,785 shares of our presently issued
and outstanding common stock are either (i) freely tradable; or (ii)
eligible for sale under Rule 144 of the Securities Act of 1933, as
amended ("Rule 144"), so long as all of the conditions of Rule 144 are
met. Sales of a substantial number of shares of common stock into the
public market, or the perception that such sales may occur, could
depress the market price of our common stock and impair our ability to
raise additional capital through the sale of our equity securities.


If we authorize the issuance of additional securities, existing
stockholders may experience future ownership dilution.

     Our Articles of Incorporation provide that we may issue up to
50,000,000 shares of common stock, $0.001 par value and 1,000,000
shares of preferred stock, $0.001 par value. In the event we issue
additional shares of common stock in connection with our contemplated
growth plans or otherwise, our stockholders will experience future
ownership dilution that could adversely affect prevailing market
prices for our common stock.


Our board of directors has the discretion to assign rights and
preferences to our blank check preferred stock.

     Pursuant to our Company's Articles of Incorporation, we are
authorized to issue 1,000,000 shares of preferred stock, and our board
of directors has the discretion to assign rights and preferences to
our preferred stock without the approval of our common stockholders.
The rights and preferences of this preferred stock may be superior to
the rights and preferences of our common stock; and the issuance of
this preferred stock could serve to deter or prevent a takeover from a
third party. This type of preferred stock is commonly referred to as
"Blank Check Preferred Stock."


Item 2.   Management's Discussion and Analysis or Plan of Operation.

                      Plan of Operation

     The following plan of operation provides information that
management believes is relevant to an assessment and understanding of
our plans and financial condition. The following selected financial
information is derived from our historical financial statements and
should be read in conjunction with such financial statements and notes
thereto set forth elsewhere herein and the "Forward-Looking
Statements" explanation included herein.

Overview

      Third-Order Nanotechnologies, Inc., formerly, PSI-TEC Holdings,
Inc., formerly Eastern Idaho Internet Service, Inc. was organized
under the laws of the State of Nevada in 1997, where we engaged in the
business of marketing Internet services until June 30, 1998 when our


                               35
<PAGE>


operations were discontinued.  We were then inactive until we acquired
PSI-TEC Corporation as our wholly owned subsidiary on July 14, 2004,
at which time our name was changed to PSI-TEC Holdings, Inc.  On
October 20, 2006, we completed a parent-subsidiary merger with PSI-TEC
Corporation whereby we were the surviving corporation of the merger,
and our name was changed to Third-Order Nanotechnologies, Inc.

     We are a developmental stage company that has developed and
continues to develop high-activity, high-stability electro-optic
polymers (plastics) that we believe could have a broad range of
applications in the electro-optic device market. We engineer our
proprietary electro-optic plastics at the molecular level for superior
performance, stability, cost-efficiency and ease of processability.
We expect our electro-optic plastics to broadly replace more
expensive, lower-performance materials that are currently used in
fiber-optic ground, wireless and satellite communication networks.

     In order to transmit digital information at extremely high-speeds
(wide bandwidth) over the Internet, it is necessary to convert the
electrical signals produced by a computer into optical signals for
transmission over long-distance fiber-optic cable.  The actual
conversion of electricity to an optical signal may be performed by a
molecularly-engineered material known as an electro-optic plastic.

     We are currently developing electro-optic plastics that promise
performance many times faster than any technology currently available
and that have unprecedented thermal stability. High-performance
electro-optic materials produced by our Company have demonstrated
stability as high as 350 degrees Celcius.  Stability above 300
degrees Celcius is necessary for vertical integration into many
semi-conductor production lines. Recent results, independently
confirmed by the University of Arizona, have demonstrated that the
molecular performance of some of our Company's molecular designs
perform 650% better than competitive electro-optic compounds.

     Our revenue model relies substantially on the assumption that we
will be able to successfully develop electro-optic products for
applications within the industries described below. When appropriate,
we intend to create specific materials for each of these applications
and use our proprietary knowledge base to continue to enhance its
discoveries.

     *    Satellite Reconnaissance
     *    Navigational Systems
     *    Radar Applications
     *    Telecommunications
     *    Backplane Optical Interconnects
     *    Entertainment
     *    Medical Applications

To be successful, we must, among other things:

     *    Develop and maintain collaborative relationships with
          strategic partners;

     *    Continue to expand our research and development efforts for
          our products;

     *    Develop and continue to improve on our manufacturing
          processes and maintain stringent quality controls;


                               36
<PAGE>


     *    Produce commercial quantities of our products at
          commercially acceptable prices;

     *    Rapidly respond to technological advancements;

     *    Attract, retain and motivate qualified personnel; and

     *    Obtain and retain effective intellectual property protection
          for our products and technology.

     We believe that Moore's Law (a principle which states the number
of transistors on a silicon chip doubles approximately every eighteen
months) will create markets for our high-performance electro-optic
material products.

Plan of Operation

     Since our inception, we have been engaged primarily in the
research and development of our polymer materials technologies and
potential products. We are devoting significant resources to engineer
next-generation electro-optic plastics for future applications to be
utilized by electro-optic device manufacturers, such as
telecommunications component and systems manufacturers, networking and
switching suppliers, semiconductor companies, aerospace companies and
government agencies. We expect to continue to develop products that we
intend to introduce to these rapidly changing markets and to seek to
identify new markets. We expect to continue to make significant
operating and capital expenditures for research and development
activities.

     As we move from a development stage company to a product vendor,
we expect that our financial condition and results of operations will
undergo substantial change. In particular, we expect to record both
revenue and expense from product sales, to incur increased costs for
sales and marketing and to increase general and administrative
expense. Accordingly, the financial condition and results of
operations reflected in our historical financial statements are not
expected to be indicative of our future financial condition and
results of operations.

     On August 8, 2006, we contracted with Triple Play Communications
Corporation, a design and market consulting company, to deliver a
comprehensive market opportunity assessment report for high speed 40G
(commercial) & 100G+ (military/aerospace) modulators and system
applications.

     In August, 2006 we entered into a co-location agreement with
InPlane Photonics, a New Jersey-based micro-optics company that
allowed our scientists to establish a pre-production line in order to
test and integrate our organic materials into waveguide devices and
system prototypes as a first step toward product commercialization.
This agreement was terminated at the end of January 2007 in favor of a
strategic relationship with Photon-X LLC, a Pennsylvania-based firm
with extensive experience in polymer waveguide processing. The
relationship with Photon-X affords our company access to a full suite
of fabrication facilities capable of producing commercial quantities
of precision micro-optic devices such as high-speed (40GHz) telecom
modulators, optical filters, and optical interconnects important to
military and civilian global information movement and management
markets.


                               37
<PAGE>


     On September 25, 2006 we obtained independent laboratory results
that confirmed the thermal stability of our Perkinamine electro-optic
materials. Thermal stability as high as 350 degrees Celsius was
confirmed, significantly exceeding many other commercially available
high performance electro-optic materials, such as CLD-1 which exhibits
thermal degradation in the range of 250 degrees Celsius to 275 degrees
Celsius. This high temperature stability of our materials eliminates a
major obstacle to vertical integration of electro-optic polymers into
standard microelectronic manufacturing processes (e.g. wave/vapor-
phase soldering) where thermal stability of at least 300 degrees
Celsius is required. In independent laboratory tests, ten-percent
material degradation, a common evaluation of overall thermal
stability, did not occur until our Perkinamine material base was
exposed to temperatures as high as 350 degrees Celsius, as determined
by Thermo-Gravimetric Analysis (TGA). The test results supported our
Company's progress to introduce our materials into commercial
applications such as optical interconnections, high-speed telecom and
datacom modulators, and military/aerospace components.

     On December 7, 2006, we entered into a memorandum of
understanding with Photon-X, LLC, a technology solutions provider for
polymer waveguides that works in conjunction with various government
agencies. In connection therewith, we will provide Photon-X with our
unique polymeric material to be tested and used on certain niche
devices for anticipated military and commercial applications.  If the
tests are successful, our management believes that our alliance with
Photon-X will serve to simultaneously lead its commercialization as
well as publicly validate its scientific findings, creating a new
standard in electro-optic polymers.

     We ultimately intend to use our next-generation electro-optic
plastics for future applications vital to the following industries. We
expect to create specific materials for each of these applications as
appropriate:

     *   Satellite Reconnaissance
     *   Navigational Systems
     *   Radar Applications
     *   Telecommunications
     *   Backplane Optical Interconnects
     *   Entertainment
     *   Medical Applications

     In an effort to maximize our future revenue stream from our
electro-optic polymer products, we are currently evaluating each of or
some combination of the following approaches:

     *   Licensing our technology for individual specific applications;
     *   Entering into collaborative or joint venture agreements with
         one or a number of partners; or
     *   Selling our products directly to commercial customers.

     Additionally, we must create an infrastructure, including
operational and financial systems, and related internal controls, and
recruit qualified personnel. Failure to do so could adversely affect
our ability to support our operations.


                               38
<PAGE>

     We have incurred substantial net losses since inception. We have
satisfied our capital requirements since inception primarily through
the issuance and sale of common stock. During   2004 we raised
approximately $30,000 from the sale of our common stock and $499,000
from the issuance of convertible promissory notes that were
subsequently converted to common stock in 2005. Also, during 2005, we
raised an aggregate of $1,000,000 from the private sale of our common
stock. From June 2006 to date, we raised approximately $999,000 from
the private sale of our common stock.

Recent Developments

     Award

     On September 26, 2006, we were awarded the 2006 Electro-Optic
Materials Technology Innovation of the Year Award by Frost & Sullivan.
Frost & Sullivan's Technology Innovation of the Year Award is bestowed
upon candidates whose original research has resulted in innovations
that have, or are expected to bring, significant contributions to
multiple industries in terms of adoption, change, and competitive
posture. This award recognizes the quality and depth of our Company's
research and development program as well as the vision and risk-taking
that enabled us to undertake such an endeavor.

     Stock Issuances

     On June 15, 2006, our Company's board of directors authorized our
Company to raise up to $1,500,000 of capital by selling its equity
securities and warrants to purchase its equity securities pursuant to
a private offering. On December 11, 2006, our Company's board of
directors authorized our Company to amend its this private offering to
authorize our Company to raise up to $1,000,000 of capital by selling
its equity securities and warrants to purchase its equity securities
pursuant to an amended private offering. The amended private offering
raised an aggregate of $999,000, $425,000 during 2006 and $574,000
during the first quarter of 2007, and was closed in March 2007.

     Pursuant to the terms of the amended offering, up to 20 units
were offered at the offering price of $50,000 per unit, with each unit
comprised of 100,000 shares of common stock, and a warrant to purchase
50,000 shares of common stock at $0.50 per share. The warrants are
exercisable at any time for a period of two years commencing on the
date our Company accepted the purchaser's subscription pursuant to the
amended offering. We issued an aggregate of approximately 20 units
pursuant to the amended private offering in exchange for net proceeds
totaling $999,000. All units were issued at $50,000 per unit.

     Also, in connection with the amended private offering, we and our
investors entered into a registration rights agreement pursuant to
which we agreed that if within 12 months after the closing of the
amended private offering our Company files a Form SB-2 registration
statement (or such other form that it is eligible to use) with the
Securities and Exchange Commission to register some or all of our
outstanding shares of common stock for resale and distribution, that


                               39
<PAGE>

subject to certain limitations, upon their request, we would include
all of the shares of common stock offered and sold to our investors
pursuant to the amended private offering.

     On November 29, 2006, our Company authorized the issuance of
60,000 shares of our Company's common stock, $0.001 par value, to a
consulting firm pursuant to a consulting agreement.

Results of Operations

Comparison of Fiscal 2006 to Fiscal 2005

     Revenues

     We had no revenues in fiscal 2006 or 2005 since we are a
development stage company that has yet to commence revenue creating
operations.

     Operating Expenses

     Our operating expenses were $2,657,459 and $1,708,057 for the
years ended December 31, 2006 and 2005, respectively, for an increase
of $949,402. This increase in operating expenses was due primarily to
our hiring additional personnel, significantly increasing our research
and development activities and costs associated with being a public
company.

     Included in our operating expenses for 2006 was $1,986,363 for
research and development expenses compared to $813,725 for 2005 and
$671,096 for general and administrative expenses compared to $894,332
for 2005.

     Research and development expenses currently consist primarily of
compensation for employees and contractors engaged in internal
research and product development activities; laboratory operations,
outsourced development and processing work; fees and expenses related
to patent applications and intellectual property protection; costs
incurred in acquiring and maintaining licenses; and related operating
expenses.

     We expect to continue to incur substantial research and
development expense to develop commercial products that utilize our
electro-optic plastics. These expenses could increase as a result of
continued development and commercialization of our electro-optic
materials technology; subcontracting work to potential development
partners; expanding and equipping in-house laboratories; hiring
additional technical and support personnel; pursuing other potential
business opportunities; and incurring related operating expenses.

     General and administrative expense consists primarily of
compensation and support costs for management and administrative
staff, and for other general and administrative costs, including
executive, investor relations, accounting and finance, legal,
consulting and other operating expenses, including laboratory space
rental costs.


                               40
<PAGE>


     We expect general and administrative expense to increase in
future periods as we increase the level of corporate and
administrative activity, including increases associated with our
operation as a public company; and significantly increase expenditures
related to the future production and sales of our products.

     Other Income (Expense)

     Other income was $60,940 in the year ended December 31, 2006,
consisting of $243 of interest income on cash deposits and short term
investments, $1,527 of dividend income, $63,187 of realized gain on
investment and $4,017 of interest expense compared to other income
(expense) of $(13,708) in the year ended December 31, 2005, consisting
of $6,994 of interest income on cash deposits and short term
investments and $20,702 of interest expense.

     Net Loss

     Net loss was $2,596,519 and $1,721,765 for the years ended
December 31, 2006 and 2005, respectively, for an increase of $874,754,
primarily resulting from research and development and general and
administrative expenses incurred as described above.

Comparison of Fiscal 2005 to Fiscal 2004

     Revenues

     We had no revenues in fiscal 2005 or 2004 since we are a
development stage company that has yet to commence revenue creating
operations.

     Operating Expenses

     Our operating expenses were $1,708,057 and $722,386 for the years
ended December 31, 2005 and 2004, respectively, for an increase of
$985,671. This increase in operating expenses was due primarily to our
hiring additional personnel, significantly increasing our research and
development activities and costs associated with being a public
company.

     Included in our operating expenses for 2005 was $813,725 for
research and development expenses compared to $263,702 for 2004 and
$894,332 for general and administrative expenses compared to $458,684
for 2004.

     Research and development expenses currently consist primarily of
compensation for employees and contractors engaged in internal
research and product development activities; laboratory operations,
outsourced development and processing work; fees and expenses related
to patent applications and intellectual property protection; costs
incurred in acquiring and maintaining licenses; and related operating
expenses.

     We expect to continue to incur substantial research and
development expense to develop commercial products that utilize our
electro-optic plastics. These expenses could increase as a result of
continued development and commercialization of our electro-optic


                               41
<PAGE>

materials technology; subcontracting work to potential development
partners; expanding and equipping in-house laboratories; hiring
additional technical and support personnel; pursuing other potential
business opportunities; and incurring related operating expenses.

     General and administrative expense consists primarily of
compensation and support costs for management and administrative
staff, and for other general and administrative costs, including
executive, investor relations, accounting and finance, legal,
consulting and other operating expenses, including laboratory space
rental costs.

     We expect general and administrative expense to increase in
future periods as we increase the level of corporate and
administrative activity, including increases associated with our
operation as a public company; and significantly increase expenditures
related to the future production and sales of our products.

     Other Income (Expense)

     Other income (expense) was $(13,708) in the year ended December
31, 2005, consisting of $6,994 of interest income on cash deposits and
short term investments and $20,702 of interest expense compared to
other income of $240 of interest income on cash deposits and short
term investments in the year ended December 31, 2004.

     Net Loss

     Net loss was $1,721,765 and $722,146 for the years ended December
31, 2005 and 2004, respectively, for an increase of $999,619,
primarily resulting from research and development and general and
administrative expenses incurred as described above.

Critical Accounting Policies

     The Company's accounting policies are more fully described in
Note 1 of Notes to Financial Statements. As disclosed in Note 1 of
Notes to Financial Statements, the preparation of financial statements
in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions
about future events that affect the amounts reported in the financial
statements and accompanying notes. Future events and their effects
cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual
results inevitably will differ from those estimates, and such
differences may be material to the financial statements. The Company
believes that, of its significant accounting policies, the following
may involve a higher degree of judgment, estimation, or complexity
than other accounting policies.

     Merger

     On July 14, 2004, the Company acquired PSI-TEC.  Under the terms
of the merger agreement, the stockholders of PSI-TEC received
15,600,000 shares of common stock in exchange for its 2,206,280
shares.  Following the merger, the Company changed its name to PSI-TEC
Holdings, Inc.  Under accounting principles generally accepted in the
United States, the share exchange is considered to be a capital


                               42
<PAGE>

transaction in substance rather than a business combination.  That is,
the share exchange is equivalent to the issuance of stock by PSI-TEC
Holdings, Inc. for the net monetary assets of PSI-TEC, accompanied by
a recapitalization, and is accounted for as a change of capital
structure.  Accordingly, the accounting for the share exchange will be
identical to that resulting from a reverse acquisition, except no
goodwill will be recorded.  Under reverse takeover accounting, the
post-reverse acquisition comparative historical financial statements
of the legal acquirer, PSI-TEC Holdings, Inc., are those of the legal
acquiree, PSI-TEC, which is considered to be the accounting acquirer.
On October 20, 2006, PSI-TEC Holdings, Inc. and PSI-TEC merged and
changed its name to Third-Order Nanotechnologies, Inc.

     Stock Based Compensation

     In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS 123 (revised 2004), Share-Based Payment ("SFAS
123R").  SFAS 123(R) supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash
Flows.  Generally, the approach in SFAS 123(R) is similar to the
approach described in SFAS 123.  However, SFAS 123(R) requires share-
based payments to employees, including grants of employee stock
options, to be recognized in the income statement based on their fair
values at the date of grant.  Pro forma disclosure is no longer an
alternative.

     On January 1, 2006, the Company adopted SFAS 123(R) using the
modified prospective method as permitted under SFAS 123(R).  Under
this transition method, compensation cost recognized in the first
quarter of 2006 includes compensation cost for all share-based
payments granted prior to but not yet vested as of December 31, 2005,
based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123.  In accordance with the modified prospective
method of adoption, the Company's results of operations and financial
position for prior periods have not been restated.

     The Company uses the Black-Scholes option pricing model to
calculate the grant-date fair value of an award.

Liquidity and Capital Resources

     During 2006, net cash used in operating activities was $742,675
and net cash provided by investing activities was $166,873, which was
derived primarily by proceeds from the sale of available securities.
Net cash provided by financing activities during 2006 was $426,303.
At December 31, 2006, our cash and cash equivalents totaled $528, our
assets totaled $839,746, our liabilities totaled $264,974, and we had
stockholders' equity of $574,772.

     During 2005, net cash used in operating activities was $775,298
and net cash used in investing activities was $238,687, which were
financed primarily by proceeds from the sale of common stock. Net cash
provided by financing activities during 2005 was $995,620.  At
December 31, 2005, our cash and cash equivalents totaled $150,027, our
assets totaled $959,110, our liabilities totaled $127,232 and we had
stockholders' equity of $831,878.


                               43
<PAGE>

     Sources and Uses of Cash

     Our future expenditures and capital requirements will depend on
numerous factors, including: the progress of our research and
development efforts; the rate at which we can, directly or through
arrangements with original equipment manufacturers, introduce and sell
products incorporating our plastic materials technology; the costs of
filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights; market acceptance of our products
and competing technological developments; and our ability to establish
cooperative development, joint venture and licensing arrangements. We
expect that we will incur in excess of $1 million of expenditures over
the next 12 months. Our cash requirements are expected to increase at
a rate consistent with revenue growth as we expand our activities and
operations with the objective of commercializing our electro-optic
plastic technology during 2008.

     Our business does not presently generate the cash needed to
finance our current and anticipated operations. We believe we have
raised sufficient capital to finance our operations for the next five
(5) months, however, we will need to obtain additional future
financing during the latter part of 2007 to finance our operations
until such time that we can conduct profitable revenue-generating
activities. Such future sources of financing may include cash from
equity offerings, exercise of warrants and stock options and proceeds
from debt instruments; but we cannot assure you that such equity or
borrowings will be available or, if available, will be at rates or
prices acceptable to us.  If adequate funds are not available to
satisfy either short-term or long-term capital requirements, or if
planned revenues are not generated, we may be required to
substantially limit our operations. This limitation of operations may
include reductions in capital expenditures and reductions in staff and
discretionary costs.

     We expect that our cash used in operations will increase during
2007 and beyond as a result of the following planned activities:

     *   The addition of management, sales, marketing, technical and
         other staff to our workforce;

     *   Increased spending for the expansion of our research and
         development efforts, including purchases of additional
         laboratory and production equipment;

     *   Increased spending in marketing as our products are introduced
         into the marketplace;

     *   Developing and maintaining collaborative relationships with
         strategic partners;

     *   Developing and improving our manufacturing processes and
         quality controls; and

     *   Increases in our general and administrative activities
         related to our operations as a reporting public company and
         related corporate compliance requirements.


                               44
<PAGE>


     Analysis of Cash Flows

     For the year ended December 31, 2006

     Net cash used in operating activities was $742,675 for the year
ended December 31, 2006, consisting of payments for management, legal,
professional and consulting expenses, rent and other expenditures
necessary to develop our business infrastructure, offset by $63,187 in
realized gains on investments and $9,353 in prepaid expenses.

     Net cash provided by investing activities was $166,873 for the
year ended December 31, 2006, consisting of $8,514 for intangibles, as
well as the proceeds from the sale of available for sale securities of
$175,387.

     Net cash provided by financing activities was $426,303 for the
year ended December 31, 2006 and consisted of $425,000 of proceeds
from the sale of our common stock, and $6,500 from a subscription
receivable, offset by the repayment of $5,197 of notes payable.

     For the year ended December 31, 2005

     Net cash used in operating activities was $775,298 for the year
ended December 31, 2005, consisting of payments for management, legal,
professional and consulting expenses, rent and other expenditures
necessary to develop our business infrastructure, offset by $762,565
in deferred charges and $26,334 in accounts payable.

     Net cash used in investing activities was $238,687 for the year
ended December 31, 2005, consisting of $24,825 for laboratory
equipment, $13,862 for intangibles, as well as the purchase of
$200,000 of investment securities.

     Net cash provided by financing activities was $995,620 for the
year ended December 31, 2005 and consisted of $1,000,000 of proceeds
from the sale of our common stock, offset by the payment of $4,380
related to a loan payable.

Inflation and Seasonality

     We do not believe that our operations are significantly impacted
by inflation. Our business is not seasonal in nature.


Item 3.   Description Of Property.

     We share approximately 1,200 square feet of office space with
Universal Capital Management, Inc. for our executive and business
office headquarters that are located at 2601 Annand Dr. #16,
Wilmington, Delaware 19808. We coordinate our operations and market
our services from this space. Universal Capital Management, Inc.
allows us to utilize this office space free of charge on a month-to-
month basis.

                               45
<PAGE>


     We also lease approximately 1,400 square feet of laboratory space
at 41A Germay Drive, Wilmington, Delaware 19804-1100. We operate an
organic synthesis and thin-films laboratory from this facility, which
has state-of-the-art equipment including NMR, IR, UV/VIS and HPLC
analytical systems, profilometry evaluation and electro-optic (r33)
materials characterization necessary to produce next generation fiber-
optic organic materials. We lease this space at fair market value
rates from a third party. The lease expires on December 31, 2008 and
annual rent for the space is $8,400.

    We believe our executive and business office headquarters are
adequate for our reasonably foreseeable needs.

Item 4.  Security Ownership Of Certain Beneficial Owners And
         Management.

         Security Ownership of Certain Beneficial Owners

    The following table sets forth the names, addresses, amount and
nature of beneficial ownership and percent of such ownership of each
person or group known to our Company to be the beneficial owner of
more than five percent (5%) of our common stock:

<TABLE>
<CAPTION>
  Name and Address                Amount and Nature
of Beneficial Owner (1)        of Beneficial Ownership(3)   % of Class Owned (5)
- -----------------------        --------------------------   --------------------
<S>                            <C>                          <C>
Frederick J. Goetz, Jr.  (2)            3,372,000                   11.17%

Frederick J. Goetz (2)                  6,597,000 (4)               21.85%

Mary Goetz (2)                          6,597,000 (4)               21.85%

Andrew J. Ashton                        3,132,000                   10.37%

- ---------------------------
</TABLE>

1.   In care of our Company at 2601 Annand Dr. #16, Wilmington,
     Delaware 19808.
2.   Frederick J. Goetz and Mary Goetz are Husband and wife, and
     Frederick J. Goetz, Jr. is their son.
3.   To our best knowledge, as of the date hereof, such holders had
     the sole voting and investment power with respect to the voting
     securities beneficially owned by them, unless otherwise indicated
     herein. Includes the person's right to obtain additional shares
     of common stock within 60 days from the date hereof.
4.   Consists of (i) 3,465,000 shares of common stock owned by
     Frederick J. Goetz; and (ii) 3,132,000 shares of common stock
     owned by Mary Goetz. Each of Frederick J. Goetz and Mary Goetz
     disclaim any beneficial ownership of their spouse's shares of
     common stock.
5.   Based on 30,188,535 shares of common stock outstanding. Does not
     include shares underlying: (i) options to purchase shares of our
     common stock under our 2005 Stock Option Plan, or (ii)
     outstanding warrants to purchase shares of our common stock.


                               46
<PAGE>


                Security Ownership of Management

     The following table sets forth the names, addresses, amount and
nature of beneficial ownership and percent of such ownership of our
common stock of each of our officers and directors, and officers and
directors as a group:

<TABLE>
<CAPTION>
  Name and Address                Amount and Nature
of Beneficial Owner (1)        of Beneficial Ownership(2)   % of Class Owned (3)(4)
- -----------------------        --------------------------   -----------------------
<S>                            <C>                          <C>
Ronald R. Genova
Interim Chief Executive
Officer (5)                             444,000 (6)                  1.47%

Harold R. Bennett
Director
Chief Executive Officer (7)                  ** (8)                    ** (8)

Frederick J. Goetz, Jr. (9)
Director, President                   3,372,000                     11.17%

Frederick J. Goetz (9)
Chief Technology Officer              6,597,000 (10)                21.85%

Andrew J. Ashton
Director, Executive
Vice President, Treasurer
Secretary                             3,132,000                     10.37%

Directors and Officers as
a Group (5 Persons)                  13,545,000                     44.86%

- ----------------------------
</TABLE>
1.   In care of our Company at 2601 Annand Dr. #16, Wilmington,
     Delaware 19808.
2.   To our best knowledge, as of the date hereof, such holders had
     the sole voting and investment power with respect to the voting
     securities beneficially owned by them, unless otherwise indicated
     herein. Includes the person's right to obtain additional shares
     of common stock within 60 days from the date hereof.
3.   Based on 30,188,535 shares of common stock outstanding. Does not
     include shares underlying: (i) options to purchase shares of our
     common stock under our 2005 Stock Option Plan, or (ii)
     outstanding warrants to purchase shares of our common stock.
4.   If a person listed on this table has the right to obtain
     additional shares of common stock within 60 days from the date
     hereof, the additional shares are deemed to be outstanding for
     the purpose of computing the percentage of class owned by such
     person, but are not deemed to be outstanding for the purpose of
     computing the percentage of any other person.
5.   From September 2005 to February 2007, Mr. Genova served as our
     Interim Chief Executive Officer.


                               47
<PAGE>

6.   Consists of an option to purchase up to 444,000 shares of common
     stock exercisable within 60 days from the date hereof.
7.   Mr. Bennett was appointed to serve as our Chief Executive Officer
     in March 2007.
8.   Our company has not yet negotiated an employment compensation
     package with Mr. Bennett.
9.   Frederick J. Goetz and Mary Goetz are Husband and wife, and
     Frederick J. Goetz, Jr. is their son.
10.  Consists of (i) 3,465,000 shares of common stock owned by
     Frederick J. Goetz; and (ii) 3,132,000 shares of common stock
     owned by Mary Goetz. Frederick J. Goetz disclaims any beneficial
     ownership of the 3,132,000 shares of common stock owned by Mary
     Goetz, his wife.

Item 5.  Directors And Executive Officers, Promoters And Control
         Persons.

Our current directors and executive officers are as follows:

<TABLE>
<CAPTION>
     Name                  Age     Position                   Term/Period Served
     ----                  ---     --------                   ------------------
<S>                        <C>     <C>                        <C>
Harold R. Bennett          50      Director, Chief Executive   1 yr./Since 2007
                                   Officer
Frederick J. Goetz, Jr.    32      Director, President         1 yr./Since 2004

Frederick J. Goetz (1)     64      Chief Technology Officer    ----/Since Inception (1)

Andrew J. Ashton           31      Director, Senior Vice       1 yr./Since 2004
                                   President, Treasurer,
                                   Secretary
- ------------------------
</TABLE>
1.   Dr. Goetz was the founder of PSI-TEC Corporation and has served
     as an officer and until 2005, a director, of our Company since
     its inception.

     Mr. Harold R. Bennett.  Mr. Bennett has served as an officer and
     ---------------------
director of our Company since March 2007. For over a decade, Mr.
Bennett has acted as a corporate restructuring advisor for large high-
tech corporations, including DuPont, Silicon Graphics, 3M and Sun
Microsystems. Most recently, Mr. Bennett successfully implemented a
program for DuPont to outsource innovation by creating a new business
model for DuPont Ventures. He started his restructuring career by
turning around Research Systems, a scientific software company, which
was acquired by Kodak two years subsequent to his involvement with
that company. Before that, he gained extensive experience in starting
and growing companies in Silicon Valley, including Aprex, West End
Partners Imaging and Digital Research. Mr. Bennett has a degree in
Mathematical Physics from Stanford University and is named on several
U.S. Patents.

      Mr. Frederick J. Goetz, Jr. Mr. Goetz has served as an officer
      ---------------------------
and director of our Company since 2004. Mr. Goetz is in charge of the
day-to-day operations of PSI-TEC and its movement to a fully
functioning commercial corporation. He is a leader in the corporate
coding and operation of electrostatic simulation software for
nonlinear optic materials development and aids in the development of
novel molecular designs and quantum mechanical interpretation at our


                               48
<PAGE>

Mr. Goetz began his career at Lawrence Berkeley Laboratory
and the Army Research Laboratory on Aberdeen Proving Grounds after
graduating first in his class in physics from the University of
Delaware. He holds a degree in physics and currently serves as
technical advisor on the board of Universal Capital Management.
Frederick J. Goetz, Jr. is Dr. Goetz's son.

      Dr. Frederick J. Goetz. Dr. Goetz founded our Company in 1991 and
      -----------------------
has served as an officer and until 2005, a director, of our Company
since its inception. Dr. Goetz has dedicated his life to the
advancement of electro-optics. A recognized industrial expert in
polyheterocyclic organic chemistry, his distinguished career began at
American Aniline Products, where he served as a research project team
leader. He went on to lead groups at American Color and Chemical
Corporation, Hooker Chemical and Plastics, Occidental Petroleum
(Senior Scientist), Occidental Chemical, DuPont Experimental Station
(Research Associate), Pennwalt, and Atochem North America. Dr. Goetz
established an electro-optics program at Atochem, before founding PSI-
TEC Corporation in 1991. Dr. Goetz is Frederick J. Goetz, Jr.'s
father.

      Mr. Andrew J. Ashton.  Mr. Ashton has served as an officer and
      --------------------
director of our Company since 2004. Mr. Ashton is a skilled computer
scientist and organic chemist who, prior to joining our Company,
worked in composite and sensor materials development at the Army
Research Laboratory. To date, Mr. Ashton has been instrumental in
securing more than $2,000,000 in government funding for PSI-TEC and is
fully engaged in our Company's strategic initiatives.


Item 6.  Executive Compensation.

      The table below summarizes all compensation awarded to, earned
by, or paid to our current executive officers for the fiscal years
ended December 31, 2006 and 2005.

<TABLE>
<CAPTION>
                    Summary Compensation Table
                    --------------------------
                                                                              Nonqualified
Name                                                           Non-Equity       Deferred
and                                       Stock     Option   Incentive Plan   Compensation     All Other
principal                Salary   Bonus   Awards    Awards    Compensation      Earnings     Compensation     Total
position           Year   ($)      ($)     ($)       ($)          ($)             ($)            ($)           ($)
- --------           ----  ------   -----   ------   --------  --------------   ------------   ------------   --------
<S>                <C>   <C>      <C>     <C>      <C>       <C>              <C>            <C>            <C>

Ronald R. Genova,  2006  96,000     0       0      $473,737       0               0              0         $569,737
Interim CEO(1)     2005  51,000     0       0         0           0               0              0         $ 51,000

Frederick J.       2006  96,000     0       0         0           0               0              6,000(5)  $102,000
 Goetz, Jr.,       2005  96,000     0       0         0           0               0              6,000(5)  $102,000
President,
Director(2)

Frederick J.       2006  72,000     0       0         0           0               0              0         $ 72,000
 Goetz, Sr.,       2005  72,000     0       0         0           0               0              4,000     $ 76,000
Chief Tech.
Officer, Former
Director(3)

Andrew J. Ashton,  2006  96,000     0       0         0           0               0              0         $ 96,000
Vice Pres.,        2005  96,000     0       0         0           0               0              0         $ 96,000
Treasurer,
Director(4)
</TABLE>


                               49
<PAGE>


(1)  From September 2005 to February 2007, Mr. Genova served as our
     Interim Chief Executive Officer. Mr. Genova received $8,000 per month
     for serving as our interim chief executive officer. During 2005,
     $24,000 of Mr. Genova's salary was for serving as our interim chief
     executive officer and $27,000 was for consulting services Mr. Genova
     provided our Company prior to September 2005. Mr. Genova deferred
     payment of $24,000 owed to him during 2006 due to our limited
     operating capital.  Previously, on May 6, 2005, we entered into an
     Advisory Board Agreement with Mr. Genova whereby we named Mr. Genova
     to our Advisory Board to provide advisory services to our Company, and
     pursuant to that agreement we issued to Mr. Genova a warrant to
     purchase 100,000 shares of our common stock at an exercise price of
     $2.10 per share. On February 14, 2006, we canceled that warrant and
     granted Mr. Genova stock options to purchase up to 500,000 shares of
     our common stock at the exercise price of $1.00 per share pursuant to
     our 2005 Stock Option Plan.
(2)  We have no written employment agreement with Fred Goetz, Jr. Mr.
     Goetz receives an annual salary of $96,000. Due to our limited
     operating capital, Mr. Goetz deferred payment of $16,000 and $8,000
     owed to him during 2006 and 2005, respectively.
(3)  Mr. Fred Goetz, Sr. ceased being a director on December 20, 2005.
     We have no written employment agreement with Fred Goetz, Sr. Mr. Goetz
     receives an annual salary of $72,000. Due to our limited operating
     capital, Mr. Goetz deferred payment of $18,000 owed to him during
     2006.
(4)  We have no written employment agreement with Andrew J. Ashton.
     Mr. Ashton receives an annual salary of $96,000. Due to our limited
     operating capital, Mr. Ashton deferred payment of $16,000 and $8,000
     owed to him during 2006 and 2005, respectively.
(5)  We provide an automobile that Mr. Fred Goetz, Jr. utilizes at a
     cost to us of approximately $6,000 per year.

Summary of Options Grants

     Set forth below is a summary of our option awards to executive
officers outstanding as of December 31, 2006, our latest fiscal year
end.

<TABLE>
<CAPTION>
                                                Number of Securities
                  Number of Securities          Underlying              Option     Option
                  Underlying Unexercised        Unexercised Options     Exercise   Expiration
Name              Options (#) Exercisable (1)   (#) Unexercisable       Price ($)  Date
- ----              ---------------------------   --------------------    ---------  ----------
<S>               <C>                           <C>                     <C>

Ronald R. Genova         444,000                        ---              1.00       5/30/07
</TABLE>

(1)  We grant stock options to our executive officers based on their
     level of experience and contributions to our Company. The aggregate
     fair value of these options are computed in accordance with FAS 123R
     and are reported in the Summary Compensation Table above in the column


                               50
<PAGE>

     titled "Option Awards." On February 14, 2006, we granted Mr. Genova
     options to purchase up to 500,000 shares of our common stock at the
     exercise price of $1.00 per share with an expiration date of February
     14, 2009, pursuant to our 2005 Stock Option Plan, and we canceled a
     previously issued 100,000 share warrant to purchase our common stock
     at an exercise price of $2.10 per share. On November 10, 2006, we
     extended the option expiration date to February 13, 2016 and modified
     the vesting schedule of unvested options from 300,000 options vesting
     from 2/14/06 to 2/14/09 and 200,000 options vesting from 1/1/07 to
     2/14/09 to 420,000 options vesting on November 10, 2006 and 80,000
     options vesting at the rate of 8,000 options per month from 12/1/06 to
     9/1/07. Pursuant to our 2005 Stock Option Plan, since Mr. Genova's
     employment with the Company ceased effective February 28, 2007, the
     expiration date of his options accelerated to 5/30/07. At no time
     during the last fiscal year was any outstanding option otherwise
     modified or re-priced, and there was no tandem feature, reload
     feature, or tax-reimbursement feature associated with any of the stock
     options we granted to our executive officers or otherwise.

     There were no other options granted or exercised by the named
executive officers in the last two fiscal years.

                    Compensation of Directors

     During fiscal years 2005 and 2006, no officer or director
received any type of compensation from our Company for serving as
such. Presently, our directors, including those who serve as officers
of our Company, are not compensated for serving as such, other than
reimbursement for out of pocket expenses incurred in attending
director meetings.

    We adopted our 2005 Stock Option Plan for the benefit of our
directors, officers, employees and consultants, and we have reserved
1,000,000 shares of common stock for such persons pursuant to this
Plan.

    Our board of directors currently has no formal committees, such
as a compensation committee or an audit committee.


Item 7.   Certain Relationships and Related Transactions.

    None.

Item 8.   Description of Securities.

                            General

    As of the date of this registration statement, we have the
authority to issue 51,000,000 shares of stock, consisting of
50,000,000 shares of common stock, par value $0.001 per share; and
1,000,000 shares of preferred stock, par value $0.001 per share. As of
the date of this registration statement, we have a total of 30,188,535
shares of common stock outstanding, held of record by approximately
103 stockholders. We do not have any shares of preferred stock
outstanding.


                               51
<PAGE>

                         Common Stock

    Each outstanding share of common stock is entitled to one vote on
all matters to be submitted to a vote of the stockholders. Holders do
not have preemptive rights, so we may issue additional shares that may
reduce each holder's voting and financial interest in our Company.
Cumulative voting does not apply to the election of directors, so
holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. All elections for directors
shall be decided by a plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by Nevada
Statutes. Our bylaws permit the holders of the same percentage of all
shareholders entitled to vote at a meeting to take action by written
consent without a meeting.

    Holders of common stock are entitled to receive dividends when,
as and if declared by the board of directors out of funds legally
available therefor. In the event of liquidation, dissolution or
winding up of our Company, holders are entitled to share ratably in
all assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class of
stock, if any, having preference over the common stock. Holders do not
have any conversion, redemption provisions or other subscription
rights. All of the outstanding shares of common stock are fully paid
and non-assessable.

                       Preferred Stock

    Pursuant to our Company's Articles of Incorporation, our board of
directors is empowered, without stockholder approval, to issue series
of preferred stock with any designations, rights and preferences as
they may from time to time determine. The rights and preferences of
this preferred stock may be superior to the rights and preferences of
our common stock; consequently, preferred stock, if issued, could have
dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the common stock.
Additionally, Preferred stock, if issued, could be utilized, under
special circumstances, as a method of discouraging, delaying or
preventing a change in control of our business or a takeover from a
third party.

                           PART II

Item 1.   Market Price of and Dividends on the Registrant's Common
          Equity and Related Stockholder Matters.

                      Market Information

     Our common stock is currently traded under the symbol TDON on the
Pink Sheets' Electronic Quotation Service (the "Pink Sheets").

     The following table set forth below lists the range of high and
low bids for our common stock for each fiscal quarter for the last two
fiscal years as reported by the Pink Sheets. The prices in the table
reflect inter-dealer prices, without retail markup, markdown or
commission and may not represent actual transactions.


                               52
<PAGE>

<TABLE>
<CAPTION>
                         High             Low
                         ----             ---
     2005             Bid    Asked    Bid    Asked
     ----             ---    -----    ---    -----
<S>                  <C>     <C>     <C>     <C>
     1st Quarter     $4.40   $4.85   $0.56   $0.65
     2nd Quarter     $4.60   $4.80   $1.85   $1.865
     3rd Quarter     $3.05   $3.13   $2.00   $2.09
     4th Quarter     $2.06   $2.10   $1.30   $1.45

     2006
     ----

     1st Quarter     $2.10   $2.15   $2.15   $0.90
     2nd Quarter     $1.87   $2.00   $2.00   $1.10
     3rd Quarter     $1.14   $1.25   $1.25   $0.53
     4th Quarter     $0.83   $0.86   $0.38   $0.42
</TABLE>

                            Holders

    As of the date of this registration statement, we have a total of
30,188,535 shares of common stock outstanding, held of record by
approximately 103 shareholders. We do not have any shares of preferred
stock outstanding.


                           Dividends

    No cash dividends have been declared or paid on our common stock
to date. No restrictions limit our ability to pay dividends on our
common stock. The payment of cash dividends in the future, if any,
will be contingent upon our Company's revenues and earnings, if any,
capital requirements and general financial condition. The payment of
any dividends is within the discretion of our board of directors. Our
board of director's present intention is to retain all earnings, if
any, for use in our business operations and, accordingly, the board of
directors does not anticipate paying any cash dividends in the
foreseeable future.

  Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information about our compensation plans
under which shares of common stock may be issued upon the exercise of
options as of December 31, 2006.


                               53
<PAGE>

<TABLE>
<CAPTION>

         Equity Compensation Plans as of December 31, 2006

- ---------------------------------------------------------------------------------------------------
                    A                               B                       C
- ---------------------------------------------------------------------------------------------------
                                                                            Number of securities
                                                                            remaining available for
                                                    Weighted-               future issuance under
                    Number of securities            average exercise        equity compensation
                    to be issued upon               price of                plans (excluding
                    exercise of outstanding         outstanding options,    securities reflected
Plan category       options, warrants and rights    warrants and rights      in column (A))
- ---------------------------------------------------------------------------------------------------
<S>                 <C>                             <C>                     <C>

Equity compensation
plans approved by
security holders(1)        700,000                         1.00                 300,000

- ---------------------------------------------------------------------------------------------------

Equity compensation
plans not approved
by security holders          ---                            ---                  ---

- ---------------------------------------------------------------------------------------------------

Total                      700,000                        $1.00                 300,000
- ---------------------------------------------------------------------------------------------------
</TABLE>

     On December 20, 2005, we adopted our 2005 Stock Option Plan for
the benefit of our directors, officers, employees and consultants, and
we have reserved 1,000,000 shares of common stock for such persons
pursuant to this Plan.

           Over-the-counter Bulletin Board Listing Matters

    By virtue of filing this registration statement, we are making an
application with the Securities and Exchange Commission (the "SEC" or
"Commission") to register our common stock under the provisions of
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). This registration will require our Company to comply
with periodic reporting, proxy solicitations and certain other
requirements of the Exchange Act.

     We intend to seek the listing of our common stock on the over-
the-counter bulletin board ("OTCBB") upon the completion of this
registration statement. In order to become listed on the OTCBB, a NASD
market maker must apply on our behalf to make a market of our common
stock on the OTCBB. We cannot assure you that a market maker will make
an application on our behalf, or that if an application is made on our
behalf, that the NASD will list our Company on the OTCBB.


                               54
<PAGE>

       Penny Stock Regulations and Restrictions on Marketability

     The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00,
other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price
and volume information with respect to transactions in such securities
is provided by the exchange or system. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the SEC, that: (a)
contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
securities laws; (c) contains a brief, clear, narrative description of
a dealer market, including bid and ask prices for penny stocks and the
significance of the spread between the bid and ask price; (d) contains
a toll-free telephone number for inquiries on disciplinary actions;
(e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and
format, as the SEC shall require by rule or regulation.

     The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with (a) bid and offer
quotations for the penny stock; (b) the compensation of the broker-
dealer and its salesperson in the transaction; (c) the number of
shares to which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for such
stock; and (d) a monthly account statement showing the market value of
each penny stock held in the customer's account.

     In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written acknowledgment of the receipt of a risk disclosure
statement, a written agreement as to transactions involving penny
stocks, and a signed and dated copy of a written suitability
statement.

     These disclosure requirements may have the effect of reducing the
trading activity for our common stock. Therefore, stockholders may
have difficulty selling our securities.

                       Our Transfer Agent

     StockTrans, Inc. is the transfer agent for our common stock. They
are located at 44 West Lancaster Ave., Ardmore, Pennsylvania 19003.


Item 2.  Legal Proceedings.

     During the spring of 2005, we raised $1,000,000 through the sale
of 4,000,000 shares of our common stock in a limited offering to
persons considered to be accredited investors. Our Company received a
legal opinion from outside counsel as to the availability of an
exemption from registration with the Securities and Exchange


                               55
<PAGE>

Commission (the "SEC" or "Commission") with respect to the limited
offering.

     In December 2005, we were informed by the Commission that it is
investigating the circumstances surrounding the $1,000,000 offering
described above including the subsequent public resale of certain
shares originally sold in the offering, along with related matters.
Our Company has further been informed that the original issuance of
the stock and subsequent resale thereof may have been done, in the
opinion of the Commission, in violation of the registration provisions
of the Securities Act of 1933, as amended. These matters could lead to
enforcement action by the Commission. Our Company has committed to
cooperate fully with the Commission with the intention that all issues
will be resolved as quickly as possible.

     Other than described herein, we are not aware of any litigation
or threatened litigation of a material nature.

Item 3.   Changes In and Disagreements with Accountants.

     Not Applicable.

Item 4.   Recent Sales of Unregistered Securities.

     Our Company has sold the following securities within the past
three years without registering the securities under the Securities
Act:

     Common Stock/Convertible Notes

     During 2004, our Company and subsidiary issued $499,000 in
convertible promissory notes and 187,500 shares of our common stock to
forty-one accredited investors. Our Company and subsidiary relied on
Rule 506 of Regulation D for these transactions. The 187,500 shares of
our common stock were issued at the price of 0.16 per share. As of
June of 2005, all of the convertible promissory notes were converted
into 3,118,750 shares of our common stock at the conversion price of
approximately $0.16 per share.

     In July 2004, pursuant to our plan of reorganization, PSI-TEC
shareholders were issued 15,600,000 shares of our common stock. These
persons were the only offerees in connection with this transaction. We
relied on Section 4(2) of the Securities Act.

     Also in July 2004, our Company issued 637,500 shares of common
stock to five other persons, including 100,000 shares to our
president, in exchange for the services such persons provided to our
Company and subsidiary prior to August 1, 2004. The shares were valued
at $0.16 per share for an aggregate amount of $102,000. These persons
were the only offerees in connection with this transaction. We relied
on Section 4(2) of the Securities Act since the transaction did not
involve any public offering.


                               56
<PAGE>

     During April 2005 we issued 4,000,000 shares of common stock to
seven persons our Company considered to be accredited investors at
$0.25 per share for an aggregate amount of $1,000,000. We relied on
Rule 504 of Regulation D for this transaction.

     During August 2005 we issued 200,000 shares of common stock to
one accredited investor, in exchange for management advisory services
it provided to our Company and its subsidiary. The shares were valued
at $2.92 per share for an aggregate amount of $584,000. This person
was the only offeree in connection with this transaction. We relied on
Section 4(2) of the Securities Act since the transaction did not
involve any public offering.

     Also, during August 2005 we issued 210,000 shares of common stock
to two accredited investors in exchange for consulting services
provided to our Company and its subsidiary. The shares were valued at
an average price of approximately $2.79 per share for an aggregate
amount of $585,500. These persons were the only offerees in connection
with these transactions. We relied on Section 4(2) of the Securities
Act since the transactions did not involve any public offering.

     During December 2005, our Company adopted its 2005 Stock Option
Plan and reserved up to 1,000,000 shares of our Company's common stock
for issuance pursuant to the Stock Option Plan. Since then, we have
granted options to purchase up to 700,000 shares of our common stock
at an exercise price of $1.00 per share.

     During December 2005, we issued 300,000 shares of common stock to
one accredited investor for $75,000 pursuant to a warrant to purchase
300,000 shares of our common stock at an exercise price of $0.25 per
share issued during that same time. We relied on Section 4(2) of the
Securities Act since the transaction did not involve any public
offering.

     During February 2006 we issued an aggregate of 300,000 shares of
common stock to two accredited investors for professional and
consulting services. The shares were valued at $0.90 per share for an
aggregate amount of approximately $270,000.  We relied on Section 4(2)
and/or Rule 701 of the Securities Act since the transaction did not
involve any public offering.

     During May and June of 2006 we issued an aggregate of 425,000
shares of common stock to three accredited investors for professional
and consulting services. The shares were valued at approximately $1.45
to 1.60 per share for an aggregate amount of approximately $656,250.
We relied on Section 4(2) and/or Rule 701 of the Securities Act since
the transaction did not involve any public offering.

      During June 2006, we authorized the private offering of our
common stock, which offering was amended in August and again in
December 2006. Ultimately, the private offering terms were to raise up
to an aggregate of $1,000,000, with up to 20 units to be offered at
the offering price of $50,000 per unit, with each unit comprised of
100,000 shares of common stock, and a warrant to purchase 50,000
shares of common stock at $0.50 per share. The private offering raised
a total of $999,000, $425,000 during 2006 and $574,000 during the
first quarter of 2007, and was closed in March 2007. We relied on
Section 4(2) and Rule 506 of Regulation D of the Securities Act since
the transaction does not involve any public offering.


                               57
<PAGE>

     During November 2006, we issued 60,000 shares of our common stock
to one accredited investor for consulting services. The shares were
valued at approximately $0.49 per share for an aggregate amount of
$29,400. We relied on Section 4(2) of the Securities Act since the
transaction did not involve any public offering.

     During February 2007, we issued: (i) 151,785 shares of our common
stock to one accredited investor for stock analyst services. The
shares were valued at approximately $0.70 per share for an aggregate
amount of approximately $106,250; and (ii) 1,000,000 shares of our
common stock to one accredited investor for management advisory
services. The shares were valued at approximately $0.58 per share for
an aggregate amount of approximately $580,000 These persons were the
only offerees in connection with these transactions. Our Company
relied on Section 4(2) of the Securities Act since the transaction did
not involve any public offering.

      Warrants to Purchase Common Stock

     Our Company has outstanding the following warrants to purchase
shares of our Company's common stock as described below:

<TABLE>
<CAPTION>
                           Shares Underlying
   Date Issued          Warrants/ Exercise Price    Exercise/Expiration Schedule
   -----------          ------------------------    ----------------------------
   <S>                  <C>                         <C>

September 1, 2005             50,000/$2.00          25,000 shares from 9/1/06 - 9/1//07(1)(2)
                                                    25,000 shares from 9/1/07 - 9/1//08(1)(2)

June 1, 2006                  300,000/$0.25         300,000 shares from 6/1/06 - 5/31/08(2)

  ----(3)                     999,000/$.50                    ----(4)(5)
- --------------------
</TABLE>

1.   The warrant holder must remain an employee of, or an active
     advisor or consultant to our Company during such exercise
     period.
2.   The warrants were issued in connection with advisory
     services provided to our Company. These persons were the
     only offerees in connection with this transaction. Our
     Company relied on Section 4(2) of the Securities Act since
     the transaction did not involve any public offering.
3.   Issued at various times in connection with our June 16,
     2006 amended private offering.
4.   The warrants are immediately exercisable for a period of
     two (2) years from the date of purchase.
5.   We relied upon Section 4(2) and Rule 506 of Regulation D of
     the Securities Act since the transaction did not involve
     any public offering.

     No underwriters were utilized and no commissions or fees were
paid with respect to any of the above transactions.


                               58
<PAGE>

Item 5.   Indemnification of Directors and Officers.

    Nevada Revised Statutes provide for indemnification of the
corporation's directors, officers, employees and agents for
liabilities and expenses that they may incur as a result of his or her
acting in such capacities. In general, directors, officers, employees
and agents are indemnified with respect to actions taken in good
faith, in a manner reasonably believed to be in, or not opposed to,
the best interests of the corporation, and with respect to any
criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. Our Articles of
Incorporation provide that a director or officer shall be liable to
the extent provided by applicable law, (i) for acts or omission which
involves intentional misconduct, fraud or a knowing violation of the
law, or (ii) for the payment of dividends in violation of the Nevada
Revised Statutes.

     Insofar as indemnification arising under the Securities Act may
be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions or otherwise, we have been
advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable.




















                               59
<PAGE>

                             PART F/S



















                THIRD-ORDER NANOTECHNOLOGIES, INC.
                 (FORMERLY PSI-TEC HOLDINGS, INC.)
                   (A Development Stage Company)

                       FINANCIAL STATEMENTS

                    DECEMBER 31, 2006 AND 2005



























<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                 (FORMERLY PSI-TEC HOLDINGS, INC.)
                   (A Development Stage Company)







                                                                 PAGE
                                                                 ----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           F-1

BALANCE SHEETS                                                    F-2

STATEMENTS OF OPERATIONS                                          F-3

STATEMENT OF COMPREHENSIVE LOSS                                   F-4

STATEMENTS OF STOCKHOLDERS' EQUITY                                F-5

STATEMENTS OF CASH FLOWS                                       F-6 - F-7

NOTES TO FINANCIAL STATEMENTS                                  F-8 - F-19























<PAGE>



      REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors

Third-Order Nanotechnologies, Inc.
(Formerly PSI-TEC Holdings, Inc.)
Wilmington, DE

We have audited the accompanying balance sheets of Third-Order
Nanotechnologies, Inc., (formerly PSI-TEC Holdings, Inc.), as of
December 31, 2006 and 2005 and the related statements of operations,
comprehensive loss, stockholders' equity and cash flows for the years
then ended and for the period from January 1, 2004 (inception of
development stage) through December 31, 2006.  These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from
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. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Third-
Order Nanotechnologies, Inc., (formerly PSI-TEC Holdings, Inc.) as of
December 31, 2006 and 2005 and results of their operations and their
cash flows for the years then ended and for the period from January 1,
2004 (inception of development stage) through December 31, 2006 in
conformity with accounting principles generally accepted in the United
States.

As discussed in Note 11 to the financial statements, the Company
changed its method of accounting for share-based payments as of
January 1, 2006.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company is in the
development stage at December 31, 2006. As discussed in Note 2 to the
financial statements, successful completion of the Company's
development program and, ultimately, the attainment of profitable
operations is dependent upon future events, including obtaining
adequate financing to fulfill its development activities and achieving
a level of sales adequate to support the Company's cost structure.
These factors raise substantial doubt about the ability of the Company
to continue as a going concern. The consolidated financial statements
do not include any adjustments that might result from the outcome of
these uncertainties.

/s/ MORISON COGEN LLP
March 23, 2007
Bala Cynwyd, Pennsylvania




<PAGE>

               THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                 (A Development Stage Company)
                         BALANCE SHEETS
<TABLE>
<CAPTION>

                                    December 31, 2006     December 31, 2005
                                    -----------------     -----------------
<S>                                 <C>                   <C>
                 ASSETS

 CURRENT ASSETS
 Cash and cash equivalents          $             528     $         150,027
 Deferred charges                             683,254               445,625
 Prepaid expenses                               9,353                     -
 Receivables                                      100                75,100
                                    -----------------     -----------------
                                              693,235               670,752

 AVAILABLE FOR SALE SECURITIES                 61,800               200,000

 PROPERTY AND EQUIPMENT - NET                  42,335                54,496

 OTHER ASSETS
 Intangible assets                             42,376                33,862
                                    -----------------     -----------------

 TOTAL ASSETS                       $         839,746     $         959,110
                                    =================     =================


 LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
 Loan payable - current portion     $           4,977     $           4,696
 Accounts payable                             100,714                12,290
 Accounts payable - related party              65,339                     -
 Accrued expenses                              83,712                94,536
 Officer loans                                  1,468                 1,468
                                    -----------------     -----------------
                                              256,210               112,990

 CONTINGENCY                                        -                     -

 LOAN PAYABLE - NET OF CURRENT
   PORTION                                      8,764                14,242
                                    -----------------     -----------------

 TOTAL LIABILITIES                            264,974               127,232
                                    -----------------     -----------------

 STOCKHOLDERS' EQUITY
 Preferred stock, $0.001 par value,
 1,000,000 authorized
 No shares issued or outstanding                    -                     -
 Common stock $0.001 par value,
 50,000,000 authorized
 27,888,750 and 26,253,750 issued
 and outstanding at
 December 31, 2006 and 2005                    27,889                26,254
 Additional paid-in-capital                 5,629,140             3,590,407
 Subscription receivable                            -                (6,500)
 Deferred charges                                   -              (318,545)
 Unrealized loss on Available for
 Sale Securities                              (26,000)                    -
 Accumulated deficit                          (15,827)              (15,827)
 Deficit accumulated during
 development stage                         (5,040,430)           (2,443,911)
                                    -----------------     -----------------

 TOTAL STOCKHOLDERS' EQUITY                   574,772               831,878
                                    -----------------     -----------------
 TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY               $         839,746     $         959,110
                                    =================     =================
</TABLE>




The accompanying notes are an integral part of these financial statements.


                                   F-2

<PAGE>


                     THIRD-ORDER NANOTECHNOLOGIES, INC.
                      (FORMERLY PSI-TEC HOLDINGS, INC.)
                         (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDING DECEMBER 31, 2006 AND 2005 AND
                         FOR THE PERIOD JANUARY 1, 2004
           (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2006

<TABLE>
<CAPTION>
                                 Cumulative         For the               For the
                                   Since          Year Ending           Year Ending
                                 Inception      December 31, 2006     December 31, 2005
                                 ----------     -----------------     -----------------
<S>                              <C>            <C>                   <C>

NET SALES                        $         -     $            -       $              -

COST AND EXPENSE
Research and development           3,063,790          1,986,363                813,725
General and administrative         2,024,112            671,096                894,332
                                 -----------     --------------       ----------------
                                   5,087,902          2,657,459              1,708,057

LOSS FROM OPERATIONS              (5,087,902)        (2,657,459)            (1,708,057)

OTHER INCOME (EXPENSE)
Interest income                        7,477                243                  6,994
Dividend income                        1,527              1,527                      -
Realized gain on investment           63,187             63,187                      -
Interest expense                     (24,719)            (4,017)               (20,702)
                                 -----------     --------------       ----------------

NET LOSS                         $(5,040,430)    $   (2,596,519)      $     (1,721,765)
                                 ===========     ==============       ================

Basic and Diluted Loss per Share                 $        (0.10)      $          (0.07)
                                                 ==============       ================

Basic and Diluted Weighted
Average Number of Shares                             27,190,449             24,098,833
                                                 ==============       ================
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                F-3
<PAGE>


               THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                STATEMENTS OF COMPREHENSIVE LOSS
       FOR THE YEARS ENDING DECEMBER 31, 2006 AND 2005
               AND FOR THE PERIOD JANUARY 1, 2004
      (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2006


<TABLE>
<CAPTION>
                                 Cumulative         For the               For the
                                   Since          Year Ending           Year Ending
                                 Inception      December 31, 2006     December 31, 2005
                                 ----------     -----------------     -----------------
<S>                              <C>            <C>                   <C>
NET LOSS                         $(5,040,430)    $   (2,596,519)      $     (1,721,765)

OTHER COMPREHENSIVE LOSS
Unrealized loss on Available
  for Sale Securities                (26,000)           (26,000)                     -
                                 -----------     --------------       ----------------

COMPREHENSIVE LOSS               $(5,066,430)    $   (2,622,519)      $     (1,721,765)
                                 ===========     ==============       ================
</TABLE>






















The accompanying notes are an integral part of these financial statements.



                                F-4
<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                 (FORMERLY PSI-TEC HOLDINGS, INC.)
                   (A Development Stage Company)
                 STATEMENT OF STOCKHOLDERS' EQUITY
                  FOR THE PERIOD JANUARY 1, 2004
       (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2006

<TABLE>
<CAPTION>
                                                                                                 Deficit
                                                                                               Accumulated
                                                                                                 During     Unrealized
                         Number of Common      Paid-in    Subscription  Deferred  Accumulated  Development   Loss on
                           Shares  Stock       Capital     Receivable   Charges    Deficit       Stage     Securities     Total
                        ---------- --------  ----------  ------------ ----------  ----------- ------------ ---------- -----------
<S>                     <C>        <C>       <C>         <C>          <C>        <C>          <C>          <C>        <C>
ENDING BALANCE AT
DECEMBER 31, 2003              100 $      1  $        -  $          -  $      -  $   (15,827) $         -  $       -  $    (15,826)

Retroactive
  recapitalization
  upon reverse
   acquisition             706,973      706        (706)            -         -            -            -          -             -
                        ---------- --------  ----------  ------------ ---------     --------  -----------  ---------  -----------
BALANCE AT
JANUARY 1, 2004            707,073      707        (706)            -         -      (15,827)           -          -       (15,826)

Issuance of common
  stock to founders     13,292,927   13,293     (13,293)            -         -            -            -          -             -
Issuance of common
  stock for services     1,600,000    1,600     254,400             -         -            -            -          -       256,000
Issuance of common
  stock at merger        2,000,000    2,000      (2,000)            -         -            -            -          -             -
Issuance of common
  stock for services
  (post-merger)            637,500      638      74,362             -         -            -            -          -        75,000
Conversion of note
  payable                  187,500      187      29,813             -         -            -            -          -        30,000
Net loss for the year
ended December 31, 2004          -        -           -             -         -            -     (722,146)         -      (722,146)
                        ---------- --------  ----------  ------------ ---------     --------  -----------  ---------  -----------
BALANCE AT
DECEMBER 31, 2004       18,425,000   18,425     342,576             -         -      (15,827)    (722,146)         -      (376,972)

Issuance of common
  stock, private
  placement              4,000,000    4,000     996,000             -         -            -            -          -     1,000,000
Conversion of notes
  payable                3,118,750    3,119     495,881             -         -            -            -          -       499,000
Subscription receivable          -        -           -        (6,500)        -            -            -          -        (6,500)
Issuance of common
  stock for services       410,000      410   1,169,090             -         -            -            -          -     1,169,500
Deferred charges                 -        -           -             -  (318,545)           -            -          -      (318,545)
Issuance of warrants
  for services                   -        -     512,160             -         -            -            -          -       512,160
Exercise of warrants       300,000      300      74,700             -         -            -            -          -        75,000
Net loss for the year
ended December 31, 2005          -        -           -             -         -            -   (1,721,765)         -    (1,721,765)

                        ---------- --------  ----------  ------------ ---------     --------  -----------  ---------   -----------
BALANCE AT
DECEMBER 31, 2005       26,253,750   26,254   3,590,407        (6,500) (318,545)     (15,827)  (2,443,911)         -       831,878

Issuance of common
  stock for services       785,000      785     954,865             -         -            -            -          -       955,650
Issuance of common
  stock, private
  placement                850,000      850     424,150             -         -            -            -          -       425,000
Stock options issued
  for services                   -        -     624,094             -         -            -            -          -       624,094
Contributed capital
  related to accrued
  interest                       -        -      35,624             -         -            -            -          -        35,624
Subscription
  receivable                     -        -           -         6,500         -            -            -          -         6,500
Amortization of
  deferred charges               -        -           -             -   318,545            -            -          -       318,545
Net loss for the year
ending December 31, 2006         -        -           -             -         -            -   (2,596,519)         -   (2,596,519)
Unrealzed loss on
  securities                     -        -           -             -         -            -            -    (26,000)     (26,000)
                        ---------- --------  ----------  ------------ ---------     --------  -----------  ---------  -----------
BALANCE AT
DECEMBER 31, 2006       27,888,750 $ 27,889  $5,629,140  $          - $       -     $(15,827) $(5,040,430) $ (26,000) $   574,772
                        ========== ========  ==========  ============ =========     ========  ===========  =========  ===========

</TABLE>




The accompanying notes are an integral part of these financial statements.



                                   F-5
<PAGE>

                     THIRD-ORDER NANOTECHNOLOGIES, INC.
                     (FORMERLY PSI-TEC HOLDINGS, INC.)
                       (A Development Stage Company)
                        STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDING DECEMBER 31, 2006 AND 2005 AND
                       FOR THE PERIOD JANUARY 1, 2004
         (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2006

<TABLE>
<CAPTION>

                                               Cumulative         For the            For the
                                                  Since         Year Ending        Year Ending
                                                Inception    December 31, 2006   December 31, 2005
                                              -------------  -----------------   -----------------
<S>                                           <C>            <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                      $  (5,040,430) $      (2,596,519)  $      (1,721,765)
Adjustment to reconcile net loss to net cash
 used in operating activities
   Warrants issued for services                     512,160                  -             512,160
   Amortization of deferred charges                 318,545            318,545                   -
   Stock options issued for services                624,094            624,094                   -
   Depreciation                                      28,776             12,161              10,222
   Issuance of common stock for services          1,500,500                  -           1,169,500
   Realized gain on investments                     (63,187)           (63,187)                  -
   (Increase) decrease in assets
     Receivables                                     69,439             75,000              11,000
     Deferred charges                               (43,649)           718,021            (762,565)
     Prepaid expenses                                (9,353)            (9,353)                  -
   Increase (decrease) in liabilities
     Accounts payable                               158,921             88,424             (26,334)
     Accounts payable - related party                65,339             65,339                   -
     Accrued expenses                                18,198             24,800              32,484
                                              -------------  -----------------   -----------------
Net cash used in operating activities            (1,860,647)          (742,675)           (775,298)
                                              -------------  -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of intangibles                          (42,376)            (8,514)            (13,862)
   Proceeds from sale of available for
     sale securities                                175,387            175,387                   -
   Purchase of available for sale
     securities                                    (200,000)                 -            (200,000)
   Purchase of equipment                            (24,825)                 -             (24,825)
                                              -------------  -----------------   -----------------
Net cash provided by (used) in
investing activities                                (91,814)           166,873            (238,687)
                                              -------------  -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock, private
    placement                                     1,455,000            425,000           1,000,000
  Repayment of notes payable                        (10,902)            (5,197)             (4,380)
  Proceeds from subscription receivable               6,500              6,500                   -
  Advances to stockholders                           (3,435)                 -                   -
  Proceeds from convertible notes                   499,000                  -                   -
  Advances from officers                              1,468                  -                   -
                                              -------------  -----------------   -----------------
Net cash provided by financing activities         1,947,631            426,303             995,620
                                              -------------  -----------------   -----------------

NET INCREASE IN CASH AND CASH EQUIVALENTS            (4,830)          (149,499)            (18,365)

CASH AND CASH EQUIVALENTS
  - BEGINNING OF PERIOD                               5,358            150,027             168,392
                                              -------------  -----------------   -----------------
CASH AND CASH EQUIVALENTS - END OF PERIOD     $         528  $             528   $         150,027
                                              =============  =================   =================
</TABLE>



 The accompanying notes are an integral part of these financial statements.

                                  F-6

<PAGE>


                   THIRD-ORDER NANOTECHNOLOGIES, INC.
                    (FORMERLY PSI-TEC HOLDINGS, INC.)
                      (A Development Stage Company)
                        STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDING DECEMBER 31, 2006 AND 2005 AND
                     FOR THE PERIOD JANUARY 1, 2004
          (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2006

<TABLE>
<CAPTION>

                                               Cumulative         For the            For the
                                                  Since         Year Ending        Year Ending
                                                Inception    December 31, 2006   December 31, 2005
                                              -------------  -----------------   -----------------
<S>                                           <C>            <C>                 <C>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION

CASH PAID DURING THE PERIOD FOR:
   Interest                                   $      12,110  $           4,017   $           2,556
                                              =============  =================   =================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES

Common stock issued in exchange for
  deferred charges                            $     955,650  $         955,650   $               -

Accrued interest contributed
  as capital                                  $      35,624  $          35,624   $               -

Common stock issued in the conversion
  of notes payable                            $     499,000  $               -   $         499,000

Acquisition of automobile through
  loan payable                                $      24,643  $               -   $               -

Common stock issued upon exercise of
  a warrant in exchange for receivable        $      75,000  $               -   $          75,000
</TABLE>




















  The accompanying notes are an integral part of these financial statements.

                                F-7

<PAGE>

                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005


NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History and Nature of Business
Third-Order Nanotechnologies, Inc., formerly PSI-Tec Holdings, Inc.,
formerly Eastern Idaho Internet Service, Inc. (the "Company") was
organized under the laws of the State of Nevada in 1997.  The Company
was engaged in the business of marketing internet services until June
30, 1998, at which time the principal assets of the business were sold
and operations were discontinued.  The Company was inactive until the
acquisition of PSI-TEC Corporation ("PSI-TEC") on July 14, 2004, at
which time the name was changed to PSI-TEC Holdings, Inc.

Development Stage
PSI-TEC was incorporated in 1995 under the laws of the State of
Delaware.  PSI-TEC primarily conducted research for the United States
Government under a contract, which expired in 2003.  Beginning January
1, 2004, PSI-TEC was engaged in the development of electro-optic
polymers for application in the electro-optic device markets.  PSI-TEC
is considered a development stage company as defined in Statement on
Financial Accounting Standards (SFAS) No. 7 from the inception of the
development stage on January 1, 2004.

Merger
On July 14, 2004, the Company acquired PSI-TEC.  Under the terms of
the merger agreement, the stockholders of PSI-TEC received 15,600,000
shares of common stock in exchange for its 2,206,280 shares.
Following the merger, the Company changed its name to PSI-TEC
Holdings, Inc.  Under accounting principles generally accepted in the
United States, the share exchange is considered to be a capital
transaction in substance rather than a business combination.  That is,
the share exchange is equivalent to the issuance of stock by PSI-TEC
Holdings, Inc. for the net monetary assets of PSI-TEC, accompanied by
a recapitalization, and is accounted for as a change of capital
structure.  Accordingly, the accounting for the share exchange will be
identical to that resulting from a reverse acquisition, except no
goodwill will be recorded.  Under reverse takeover accounting, the
post-reverse acquisition comparative historical financial statements
of the legal acquirer, PSI-TEC Holdings, Inc., are those of the legal
acquiree, PSI-TEC, which is considered to be the accounting acquirer.
On October 20, 2006, PSI-TEC Holdings, Inc. and PSI-TEC merged and
changed its name to Third-Order Nanotechnologies, Inc.

Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying disclosures.  Although these
estimates are based on management's best knowledge of current events
and actions the Company may undertake in the future, actual results
could differ from the estimates.

Cash Equivalents
For the purposes of the statement of cash flows, the Company considers
all highly liquid instruments with maturities of three months or less
at the time of purchase to be cash equivalents.

Concentration of Credit Risk
Certain financial instruments potentially subject the Company to
concentrations of credit risk.  These financial instruments consist
primarily of cash.  The Company places its temporary cash investments
with high credit quality financial institutions to limit its credit
exposure.


                                F-8

<PAGE>

                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005




NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investment
Securities classified as available-for-sale may be sold in response to
changes in interest rates, liquidity needs, and for other purposes.
Available-for-sale securities are carried at fair value.  Unrealized
gains and losses on investment securities available for sale are based
on the difference between book value and fair value of each security.
These gains and losses are credited or charged to other comprehensive
income, whereas realized gains and losses are recognized in the
Company's net income (loss).

Property and Equipment
Equipment is stated at cost.  Depreciation is principally provided by
use of straight-line methods for financial and tax reporting purposes
over the estimated useful lives of the assets, generally 5 years.

Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts payable
and accrued expenses.  The carrying values of cash, accounts payable
and accrued expenses approximate fair value because of their short
maturities.

Income Taxes
The Company follows Statement of Financial Accounting Standards
("SFAS")  No. 109, "Accounting for Income Taxes," which requires an
asset and liability approach to financial accounting and reporting for
income taxes.  Deferred income tax assets and liabilities are computed
annually for temporary differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax 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.  Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.

Loss Per Share
The Company follows SFAS No. 128, "Earnings Per Share," resulting in
the presentation of basic and diluted earnings per share.  Because the
Company reported a net loss in 2006 and 2005, common stock
equivalents, including stock options and warrants were anti-dilutive;
therefore, the amounts reported for basic and dilutive loss per share
were the same.

Recoverability of Long Lived Assets
The Company follows SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("Statement 144").  Long-lived assets
to be held and used are reviewed for impairment whenever events or
changes in circumstances indicate that the related carrying amount may
not be recoverable.  When required, impairment losses on assets to be
held and used are recognized based on the excess of the asset's
carrying amount.

Comprehensive Income
The Company follows SFAS No. 130, "Reporting Comprehensive Income."
Comprehensive income is a more inclusive financial reporting
methodology that includes disclosure of certain financial information
that historically has not been recognized in the calculation of net
income.

                                F-9

<PAGE>

                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005


NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Pronouncements
In June 2006, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income
Taxes. FIN 48 prescribes detailed guidance for the financial statement
recognition, measurement and disclosure of uncertain tax positions
recognized in an enterprise's financial statements in accordance with
FASB Statement No. 109, Accounting for Income Taxes. Tax positions
must meet a more-likely-than-not recognition threshold at the
effective date to be recognized upon the adoption of FIN 48 and in
subsequent periods. FIN 48 will be effective for fiscal years
beginning after December 15, 2006, and will become effective for us
beginning with the first quarter of 2007, and the provisions of FIN 48
will be applied to all tax positions under Statement No. 109 upon
initial adoption. The cumulative effect of applying the provisions of
this interpretation will be reported as an adjustment to the opening
balance of retained earnings for that fiscal year. The Company is
currently evaluating the potential impact of FIN 48 on its financial
statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108
("SAB No. 108"). SAB No. 108 addresses the process and diversity in
practice of quantifying financial statement misstatements resulting in
the potential build up of improper amounts on the balance sheet. The
Company is required to adopt the provisions of SAB No.108 in fiscal
2006. The adoption of SAB No. 108 did not have a material impact on
its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements). SFAS No. 157 establishes a framework for measuring fair
value and expands disclosures about fair value measurements. The
changes to current practice resulting from the application of this
Statement relate to the definition of fair value, the methods used to
measure fair value, and the expanded disclosures about fair value
measurements. The Statement is effective for fiscal years beginning
after November 15, 2007 and will become effective beginning with the
first quarter of 2008.  The Company has not yet determined the impact
of the adoption of SFAS No. 157 on its financial statements and
footnote disclosures.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities.  This Statement
permits entities to choose to measure many financial instruments and
certain other items at fair value that are not currently required to
be measured at fair value.  The objective is to improve financial
reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge
accounting provisions.  This statement also establishes presentation
and disclosure requirements designed to facilitate comparisons between
entities that choose different measurement attributes for similar
types of assets and liabilities.  This Statement is effective for
financial statements issued for fiscal years beginning after November
15, 2007 and will become effective for us beginning with the first
quarter of 2008.  The Company has not yet determined the impact of the
adoption of SFAS No. 159 on its financial statements and footnote
disclosures.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern.  The Company has incurred
significant losses and experienced negative cash flow during the
development stage.  These conditions raise substantial doubt about the
Company's ability to continue as a going concern.  The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                F-10

<PAGE>

                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005


NOTE 2 - GOING CONCERN (CONTINUED)

The Company is in the development stage at December 31, 2006.
Successful completion of the Company's development program and,
ultimately, the attainment of profitable operations is dependent upon
future events, including obtaining adequate financing to fulfill its
development activities and achieving a level of revenue adequate to
support the Company's cost structure.  The Company is currently in the
process of raising capital through a private placement memorandum of
up to $1,000,000, of which $999,000 has been raised through March 23,
2007.  However, there can be no assurances that the Company will be
able to secure the necessary financing and/or equity investment or
achieve an adequate sales level.


NOTE 3 - DEFERRED CHARGES

Deferred charges represent the unamortized fair value of the issuance
of common stock and warrants for future services to non-employees
which was accounted for in accordance with Emerging Issue Task Force
No. 96-18, Accounting for Equity Instruments That Are Issued To Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services, as follows:



                                              2006           2005
                                          -----------    -----------
        Common stock                      $ 1,632,596    $ 1,169,500
        Warrants                              435,000        435,000
                                            2,067,596      1,604,500
        Less:  Accumulated amortization     1,384,342        840,330
                                          -----------    -----------
                                              683,254        764,170
	Less:  Amount reflected as a
	contra-equity account for
        management consulting services              -        318,545
                                          -----------    -----------
                                          $   683,254    $   445,625
                                          ===========    ===========



NOTE 4 - INVESTMENTS

Investments consist of available-for-sale equity securities of a
related party reported at fair value of $59,265 and $200,000 and an
equity security reported at fair value at $2,535 and $0 at
December 31, 2006 and 2005.  Unrealized loss on available-for-sale
securities at December 31, 2006 and 2005 was $26,000 and $0.  The
related party is a stockholder of the Company and also provides
services under a management agreement.

During 2006 the Company sold 56,100 shares of the related party for
proceeds of $175,387 resulting in a short-term capital gain of
$63,187.



                                F-11

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005



NOTE 5 - EQUIPMENT

Equipment consists of the following:

                                            2006        2005
                                           -------     -------
         Automobile                        $24,643     $24,643
         Office equipment                   23,752      23,752
         Lab equipment                      24,825      24,825
                                           -------     -------
                                            73,220      73,220
         Less: Accumulated depreciation     30,885      18,724
                                           -------     -------

                                           $42,335     $54,496
                                           =======     =======

Depreciation expense for the years ended December 31, 2006 and 2005
was $12,161 and $10,222.

NOTE 6 - INTANGIBLE ASSETS

Intangible assets consist of a patent pending amounting to $42,376 and
$33,862 at December 31, 2006 and 2005.  Amortization will begin upon
issuance of the patent.

NOTE 7 - LOAN PAYABLE

During 2004, the Company entered into a loan payable in the amount of
$24,643 to finance an automobile. This loan is payable in monthly
installments of $489, including interest at 7%, due August 2009, and
is secured by the automobile.

The minimum annual repayment requirements on the loan payable as of
December 31, 2006 are as follows:

                    YEARS ENDING
                    DECEMBER 31,          AMOUNT
                    ------------          ------

                       2007              $  4,977
                       2008                 4,878
                       2009                 3,886
                                         --------
                       Total               13,741
                Less: Current portion       4,977
                                         --------

                                         $  8,764
                                         ========



                                F-12

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005



NOTE 8 - COMMITMENTS

The Company is obligated under two operating lease for office and lab
space expiring December 31, 2008.

Aggregate minimum future lease payments are as follows:


                    YEARS ENDING
                    DECEMBER 31,   AMOUNT
                    ------------   ------
                        2006       $44,343
                        2007        44,593

Rent expense approximating $20,275 and $10,200 is included in general
and administrative expenses for the years ended December 31, 2006 and
2005.

NOTE 9 - INCOME TAXES

As discussed in Note 1, the Company utilizes the asset and liability
method of accounting for income taxes in accordance with SFAS 109.
The effective tax rates differ from the statutory rate primarily due
to the Company's historical corporate structure.  The reconciliation
of the statutory federal rate to the Company's historical Income tax
benefit is as follows:

                                               2006                2005
                                        ------------------  ------------------
                                           Amount      %       Amount      %
  Income tax benefit at U.S.
   federal income tax rate              $ (909,000)   (35)  $ (605,000)   (35)
  State tax, net of federal tax effect    (167,000)    (7)    (111,000)    (7)
  Non-deductible options                    43,000      9            -      -
  Non-deductible amortization                    -      -            -      -
  Change in valuation allowance          1,033,000     33      716,000     42
                                        ----------    ----  ----------    ----
                                        $        -      -   $        -      -
                                        ==========    ====  ==========    ====



The components of deferred tax assets as of December 31, 2006 and
December 31, 2005 are as follows:


                                                   2006           2005
                                               -----------    -----------

   Deferred tax asset for NOL carryforwards    $ 2,067,000    $ 1,034,000
   Valuation allowance                          (2,067,000)    (1,034,000)
                                               -----------    -----------

                                               $         -    $         -
                                               ===========    ===========


                                F-13

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005


NOTE 9 - INCOME TAXES (CONTINUED)

The valuation allowance for deferred tax assets as of December 31,
2006 and 2005 was $2,067,000 and $1,034,000. The change in the total
valuation for the years ended December 31, 2006 and 2005 was an
increase of $1,033,000 and $716,000.  In assessing the realization of
deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not
be realized.  The ultimate realization of deferred tax assets is
dependant upon the generation of future taxable income during the
periods in which the net operating losses and temporary differences
become deductible.  Management considered projected future taxable
income and tax planning strategies in making this assessment.  The
value of the deferred tax assets was offset by a valuation allowance,
due to the current uncertainty of the future realization of the
deferred tax assets.

As of December 31, 2006, the Company had net operating loss carry
forwards of approximately $4,989,000, expiring through the year ending
December 31, 2026.  This amount can be used to offset future taxable
income of the Company.

The timing and manner in which the Company can utilize operating loss
carryfowards in any year may be limited by provisions of the Internal
Revenue Code regarding changes in ownership of corporations.  Such
limitation may have an impact on the ultimate realization of its
carryforwards and future tax deductions.

NOTE 10 - STOCKHOLDERS' EQUITY

Preferred Stock
Pursuant to our Company's Articles of Incorporation, our board of
directors is empowered, without stockholder approval, to issue series
of preferred stock with any designations, rights and preferences as
they may from time to time determine.  The rights and preferences of
this preferred stock may be superior to the rights and preferences of
our common stock; consequently, preferred stock, if issued could have
dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the common stock.
Additionally, preferred stock, if issued, could be utilized, under
special circumstances, as a method of discouraging, delaying or
preventing a change in control of our business or a takeover from a
third party.

Common Stock
The stockholders' deficit at January 1, 2004 has been retroactively
restated for the equivalent number of shares received in the reverse
acquisition at July 14, 2004 (Note 1) after giving effect to the
difference in par value with the offset to additional paid-in-capital.

In April 2005, the Company issued 4,000,000 shares of its common stock
in a private placement for proceeds of $1,000,000.

On May 4, 2005, the Company converted the notes payable of $499,000
into 3,118,750 shares of common stock at a conversion price of $0.16
per share.  An unpaid note payable in the amount of $6,500 has been
reflected as a subscription receivable.

During 2005, the Company issued 410,000 shares of common stock for
professional services rendered valued at $1,169,500.


                                F-14

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005


NOTE 10 - STOCKHOLDERS' EQUITY (CONTINUED)

Common Stock
During May 2005, the Company issued Stock Purchase Warrants to
purchase 100,000 shares of common stock at an exercise price of $2.10
in exchange for consulting services. The warrants are exercisable
until May 2008 and vest as follows: 50,000 shares during the first
year of the agreement, 25,000 shares during the second year of the
agreement, and 25,000 shares during the third year. In accordance with
the fair value method, the Company used the Black-Scholes model to
calculate the grant-date fair value, with the following assumptions:
no dividend yield, expected volatility of 60%, risk-free interest rate
of 3.8% and expected life of option of three years.  The fair market
value of the warrants was $113,250.  In accordance with the fair value
method as described in accounting requirements of SFAS No. 123, the
Company recognized consulting expense of $37,000 in 2005.

During September 2005, the Company issued Stock Purchase Warrants to
purchase 100,000 shares of common stock at an exercise price of $2.00
in exchange for consulting services. The warrants expire in September
2008 and vest as follows: 50,000 shares during the first year of the
agreement, 25,000 shares during the second year of the agreement, and
25,000 shares during the third year of the agreement. In accordance
with the fair value method, the Company used the Black-Scholes model
to calculate the grant-date fair value, with the following
assumptions: no dividend yield, expected volatility of 60%, risk-free
interest rate of 3.8% and expected life of option of three years.  The
fair market value of the warrants was $145,100.   In accordance with
the fair value method as described in accounting requirements of SFAS
No. 123, the Company recognized consulting expense of $24,200 in 2005.

On October 15, 2005, the Company issued Stock Purchase Warrants to
purchase 30,000 shares of common stock at an exercise price of $1.40
in exchange for consulting services. The warrants expire in October
2006 and are exercisable immediately.  In accordance with the fair
value method, the Company used the Black-Scholes model to calculate
the grant-date fair value, with the following assumptions: no dividend
yield, expected volatility of 60%, risk-free interest rate of 4.15%
and expected life of option of one year.  The fair market value of the
warrants was $15,900.   In accordance with the fair value method as
described in accounting requirements of SFAS No. 123, the Company
recognized consulting expense of $15,900.

In December 2005, in conjunction with a consulting contract, the
Company issued Stock Purchase Warrants to purchase 300,000 shares of
common stock at an exercise price of $0.25 per share.  The warrants
expire in December 2007 and were exercisable immediately. In
accordance with the fair value method, the Company used the Black-
Scholes model to calculate the grant-date fair value, with the
following assumptions: no dividend yield, expected volatility of 60%,
risk-free interest rate of 4.41% and expected life of option of two
years.  In accordance with the fair value method as described in
accounting requirements of SFAS No. 123, the Company recognized
consulting expense of $235,660, and at December 31, 2005, the
remaining balance in deferred charges amounted to $199,400 at December
31, 2005.  The 300,000 warrants were fully exercised on December 31,
2005 for $75,000.

During 2006, the Company issued 785,000 shares of common stock for
professional services rendered valued at $955,650.



                                F-15

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005



NOTE 10 - STOCKHOLDERS' EQUITY (CONTINUED)

Common Stock
During 2006, the Company issued 850,000 shares of common stock and
425,000 warrants for proceeds of $425,000 in accordance to a private
placement memorandum amended December 18, 2006.  Pursuant to the terms
of the amended offering, up to 20 units were offered at the offering
price of $50,000 per unit, with each unit comprise of 100,000 shares
and a warrant to purchase 50,000 shares of common stock at $0.50 per
shares.  As of December 31, 2006, the 425,000 warrants are still
outstanding.

NOTE 11 - STOCK BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS 123 (revised 2004), Share-Based Payment ("SFAS 123R").
SFAS 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees, and amends SFAS No. 95, Statement of Cash Flows.
Generally, the approach in SFAS 123(R) is similar to the approach
described in SFAS 123.  However, SFAS 123(R) requires share-based
payments to employees, including grants of employee stock options, to
be recognized in the income statement based on their fair values at
the date of grant.  Pro forma disclosure is no longer an alternative.

On January 1, 2006, the Company adopted SFAS 123(R) using the modified
prospective method as permitted under SFAS 123(R).  Under this
transition method, compensation cost recognized in the first quarter
of 2006 includes compensation cost for all share-based payments
granted prior to but not yet vested as of December 31, 2005, based on
the grant-date fair value estimated in accordance with the provisions
of SFAS 123.  In accordance with the modified prospective method of
adoption, the Company's results of operations and financial position
for prior periods have not been restated.

The Company uses the Black-Scholes option pricing model to calculate
the grant-date fair value of an award, with the following assumptions:
no dividend yield, expected volatility of 186%, risk-free interest
rate between 3.8% and 5.1% and expected option life of two and ten
years.

During the year ending December 31, 2006, the Company's net income was
approximately $91,599 lower as a result of stock-based compensation
expense as a result of the adoption of SFAS 123(R).  As of December
31, 2006, there was approximately $177,952 of unrecognized
compensation expense related to non-vested market-based share awards
that is expected to be recognized through February 2016.

Prior to December 31, 2005, the Company followed the provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation".  The
provisions of SFAS No. 123 allowed companies to either expense the
estimated fair value of stock options or to continue to follow the
intrinsic value method set forth in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"),
but disclose the pro forma effects on net income had the fair value of
the options been expensed.  The Company elected to apply APB 25 in
accounting for its stock option incentive plans.

In accordance with APB 25 and related interpretations, compensation
expense for stock options was recognized in income based on the
excess, if any, of the quoted market price of the stock at the grant
date of the award or other measurement date over the amount an
employee must pay to acquire the stock.  Generally, the exercise price
for stock options granted to employees was equal to the fair market
value of the Company's common stock at the date of grant, thereby
resulting in no recognition of compensation expense by the Company
prior to December 31, 2005.


                                F-16

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005



NOTE 11 - STOCK BASED COMPENSATION (CONTINUED)

Had compensation cost for the Company's stock option plans been
determined based on the fair value method set forth in SFAS No. 123
during the prior year, the Company's net income (loss) and basic and
diluted net income (loss) per common share would have been changed to
the pro forma amounts indicated below:

                                                     Year Ending
                                                  December 31, 2005
Net loss:                                         -----------------

As reported                                           $1,721,765
Less: Total stock-based employee compensation
expense determined under fair value based method
method for all awards                                     24,247
                                                      ----------

Pro forma net loss                                    $1,746,012
                                                      ==========
Net loss per common share - basic and diluted:
As reported                                           $     0.07
Pro forma                                             $     0.07



The following tables summarize all stock option activity of the
Company since December 31, 2006:

                                 Non-Qualified Stock Options Outstanding
                                 ---------------------------------------
                                                            Weighted Average
                                   Number of      Exercise      Exercise
                                   Shares          Price         Price
                                  ---------    -------------   ---------
Outstanding December 31,2004              -    $        -      $       -

Granted                             680,000    $0.25 - $2.10   $    0.99
Exercised                          (300,000)   $        0.25   $    0.25
                                  ---------    -------------   ---------

Outstanding, December 31, 2005      380,000    $1.40 - $2.10   $    0.68

Granted                           1,000,000    $0.25 - $1.00   $    0.70
Cancelled                          (260,000)   $1.40 - $2.10   $   (0.48)
Expired                             (70,000)   $1.40 - $2.00   $   (0.12)
                                  ---------    -------------   ---------

Outstanding, December 31, 2006    1,050,000    $0.25 - $2.00   $    0.83

Exercisable, December 31, 2006      853,000    $0.25 - $2.00   $    0.77



                                F-17

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005




NOTE 11 - STOCK BASED COMPENSATION (CONTINUED)

<TABLE>
<CAPTION>

                 Non-Qualified Stock  Options Outstanding
- ----------------------------------------------------------------------------------
                 Number Outstanding    Weighted Average      Weighted Average
   Rance of     Currently Exercisable     Remaining      Exercise Price of Options
Exercise Prices at December 31, 2006   Contractual Life    Currently Exercisable
- --------------- --------------------   ----------------  -------------------------
<S>             <C>                    <C>               <C>
 $0.25 - $2.00          853,000            6.22 years                $0.77
</TABLE>



Stock Options
During 2005, the Board of Directors ("Board") of the Company adopted a
Stock Option Plan (the "Plan") and reserved 1,000,000 shares of common
stock for issuance under the Plan.  The Plan is intended to permit
stock options granted to employees under the Plan to qualify as
incentive stock options under Section 422 of the Internal Revenue Code
of 1986, as amended ("Incentive Stock Options").  All options granted
under the Plan, which are not intended to qualify as Incentive Stock
Options, are deemed to be non-qualified options ("Non-Statutory Stock
Options").

NOTE 12 - CONTINGENCY

During 2005, the Company raised $1,000,000 through the sale of
4,000,000 shares of common stock in a limited offering to persons
believed to be accredited investors.  The Company received a legal
opinion from third party outside counsel as to the availability of an
exemption from registration with the SEC with respect to the limited
offering.  In December 2005, the Company was informed by the SEC that
it is investigating the circumstances surrounding the $1,000,000
offering including the subsequent public resale of certain shares
originally sold in the offering, along with related matters.  The
Company has further been informed that the original issuance of the
stock and subsequent resale may have been done, in the opinion of the
SEC, in violation of the registration provisions of the Securities Act
of 1933, as amended.  These matters could lead to enforcement action
by the SEC.  The Company's management is committed to cooperate fully
with the SEC.


NOTE 13 - RELATED PARTY

The Company has available-for-sale securities of a related party
(Footnote 4).  The information is summarized below and is recorded on
the balance sheet as "Available-for-sale securities".  The unrealized
loss on this investment is included on the Statement of Other
Comprehensive Income.

                  Number                 Market     Unrealized
                of Shares     Cost       Value         Loss
                ---------   ---------  ----------   ----------
Related party    43,900      $87,800     $59,265     $(28,535)




                                F-18

<PAGE>


                THIRD-ORDER NANOTECHNOLOGIES, INC.
                (FORMERLY PSI-TEC HOLDINGS, INC.)
                  (A Development Stage Company)
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2006 AND 2005




NOTE 13 - RELATED PARTY (CONTINUED)

Under the management agreement dated August 1, 2005, the related party
was issued 200,000 shares of common stock with a fair value of
$584,000 which is being amortized over the term of the agreement (one
year).  The expense for the years ending December 31, 2006 and 2005
was $318,545 and $265,455.

At December 31, 2006 and 2005, the Company has accounts payable to a
related party of $65,339 and $-0-.

At December 31, 2006 and 2005, the Company has an officer loan payable
of $1,468 and $1,468.


NOTE 14 - SUBSEQUENT EVENTS

Through March 23, 2007, the Company issued 1,148,000 shares of its
common stock and 574,000 warrants for proceeds of $574,000.

In February 2007, the Company issued 1,151,785 shares of its common
stock for consulting services valued at $686,250.




                                F-19

<PAGE>




                             PART III

Item 1.   Index to Exhibits.

Exhibit No.     Description of Exhibit

(2)             Charter and Bylaws.
       2.1     	Restated Articles of Incorporation.
       2.2     	Bylaws.

(3)             Instruments defining the rights of security holders.
       3.1     	Restated Articles of Incorporation.*
       3.2     	Bylaws.*

(10)            Material Contracts.
       10.1     Facility Lease
       10.2     Genova Letter Agreement
       10.3     Photon X, LLC Memorandum of Understanding
       10.4     Triple Play Communications Corporation Agreement
       10.5     Universal Capital Management, Inc. Agreement
       10.6     2005 Stock Option Plan

       * Incorporated by reference to Exhibit (2) herein.



                               60
<PAGE>

                           SIGNATURES

    Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, hereunto duly
authorized.

THIRD-ORDER NANOTECHNOLOGIES, INC.

Date: April 13, 2007


By: /s/Frederick J. Goetz, Jr.
   --------------------------------
     Frederick J. Goetz, Jr.,
     President


































                               61
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>form10sb-ex21.txt
<TEXT>
                                                           [EXHIBIT 2.1]

                     RESTATED ARTICLES OF INCORPORATION

                                    OF

                     THIRD-ORDER NANOTECHNOLOGIES, INC.

     Pursuant to Nevada Revised Statutes Section 78.403, the
undersigned officer of Third-Order Nanotechnologies, Inc. does hereby
declare and certify that:


1.   He constitutes the duly elected and acting Secretary of the
     corporation, which is duly organized and existing under the laws
     of the State of Nevada.

2.   He has been authorized to sign and to file these Restated Articles
     of Incorporation with the Secretary of State pursuant to a resolution
     of the board of directors adopted on January 9, 2007.

3.   The original Articles of Incorporation of the corporation were
     filed with the Secretary of State on June 24, 1997, and subsequently
     amended on, July 14, 2004, May 3, 2005, and October 10, 2006.

4.   These Restated Articles of Incorporation correctly sets forth the
     text of the Articles of Incorporation, as amended, to the date of
     the hereof.


5.   The Articles of Incorporation of the corporation are hereby
     restated in their entirety as follows:

                             ARTICLE I - NAME
                             ----------------

     The name of the corporation is Third-Order Nanotechnologies, Inc.

                          ARTICLE II - DURATION
                          ---------------------

     The duration of the corporation is perpetual.

                          ARTICLE III - PURPOSES
                          ----------------------

     The purpose or purposes for which this corporation is organized are:

     (a)   To engage in the specific business of marketing
           Internet services, and conduct related business, and
           to engage in any other lawful acts, activities and
           pursuits for which a corporation may be organized
           under Nevada law.  Also, to acquire, develop, explore
           and otherwise deal in and with all kinds of real and
           personal property and all related activities, and for
           any and all other lawful purposes.
     (b)   To acquire by purchase, exchange, gift, bequest,
           subscription, or otherwise; and to hold, own, mortgage,
           pledge, hypothecate, sell, assign, transfer, exchange, or
           otherwise dispose of or deal in or with its own corporate
           securities or stock or other securities including, without
           limitations, any shares of stock, bonds, debentures, notes,
           mortgages, or other obligations, and any certificates, receipts


<PAGE>


           or other instruments representing rights or interests therein
           on any property or assets created or issued by any person,
           firm, associate, or corporation, or instrumentalities thereof;
           to make payment therefor in any lawful manner or to issue in
           exchange therefor its unreserved earned surplus for the purchase
           of its own shares, and to exercise as owner or holder of any
           securities, any and all rights, powers, and privileges in
           respect thereof.
     (c)   To do each and everything necessary, suitable, or proper for the
           accomplishment of any of the purposes or the attainment of any
           one or more of the subjects herein enumerated, or which may, at
           any time, appear conducive to or expedient for the protection
           or benefit of this corporation, and to do said acts as fully
           and to the same extent as natural persons might, or could do in
           any part of the world as principals, agents, partners, trustees,
           or otherwise, either alone or in conjunction with any other
           person, association, or corporation.
     (d)   The foregoing clauses shall be construed both as purposes and
           powers and shall not be held to limit or restrict in any manner
           the general powers of the corporation, and the enjoyment and
           exercise thereof, as conferred by the laws of the state of
           Nevada; and it is the intention that the purposes and powers
           specified in each of the paragraphs of this Article III shall
           be regarded as independent purposes and powers.

                           ARTICLE IV - STOCK
                           ------------------

     The aggregate number of shares which this corporation shall
have authority to issue is 50,000,000 shares of Common Stock
having a par value of $0.001 per share and 1,000,000 shares of
Preferred Stock having a par value of $0.001 per share.  All
Common Stock of the corporation shall be of the same class, and
shall have the same rights and preferences.  The corporation
shall have authority to issue the shares of Preferred Stock in
one or more series with such rights, preferences and designations
as determined by the Board of Directors of the corporation.
Fully-paid stock of this corporation shall not be liable to any
further call or assessment.

                          ARTICLE V - AMENDMENT
                          ---------------------

     These Restated Articles of Incorporation may be amended by
the affirmative vote of a majority of the shares entitled to vote
on each such amendment.

                      ARTICLE VI - SHAREHOLDERS RIGHTS
                      --------------------------------

     The authorized but unissued stock of this corporation may
be issued at such time, upon such terms and conditions and for
such consideration as the Board of Directors shall determine.
Shareholders shall not have pre-emptive rights to acquire
unissued shares of the stock of this corporation.

                         ARTICLE VII - DIRECTORS
                         -----------------------

     The directors are hereby given the authority to do any act
on behalf of the corporation by law and in each instance where
the Business Corporation Act provides that the directors may act
in certain instances where the articles of incorporation


<PAGE>


authorize such action by the directors, the directors are hereby
given authority to act in such instances without specifically
numerating such potential action or instance herein.

     The directors are specifically given the authority to
mortgage or pledge any or all assets of the business without
stockholders' approval.

                            ARTICLE VIII
         COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
         ----------------------------------------------------

     No contract or other transaction between this corporation
and any one or more of its directors or officers or any other
corporation, firm, association, or entity in which one or more of
its directors or officers are financially interested, shall be
either void or voidable because of such relationship or interest,
or because such person is present at the meeting of the Board of
Directors, or a committee thereof, which authorizes, approves, or
ratifies such contract or transaction, or because his or their
votes are counted for such purpose if:  (a)  the fact of such
relationship or interest is disclosed or known to the Board of
Directors or committee which authorizes, approves, or ratifies
the contract or transaction in good faith by vote or consent
sufficient for the purpose without counting the votes or consents
of such interested director; or (b) the fact of such relationship
or interest is disclosed or known to the stockholders entitled to
vote and they authorize, approve, or ratify such contract or
transaction by vote or written consent, (c) the fact of the
common directorship, office or financial interest is not
disclosed or known to the director or officer at the time of the
transaction is brought before the Board of Directors of the
corporation for action; or (d)  the contract or transaction is
fair and reasonable to the corporation at the time it is
approved.

     Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or committee thereof which authorizes, approves, or
ratifies such contract or transaction.

                            ARTICLE IX
               LIABILITY OF DIRECTORS AND OFFICERS
               -----------------------------------

     No director of officer shall be personally liable to the
corporation or its stockholders for monetary damages for any
breach of fiduciary duty by such person as a director or officer.
Notwithstanding the foregoing sentence, a director or officer
shall be liable to the extent provided by applicable law, (i) for
acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) for the payment of dividends
in violation of NRS 78.300.
	The provisions hereof shall not apply to or have any effect
on the liability or alleged liability of any officer or director
of the corporation for or with respect to any acts or omissions
of such person occurring prior to such amendment.


     The undersigned has hereunto executed these Restated
Articles of Incorporation as of the _16_ day of January 2007.


By:/s/ Andrew Ashton
   -------------------------
   Andrew Ashton, Secretary


<PAGE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>3
<FILENAME>form10sb-ex22.txt
<TEXT>
                                                           [EXHIBIT 2.2]

                             BYLAWS
                               OF
               THIRD-ORDER NANOTECHNOLOGIES, INC.

                            SECTION 1
                             OFFICES

     The  principal office of Third-Order Nanotechnologies, Inc.,
a  Nevada corporation (the "Corporation") shall be located at the
principal place of business or such other place as the  board  of
directors  may  designate. The Corporation may  have  such  other
offices,  either within or without the State of  Nevada,  as  the
board  of  directors  may designate or as  the  business  of  the
Corporation may require from time to time.

                            SECTION 2
                          SHAREHOLDERS

2.1  Annual Meeting

     The  annual  meeting of the shareholders shall be  held  the
first day of March in each year, or on such other day as shall be
fixed  by  resolution of the board of directors, at the principal
office  of the Corporation, or such other place as fixed  by  the
board  of  directors, for the purpose of electing  directors  and
transacting such other business as may properly come before  that
meeting.  If  the  day fixed for the annual meeting  is  a  legal
holiday at the place of that meeting, that meeting shall be  held
on the next succeeding business day.

2.2  Special Meetings

     The  board of directors, the President, or the Chair of  the
Board of Directors, may call special meetings of the shareholders
for  any purpose. The holders of not less than ten percent  (10%)
of all the outstanding shares of the Corporation entitled to vote
for  or  against  any  issue proposed to  be  considered  at  the
proposed special meeting, if they date, sign and deliver  to  the
Corporation's  Secretary a written demand for a  special  meeting
specifying  the purpose or purposes for which it is to  be  held,
may call a special meeting of the shareholders for such specified
purpose.

2.3  Place of Meeting

     All  meetings shall be held at the principal office  of  the
Corporation, or at such other place as designated by the board of
directors, by any persons entitled to call a meeting pursuant  to
the  bylaws,  or  in  a waiver of notice signed  by  all  of  the
shareholders entitled to vote at that meeting.


                                  1
<PAGE>


2.4  Notice of Meeting

     (a)  The Corporation shall cause  to  be delivered  to  each
shareholder  entitled to notice of, or to vote at, an  annual  or
special  meeting of shareholders, either personally or  by  mail,
not  less than ten (10) days nor more than sixty (60) days before
that meeting, written notice stating the date, time and place  of
that  meeting and, in the case of a special meeting, the  purpose
or purposes for which that meeting is called.

     (b)  Notice  to  a  shareholder  of  an  annual  or  special
shareholders  meeting shall be in writing.  Such  notice,  if  in
comprehensible  form,  is effective (a) when  mailed,  if  it  is
mailed  postpaid and is correctly addressed to that shareholder's
address  specified  in the Corporation's then current  record  of
shareholders, or (b) when received by that shareholder, if it  is
delivered   by  telegraph,  facsimile  transmission  or   private
courier.

     (c)  If  an  annual  or  special  shareholders  meeting   is
adjourned to a different date, time, or place, notice of the  new
date, time, or place shall not be required if the new date, time,
or  place is announced at that meeting before adjournment, unless
a new record date for the adjourned meeting is, or must be, fixed
pursuant to (i) Section 2.6(a) of these bylaws or (ii) the Nevada
General Corporation Law.

2.5  Waiver of Notice

     (a)  Whenever  any notice is required to  be  given  to  any
shareholder  pursuant  to the provisions  of  these  bylaws,  the
Articles of Incorporation or the Nevada General Corporation  Law,
a  waiver  thereof  in writing, signed by the person  or  persons
entitled  to  such  notice,  whether before  or  after  the  time
specified  in  such notice, and delivered to the Corporation  for
inclusion  in the minutes for filing with the corporate  records,
shall be deemed equivalent to the giving of such notice.

     (b) The attendance of a shareholder at a meeting shall be  a
waiver of each objection to lack of, or defect in, notice of such
meeting  or  of  consideration of a  particular  matter  at  that
meeting,  unless  that  shareholder, at  the  beginning  of  that
meeting  or  prior  to consideration of such matter,  objects  to
holding  that meeting, transacting business at that  meeting,  or
considering the matter when presented at that meeting.

2.6  Fixing of Record Date for Determining Shareholders

     (a) For the purpose of determining shareholders entitled  to
notice  of,  or to vote at, any meeting of shareholders,  or  any
adjournment thereof, or shareholders entitled to receive  payment
of  any dividend, or to make a determination of shareholders  for
any  other  purpose, the board of directors may fix in advance  a
date  as the record date for any such determination. Such  record
date  shall be not more than seventy (70) days, and in case of  a
meeting  of shareholders, not less than ten (10) days,  prior  to
the   date   on  which  the  particular  action  requiring   such
determination is to be taken. If no record date is fixed for  the
determination of shareholders entitled to notice of, or  to  vote
at,  a meeting, or to receive payment of a dividend, the date  on


                                  2
<PAGE>


which  the notice of meeting is mailed or on which the resolution
of  the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination.
Such  determination  shall  apply  to  any  adjournment  of  that
meeting;  provided, however, such adjournment is not  set  for  a
date more than one hundred twenty (120) days after the date fixed
for the original meeting.

     (b)  The  record date for the determination of  shareholders
entitled  to demand a special shareholders meeting shall  be  the
date the first shareholder signs the demand.

2.7  Shareholders' List

     (a)  Beginning  two  (2) business days  after  notice  of  a
meeting of shareholders is given, a complete alphabetical list of
the  shareholders  entitled to notice of that  meeting  shall  be
made,  arranged by voting group, and within each voting group  by
class or series, with the address of and number of shares held by
each  shareholder.  Such record shall be  kept  on  file  at  the
Corporation's principal office or at a place identified  in  that
meeting  notice in the city where the meeting will  be  held.  On
written demand, such record shall be subject to inspection by any
shareholder at any time during normal business hours. Such record
shall  also  be kept open at that meeting for inspection  by  any
shareholder.

     (b)  A shareholder may, on written demand, copy the shareholders'
list at such shareholder's expense during  regular business hours;
provided, however, that:

     (i)  Such shareholder's demand is made in good faith and for
another purpose;

    (ii)  Such shareholder has described with reasonable particularity
such shareholder's purpose  specified in the written demand; and

   (iii)  The shareholders' list is directly related to such
shareholder's purpose.

2.8  Quorum

     A majority of the votes entitled to be cast on a matter at a
meeting  by  a voting group, represented in person or  by  proxy,
shall constitute a quorum of that voting group for action on that
matter  at  a  meeting of the shareholders. If a  quorum  is  not
present  for a matter to be acted upon, a majority of the  shares
represented at that meeting may adjourn that meeting from time to
time  without  additional  notice. If  the  necessary  quorum  is
present or represented at a reconvened meeting following such  an
adjournment, any business may be transacted that might have  been
transacted  at the meeting as originally called. The shareholders
present  at  a  duly organized meeting may continue  to  transact
business  until  adjournment, notwithstanding the  withdrawal  of
enough shareholders to leave less than a quorum.


                                  3
<PAGE>


2.9  Manner of Acting

     (a)  If a quorum exists, action on a matter (other than  the
election of directors) by a voting group is approved if the votes
cast within the voting group favoring the action exceed the votes
cast  opposing  the  action, unless the  affirmative  vote  of  a
greater  number  is  required by these bylaws,  the  Articles  of
Incorporation or the Nevada General Corporation Law.

     (b)  If a matter is to be voted on by a single group, action
on  that matter is taken when voted upon by that voting group. If
a  matter  is  to  be voted on by two (2) or more voting  groups,
action  on that matter is taken only when voted upon by  each  of
those  voting groups counted separately. One voting  group  on  a
matter  may take action even though another voting group entitled
to vote on such matter takes no action.

2.10 Proxies

     A  shareholder may vote by proxy executed in writing by that
shareholder  or by his or her attorney-in-fact. Such proxy  shall
be  effective when received by the Secretary or other officer  or
agent  authorized to tabulate votes at the meeting. A proxy shall
become  invalid  eleven  (11)  months  after  the  date  of   its
execution,  unless otherwise expressly provided in the  proxy.  A
proxy for a specified meeting shall entitle the holder thereof to
vote  at any adjournment of that meeting, but shall not be  valid
after the final adjournment thereof.

2.11 Voting of Shares

     Each outstanding share entitled to vote shall be entitled to
one  vote  upon each matter submitted to a vote at a  meeting  of
shareholders.

2.12 Voting for Directors

     Each shareholder may vote, in person or by proxy, the number
of  shares owned by such shareholder that are entitled to vote at
an  election  of  directors, for as many  persons  as  there  are
directors to be elected and for whose election such shares have a
right  to  vote.  Unless otherwise provided in  the  Articles  of
Incorporation, directors are elected by a plurality of the  votes
cast  by shares entitled to vote in the election at a meeting  at
which a quorum is present.

2.13 Voting of Shares by Corporations

     2.13.1    Shares Held by Another Corporation

          Shares standing in the name of another corporation  may
     be  voted  by such officer, agent or proxy as the bylaws  of
     such other corporation may prescribe, or, in the absence  of
     such   provision,  as  the  board  of  directors   of   such
     corporation  may determine; provided, however,  such  shares
     are  not  entitled to vote if the Corporation owns, directly


                                  4
<PAGE>


     or indirectly, a majority of the shares entitled to vote for
     directors of such other corporation.

     2.13.2    Shares Held by the Corporation

          Authorized  but unissued shares shall not be  voted  or
     counted  for  determining whether a  quorum  exists  at  any
     meeting  or  counted  in determining  the  total  number  of
     outstanding  shares  at any given time. Notwithstanding  the
     foregoing,  shares of its own stock held by the  Corporation
     in  a  fiduciary  capacity may be counted  for  purposes  of
     determining whether a quorum exists, and may be voted by the
     Corporation.

2.14 Acceptance  or  Rejection  of Shareholder  Votes,  Consents,
     Waivers and Proxy Appointments

     2.14.1    Documents Bearing Name of Shareholders

          If  the name signed on a vote, consent, waiver or proxy
     appointment  corresponds to the name of a  shareholder,  the
     Secretary or other agent authorized to tabulate votes at the
     meeting  may,  if  acting in good faith, accept  such  vote,
     consent,  waiver or proxy appointment and give it effect  as
     the act of the shareholder.

     2.14.2    Documents Bearing Name of Third Parties

          If  the name signed on a vote, consent, waiver or proxy
     appointment  does  not  correspond  to  the  name   of   its
     shareholder,  the  Secretary or other  agent  authorized  to
     tabulate votes at the meeting may nevertheless, if acting in
     good  faith,  accept  such vote, consent,  waiver  or  proxy
     appointment and give it effect as the act of the shareholder
     if:

          (a)  The  shareholder is an entity and the name  signed
               purports  to be that of an officer or an agent  of
               that entity;

          (b)  The  name  signed  purports  to  be  that  of   an
               administrator,  executor, guardian or  conservator
               representing the shareholder and, if the Secretary
               or  other  agent requests, acceptable evidence  of
               fiduciary status has been presented;

          (c)  The  name signed purports to be that of a receiver
               or  trustee in bankruptcy of the shareholder, and,
               if   the   Secretary  or  other  agent   requests,
               acceptable  evidence  of  this  status  has   been
               presented;

          (d)  The  name signed purports to be that of a pledgee,
               beneficial  owner  or  attorney-in-fact   of   the
               shareholder  and, if the Secretary or other  agent


                                  5
<PAGE>


               requests,  acceptable evidence of the  signatory's
               authority to sign has been presented; or

          (e)  Two  or  more persons are the shareholder  as  co-
               owners or fiduciaries and the name signed purports
               to  be  the  name of at least one of the co-owners
               and  the  person signing appears to be  acting  on
               behalf of all co-owners.

     2.14.3    Rejection of Documents

          The  Secretary  or other agent authorized  to  tabulate
     votes  at the meeting is entitled to reject a vote, consent,
     waiver  or proxy appointment if such agent, acting  in  good
     faith, has reasonable basis for doubt about the validity  of
     the  signature on it or about the signatory's  authority  to
     sign for the shareholder.

2.15 Action by Shareholders Without a Meeting

     Any  action  required or permitted by law, these bylaws,  or
the  Articles of Incorporation of the Corporation to be taken  at
any  annual  or  special  meeting of stockholders  may  be  taken
without  a  meeting  if, before or after the  action,  a  written
consent  thereto  is signed by stockholders holding  at  least  a
majority  of  the  voting  power,  except  that  if  a  different
proportion  of voting power is required for such an action  at  a
meeting,  then that proportion of written consents  is  required.
  In  no  instance where action is authorized by written  consent
need  a  meeting of stockholders be called or notice given.  Such
written  consent shall be inserted in the minute book  as  if  it
were the minutes of an annual or special meeting of shareholders.

                            SECTION 3
                       BOARD OF DIRECTORS

3.1  General Powers

     The board of directors shall manage the business and affairs
of  the Corporation, except as may be otherwise provided in these
bylaws,  the  Articles  of Incorporation or  the  Nevada  General
Corporation Law.

3.2  Number, Tenure and Qualifications

     The board of directors shall consist of no less than one (1)
and  no more than fifteen (15) Directors, the specific number  to
be  set  by  resolution of the board of directors. The number  of
directors may be changed from time to time by amendment to  these
bylaws,  but no decrease in the number of directors shall shorten
the  term  of any incumbent director. The terms of the  directors
expire  at the next annual shareholder's meeting following  their
election.  Despite the expiration of a director's term,  however,
the  director  shall  continue  to serve  until  such  director's
successor  is elected and qualifies or until there is a  decrease
in the number of directors. Directors need not be shareholders of
the Corporation or residents of the State of Nevada.


                                  6
<PAGE>


3.3  Annual and Regular Meetings

     An  annual meeting of the board of directors shall  be  held
without additional notice immediately after and at the same place
as the annual meeting of shareholders.

     By  resolution  the  board of directors,  or  any  committee
thereof,  may  specify  the time and place  for  holding  regular
meetings thereof without other notice than such resolution.

3.4  Special Meetings

     Special  meetings of the board of directors or any committee
designated by the board of directors may be called by or  at  the
request  of the Chair of the Board of Directors, or the President
or  any  director and, in the case of any special meeting of  any
committee  designated  by the board of directors,  by  the  Chair
thereof.  The  person  or  persons  authorized  to  call  special
meetings may fix any place either within or without the State  of
Nevada as the place for holding any special board of directors or
committee meeting called by them.

3.5  Meetings by Telecommunications

     Members   of  the  board  of  directors  or  any   committee
designated by the board of directors may participate in a meeting
of  the board of directors or such committee by use of any  means
of  telecommunications equipment pursuant to  which  all  persons
participating  may  simultaneously hear each  other  during  such
meeting. Participation by such method shall be deemed presence in
person at such meeting.

3.6  Notice of Special Meetings

     Notice  of a special board of directors or committee meeting
specifying  the  date, time and place of such  meeting  shall  be
given  to  a  director in writing or orally by  telephone  or  in
person  as specified below. Neither the business to be transacted
at, nor the purpose of, any special meeting need be specified  in
the notice of such meeting.

     3.6.1     Personal Delivery

          If delivery is by personal service, the notice shall be
     effective  if  delivered  at the address  specified  on  the
     records  of  the  Corporation at least two days  before  the
     meeting.

     3.6.2     Delivery by Mail

          If  notice  is delivered by mail, the notice  shall  be
     deemed  effective  if  deposited in the official  government
     mail  at  least  five (5) days before the  meeting  properly
     addressed  to a director at his or her address specified  on
     the records of the Corporation with postage prepaid.


                                  7
<PAGE>


     3.6.3     Delivery by Telegraph

          If  notice is delivered by telegraph, the notice  shall
     be  deemed effective if the content thereof is delivered  to
     the  telegraph  company  by such  time  that  the  telegraph
     company  guarantees delivery at least two  days  before  the
     meeting.

     3.6.4     Oral Notice

          If  notice  is  delivered orally, by  telephone  or  in
     person, the notice shall be effective if personally given to
     a director at least two days before the meeting.

     3.6.5     Notice by Facsimile Transmission

          If  notice is delivered by facsimile transmission,  the
     notice  shall be deemed effective if the content thereof  is
     transmitted  to the office of a director, at  the  facsimile
     number specified on the records of the Corporation, at least
     two days before the meeting, and receipt is either confirmed
     by  confirming transmission equipment or acknowledged by the
     receiving office.

     3.6.6     Notice by Private Courier

          If  notice is delivered by private courier, the  notice
     shall  be  deemed  effective if delivered  to  the  courier,
     properly  addressed  and prepaid,  by  such  time  that  the
     courier  guarantees delivery at least two  days  before  the
     meeting.

3.7  Waiver of Notice

     3.7.1     Written Waiver

          Whenever  any  notice is required to be  given  to  any
     director  pursuant  to the provisions of these  bylaws,  the
     Articles  of Incorporation or the Nevada General Corporation
     Law,  a  waiver thereof in writing, executed  at  any  time,
     specifying the meeting for which notice is waived, signed by
     the  person  or persons entitled to such notice,  and  filed
     with  the  minutes  or corporate records,  shall  be  deemed
     equivalent to the giving of such notice.

     3.7.2     Waiver by Attendance

          The attendance of a director at a board of directors or
     committee  meeting shall constitute a waiver  of  notice  of
     such meeting, unless such director, at the beginning of  the
     meeting,  or promptly upon such director's arrival,  objects
     to  holding the meeting or transacting any business  at  the
     meeting and does not thereafter vote for or assent to action
     taken at the meeting.


                                  8
<PAGE>


3.8  Quorum

     A  majority of the number of directors determined by  or  in
the manner provided by these bylaws shall constitute a quorum for
the transaction of business at any board of directors meeting.

3.9  Manner of Acting

     The  act of the majority of the directors present at a board
of  directors  or committee meeting at which there  is  a  quorum
shall  be the act of the board of directors or committee,  unless
the  vote  of  a greater number is required by these bylaws,  the
Articles of Incorporation or the Nevada General Corporation Law.

3.10 Presumption of Assent

     A  director  of  the  Corporation  present  at  a  board  of
directors  or committee meeting at which action on any  corporate
matter  is  taken shall be deemed to have assented to the  action
taken  unless  such  director objects at  the  beginning  of  the
meeting, or promptly upon such director's arrival, to holding the
meeting   or  transacting  business  at  the  meeting;  or   such
director's  dissent is entered in the minutes of the meeting;  or
such  director delivers a written notice of dissent or abstention
to  such action with the presiding officer of the meeting  before
the adjournment thereof; or such director forwards such notice by
registered  mail to the Secretary of the Corporation  immediately
after  the  adjournment of the meeting. A director who  voted  in
favor of such action may not thereafter dissent or abstain.

3.11 Action by Board of Directors or Committee Without a Meeting

     Any action that could be taken at a meeting of the board  of
directors or of any committee appointed by the board of directors
may  be  taken  without a meeting, if a written  consent  setting
forth  the action so taken is signed by each Director or by  each
committee  member. The action shall be effective  when  the  last
signature  is placed on the consent, unless the consent specifies
an  earlier or later date. Such written consent, which shall have
the  same  effect  as a unanimous vote of the directors  or  such
committee, shall be inserted in the minute book as if it were the
minutes of a board of directors or committee meeting.

3.12 Resignation

     Any  director  may resign at any time by delivering  written
notice  to  the  Chair of the Board of Directors,  the  board  of
directors,  or to the registered office of the Corporation.  Such
resignation  shall  take  effect at the  time  specified  in  the
notice,  or  if  no  time  is specified,  upon  delivery.  Unless
otherwise  specified therein, the acceptance of such  resignation
shall  not  be necessary to make it effective. Once delivered,  a
notice  of  resignation  is  irrevocable  unless  the  board   of
directors permits revocation.


                                  9
<PAGE>


3.13 Removal

     One or more members of the board of directors (including the
entire  board  of  directors) may be  removed  at  a  meeting  of
shareholders called expressly for that purpose, provided that the
notice  of  such meeting states that the purpose, or one  of  the
purposes,  of the meeting is such removal. A member of the  board
of  directors  may be removed with or without cause,  unless  the
Articles  of Incorporation permit removal for cause  only,  by  a
vote of the holders of a majority of the shares then entitled  to
vote  on  the election of the director. A director may be removed
only  if  the number of votes cast to remove the director exceeds
the  number  of  votes  cast to not remove  the  director.  If  a
director  is elected by a voting group of shareholders, only  the
shareholders of that voting group may participate in the vote  to
remove such director.

3.14 Vacancies

     Any vacancy occurring on the board of directors, including a
vacancy  resulting from an increase in the number  of  directors,
may be filled by the shareholders, by the board of directors,  by
the  affirmative  vote of a majority of the  remaining  directors
though less than a quorum of the board of directors, or by a sole
remaining director. A director elected to fill a vacancy shall be
elected  for  the  unexpired term of his or  her  predecessor  in
office;  except that the term of a director elected by the  board
of  directors to fill a vacancy expires at the next shareholders'
meeting  at which directors are elected. Any directorship  to  be
filled by reason of an increase in the number of directors may be
filled  by  the affirmative vote of a majority of the  number  of
directors fixed by the bylaws prior to such increase for  a  term
of office continuing only until the next election of directors by
the shareholders. Any directorship not so filled by the directors
shall  be  filled  by  election at the  next  annual  meeting  of
shareholders or at a special meeting of shareholders  called  for
that  purpose.  If  the  vacant directorship  is  filled  by  the
shareholders and was held by a director elected by a voting group
of  shareholders, then only the holders of shares of that  voting
group  are entitled to vote to fill such vacancy. A vacancy  that
will  occur  at a specific later date by reason of a  resignation
effective  at  such later date or otherwise may be filled  before
the  vacancy  occurs, but the new director may  not  take  office
until the vacancy occurs.

3.15 Minutes

     The board of directors shall keep minutes of its meetings
and shall cause them to be recorded in books kept for that
purpose.

3.16 Executive and Other Committees

     3.16.1    Creation of Committees

          The  board  of  directors, by resolution adopted  by  a
     majority  of  the number of Directors fixed  in  the  manner
     provided  by these bylaws, may appoint standing or temporary
     committees, including an Executive Committee, from  its  own


                                  10
<PAGE>


     number.  The board of directors may invest such committee(s)
     with  such  powers  as  it  may see  fit,  subject  to  such
     conditions  as may be prescribed by the board of  directors,
     these  bylaws, the Articles of Incorporation and the  Nevada
     General Corporation Law.

     3.16.2    Authority of Committees

          Each  committee shall have and may exercise all of  the
     authority  of the board of directors to the extent  provided
     in  the resolution of the board of directors designating the
     committee and any subsequent resolutions pertaining  thereto
     and  adopted  in like manner, except that no such  committee
     shall  have  the  authority to (a) authorize  distributions,
     except  as may be permitted by Section 3.16.2 (g)  of  these
     bylaws;  (b)  approve  or  propose to  shareholders  actions
     required  by  the  Nevada  General  Corporation  Law  to  be
     approved by shareholders; (c) fill vacancies on the board of
     directors  or  any committee thereof; (d)  adopt,  amend  or
     repeal   these   bylaws;  (e)  amend  the   Certificate   of
     Incorporation;  (f) approve a plan of merger  not  requiring
     shareholder   approval;   or  (g)   authorize   or   approve
     reacquisition of shares, except within limits prescribed  by
     the board of directors.

     3.16.3    Quorum and Manner of Acting

          A  majority  of  the number of Directors composing  any
     committee  of  the  board of directors, as  established  and
     fixed  by  resolution  of  the  board  of  directors,  shall
     constitute a quorum for the transaction of business  at  any
     meeting of such committee.

     3.16.4    Minutes of Meetings

          All committees so appointed shall keep regular minutes
     of their meetings and shall cause them to be recorded in
     books kept for that purpose.

     3.16.5    Resignation

          Any  member of any committee may resign at any time  by
     delivering written notice thereof to the board of directors,
     the  Chair of the Board of Directors or the Corporation. Any
     such resignation shall take effect at the time specified  in
     the  notice,  or  if  no time is specified,  upon  delivery.
     Unless  otherwise specified therein, the acceptance of  such
     resignation  shall  not be necessary to make  it  effective.
     Once  delivered,  a  notice  of resignation  is  irrevocable
     unless revocation is permitted by the board of directors.

     3.16.6    Removal

          The  board  of  directors may remove  from  office  any
     member of any committee elected or appointed by it, but only
     by  the affirmative vote of not less than a majority of  the


                                  11
<PAGE>


     number  of  directors fixed by or in the manner provided  by
     these bylaws.

3.17 Compensation

          By   board   of  director  resolution,  directors   and
     committee  members may be paid their expenses,  if  any,  of
     attendance at each board of directors or committee  meeting,
     or  a fixed sum for attendance at each board of directors or
     committee  meeting,  or a stated salary  as  director  or  a
     committee member, or a combination of the foregoing. No such
     payment shall preclude any director or committee member from
     serving  the Corporation in any other capacity and receiving
     compensation therefor.

                            SECTION 4
                            OFFICERS

4.1  Number

     The  Officers of the Corporation shall be a President and  a
Secretary,  each  of  whom shall be appointed  by  the  board  of
directors.  One  or  more Vice Presidents, a Treasurer  and  such
other  Officers and assistant Officers, including a Chair of  the
Board  of  Directors, may be appointed by the board of directors;
such  officers  and assistant officers to hold  office  for  such
period,  have  such  authority and perform  such  duties  as  are
provided  in these bylaws or as may be provided by resolution  of
the  board  of directors. The board of directors may  assign  any
Officer  any  additional title that the board of directors  deems
appropriate. The board of directors may delegate to  any  officer
or  agent  the power to appoint any such subordinate officers  or
agents  and  to  prescribe  their  respective  terms  of  office,
authority  and duties. The same person may hold any two  or  more
offices.

4.2  Appointment and Term of Office

     The  officers of the Corporation shall be appointed annually
by  the board of directors at the board of directors meeting held
after  the annual meeting of the shareholders. If the appointment
of  officers is not made at such meeting, such appointment  shall
be  made  as  soon  thereafter as a board  of  directors  meeting
conveniently may be held. Unless an officer dies, resigns, or  is
removed  from office, he or she shall hold office until the  next
annual  meeting  of the board of directors or until  his  or  her
successor is appointed.

4.3  Resignation

     Any  officer  may  resign at any time by delivering  written
notice to the Corporation. Any such resignation shall take effect
at  the time specified in the notice, or if no time is specified,
upon delivery. Unless otherwise specified therein, the acceptance


                                  12
<PAGE>


of  such resignation shall not be necessary to make it effective.
Once delivered, a notice of resignation is irrevocable unless the
board of directors permits revocation.

4.4  Removal

     The  board  of directors, with or without cause, may  remove
any officer or agent appointed by the board of directors but such
removal  shall  be without prejudice to the contract  rights,  if
any, of the person so removed. Appointment of an officer or agent
shall not of itself create contract rights.

4.5  Vacancies

     A  vacancy  in  any  office because of  death,  resignation,
removal, disqualification, creation of a new office or any  other
cause  may  be filled by the board of directors for the unexpired
portion  of the term, or for a new term established by the  board
of directors. If a resignation is made effective at a later date,
and the Corporation accepts such future effective date, the board
of  directors  may fill the pending vacancy before the  effective
date, if the board of directors provides that the successor  does
not take office until the effective date.

4.6  Chair of the Board of Directors

     If  appointed,  the  Chair of the Board of  Directors  shall
perform  such duties as shall be assigned to him or  her  by  the
board  of  directors  from time to time and  shall  preside  over
meetings  of  the  board  of directors  and  shareholders  unless
another  officer  is  appointed or designated  by  the  board  of
directors as Chair of such meeting.

4.7  President

     The  President shall be the chief executive officer  of  the
Corporation  unless some other Officer is so  designated  by  the
board  of directors, shall preside over meetings of the board  of
directors and shareholders in the absence of a Chair of the Board
of  Directors  and,  subject to the board of directors'  control,
shall  supervise  and  control all of the  assets,  business  and
affairs of the Corporation. The President shall have authority to
sign  deeds,  mortgages, bonds, contracts, or other  instruments,
except when the signing and execution thereof have been expressly
delegated  by the board of directors or by these bylaws  to  some
other officer or agent of the Corporation, or are required by law
to  be  otherwise signed or executed by some other officer or  in
some  other  manner. In general, the President shall perform  all
duties  incident to the office of President and such other duties
as are prescribed by the board of directors from time to time.

4.8  Vice President

     In  the  event of the death of the President or his  or  her
inability  to act, the Vice President (or if there is  more  than
one  Vice President, the Vice President who was designated by the
board  of directors as the successor to the President, or  if  no


                                  13
<PAGE>


Vice  President  is  so  designated,  the  Vice  President  first
appointed  to  such  office)  shall perform  the  duties  of  the
President, except as may be limited by resolution of the board of
directors,  with  all  the  powers of  and  subject  to  all  the
restrictions upon the President. Vice Presidents shall  have,  to
the extent authorized by the President or the board of directors,
the same powers as the President to sign deeds, mortgages, bonds,
contracts  or  other instruments. Vice Presidents  shall  perform
such other duties as from time to time may be assigned to them by
the President or by the board of directors.

4.9  Secretary

     The  Secretary  shall (a) prepare and keep  the  minutes  of
meetings of the shareholders and the board of directors in one or
more  books  provided for that purpose; (b) see that all  notices
are  duly given in accordance with the provisions of these bylaws
or  as  required  by law; (c) be responsible for custody  of  the
corporate records and seal of the corporation; (d) keep registers
of  the post office address of each shareholder and Director; (e)
have   general  charge  of  the  stock  transfer  books  of   the
Corporation;  and (f) in general perform all duties  incident  to
the  office  of Secretary and such other duties as from  time  to
time  may  be assigned to him or her by the President or  by  the
board of directors. In the absence of the Secretary, an Assistant
Secretary may perform the duties of the Secretary.

4.10 Treasurer

     The  Treasurer shall be the chief financial officer  of  the
Corporation  unless some other Officer is so  designated  by  the
board  of  directors. If required by the board of directors,  the
Treasurer shall give a bond for the faithful discharge of his  or
her duties in such amount and with such surety or sureties as the
board  of  directors  shall determine. The Treasurer  shall  have
charge  and  custody  of and be responsible  for  all  funds  and
securities  of  the  Corporation; receive and give  receipts  for
moneys  due  and  payable  to  the Corporation  from  any  source
whatsoever,  and  deposit all such moneys  in  the  name  of  the
Corporation  in  banks,  trust companies  or  other  depositories
selected  in accordance with the provisions of these bylaws;  and
in  general perform all of the duties incident to the  office  of
Treasurer  and  such other duties as from time  to  time  may  be
assigned  to  him  or her by the President or  by  the  board  of
directors.  In  the  absence  of  the  Treasurer,  an   Assistant
Treasurer may perform the duties of the Treasurer.

4.11 Salaries

     The  board  of  directors  shall fix  the  salaries  of  the
Officers  from time to time or by any person or persons  to  whom
the  board of directors has delegated such authority. No  officer
shall  be prevented from receiving such salary by reason  of  the
fact that he or she is also a Director of the Corporation.


                                  14
<PAGE>


                            SECTION 5
              CONTRACTS, LOANS, CHECKS AND DEPOSITS

5.1  Contracts

     The  board  of  directors  may  authorize  any  Officer   or
Officers,  or  agent  or agents, to enter into  any  contract  or
execute  and deliver any instrument in the name of and on  behalf
of  the Corporation. Such authority may be general or confined to
specific instances.

5.2  Loans to the Corporation

     No  loans  shall be contracted on behalf of the  Corporation
and  no  evidences of indebtedness shall be issued  in  its  name
unless authorized by a resolution of the board of directors. Such
authority may be general or confined to specific instances.

5.3  Loans to Directors and Officers

     The  Corporation  shall not lend money to or  guarantee  the
obligation of any Director or Officer.

5.4  Checks, Drafts, Etc.

     All checks, drafts or other orders for the payment of money,
notes  or other evidences of indebtedness issued in the  name  of
the  Corporation shall be signed by such officer or officers,  or
agent or agents, of the Corporation and in such manner as is from
time to time determined by resolution of the board of directors.

5.5  Deposits

     All funds of the Corporation not otherwise employed shall be
deposited  from time to time to the credit of the Corporation  in
such banks, trust companies or other depositories as the board of
directors may select.

                            SECTION 6
           CERTIFICATES FOR SHARES AND THEIR TRANSFER

6.1  Issuance of Shares

     No   shares  of  the  Corporation  shall  be  issued  unless
authorized  by the board of directors, which authorization  shall
include  the  maximum  number of shares  to  be  issued  and  the
consideration  to  be  received  for  each  share.   Before   the
Corporation issues shares, the board of directors shall determine
that the consideration received or to be received for such shares
is  adequate. Such determination by the board of directors  shall
be  conclusive insofar as the adequacy of consideration  for  the
issuance  of  shares  relates to whether the shares  are  validly
issued, fully paid and nonassessable.


                                  15
<PAGE>


6.2  Escrow for Shares

     The board of directors may authorize the placement in escrow
of  shares issued for a contract for future services or  benefits
or  a  promissory  note, or may authorize other  arrangements  to
restrict  the transfer of shares, and may authorize the crediting
of distributions in respect of such shares against their purchase
price, until the services are performed, the note is paid or  the
benefits received. If the services are not performed, the note is
not  paid,  or  the  benefits  are not  received,  the  board  of
directors may cancel, in whole or in part, such shares placed  in
escrow or restricted and such distributions credited.

6.3  Certificates for Shares

     Certificates representing shares of the Corporation shall be
in  such  form as shall be determined by the board of  directors.
Such  certificates shall be signed by any two  of  the  following
officers: the Chair of the Board of Directors, the President, any
Vice  President,  the Treasurer, the Secretary or  any  Assistant
Secretary. Any or all of the signatures on a certificate  may  be
facsimiles if the certificate is manually signed on behalf  of  a
transfer  agent or a registrar other than the Corporation  itself
or  an  employee  of the Corporation. All certificates  shall  be
consecutively numbered or otherwise identified.

6.4  Stock Records

     The  stock  transfer books shall be kept at  the  registered
office  or principal place of business of the Corporation  or  at
the  office of the Corporation's transfer agent or registrar. The
name  and address of each person to whom certificates for  shares
are  issued,  together  with  the  class  and  number  of  shares
represented  by  each  such certificate and  the  date  of  issue
thereof,  shall  be entered on the stock transfer  books  of  the
Corporation. The person in whose name shares stand on  the  books
of  the Corporation shall be deemed by the Corporation to be  the
owner thereof for all purposes.

6.5  Restriction on Transfer

     6.5.1     Securities Laws

          Except  to the extent that the Corporation has obtained
     an  opinion  of  counsel acceptable to the Corporation  that
     transfer  restrictions  are  not required  under  applicable
     securities laws, or has otherwise satisfied itself that such
     transfer  restrictions  are not required,  all  certificates
     representing   shares   of   the  Corporation   shall   bear
     conspicuously  on  the front or back of  the  certificate  a
     legend   or   legends   describing   the   restriction    or
     restrictions.


                                  16
<PAGE>


     6.5.2     Other Restrictions

          In  addition,  the  front or back of  all  certificates
     shall  include  conspicuous written notice  of  any  further
     restrictions  that may be imposed on the transferability  of
     such shares.

6.6  Transfer of Shares

     Transfer of shares of the Corporation shall be made only  on
the   stock  transfer  books  of  the  Corporation  pursuant   to
authorization  or  document of transfer made  by  the  holder  of
record  thereof or by his or her legal representative, who  shall
furnish  proper evidence of authority to transfer, or by  his  or
her   attorney-in-fact  authorized  by  power  of  attorney  duly
executed  and  filed with the Secretary of the  Corporation.  All
certificates surrendered to the Corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificates  for  a  like  number  of  shares  shall  have  been
surrendered and cancelled.

6.7  Lost or Destroyed Certificates

     In the case of a lost, destroyed or mutilated certificate, a
new  certificate  may  be issued therefor  upon  such  terms  and
indemnity  to  the  Corporation as the  board  of  directors  may
prescribe.

6.8  Transfer Agent and Registrar

     The board of directors may from time to time appoint one  or
more Transfer Agents and one or more Registrars for the shares of
the  Corporation, with such powers and duties  as  the  board  of
directors shall determine by resolution.

6.9  Officer Ceasing to Act

     In  case  any  officer  who has signed  or  whose  facsimile
signature  has  been placed upon a stock certificate  shall  have
ceased  to be such officer before such certificate is issued,  it
may  be issued by the Corporation with the same effect as if  the
signer were such officer at the date of its issuance.

6.10 Fractional Shares

     The Corporation shall not issue certificates for fractional
shares.

                            SECTION 7
                        BOOKS AND RECORDS

     The  Corporation shall keep correct and complete  books  and
records  of  account,  stock  transfer  books,  minutes  of   the
proceedings of its shareholders and board of directors  and  such
other records as may be necessary or advisable.


                                  17
<PAGE>


                            SECTION 8
                           FISCAL YEAR

     The  fiscal  year of the Corporation shall be  the  calendar
year; provided, however, that the board of directors may select a
different fiscal year at any time for purposes of federal  income
taxes, or otherwise.

                            SECTION 9
                              SEAL

     The  seal of the Corporation, if any, shall consist  of  the
name of the Corporation and the state of its incorporation.

                           SECTION 10
                         INDEMNIFICATION

10.1 Right to Indemnification of Directors and Officers

     Each  person who was or is made a party or is threatened  to
be  made a party to or is otherwise involved in any action,  suit
or   proceeding,  whether  civil,  criminal,  administrative   or
investigative (hereafter a "proceeding"), by reason of  the  fact
that he or she 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 of a partnership,
joint venture, trust or other enterprise, including service  with
respect   to   an   employee   benefit   plan   (hereinafter   an
"indemnitee"),  whether the basis of such proceeding  is  alleged
action in an official capacity as a director or officer or in any
other  capacity while serving as a director or officer  shall  be
indemnified  and held harmless by the Corporation to the  fullest
extent  authorized by the Nevada General Corporation Law, as  the
same exists or may hereafter be amended, (but, in the case of any
such  amendment,  only to the extent that such amendment  permits
the  Corporation to provide broader indemnification  rights  than
permitted prior thereto), against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise  taxes
or  penalties and amounts paid in settlement) reasonably incurred
or  suffered by such indemnitee in connection therewith and  such
indemnification shall continue as to an indemnitee who has ceased
to be a director or officer and shall inure to the benefit of the
indemnitee's  heirs,  executors  and  administrators;   provided,
however, that, except as provided in Section 10.3 of these bylaws
or   with   respect   to  proceedings  to   enforce   rights   to
indemnification,  the  Corporation  shall  indemnify   any   such
indemnitee  in  connection with a proceeding  (or  part  thereof)
initiated  by  such indemnitee only if such proceeding  (or  part
thereof)  was  authorized  by  the  board  of  directors  of  the
Corporation.

10.2 Right to Advancement of Expenses

     The  right to indemnification conferred in Section  10.1  of
these  bylaws  shall  include  the  right  to  be  paid  by   the
Corporation the expenses incurred in defending any proceeding for
which  such right to indemnification is applicable in advance  of


                                  18
<PAGE>


its final disposition (hereinafter an "advancement of expenses");
provided,  however, that, if the Nevada General  Corporation  Law
requires, an advancement of expenses incurred by an indemnitee in
his  or  her  capacity as a director or officer (and not  in  any
other  capacity  in  which service was or  is  rendered  by  such
indemnitee, including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the Corporation
of an undertaking (hereinafter an "undertaking"), by or on behalf
of  such indemnitee, to repay all amounts so advanced if it shall
ultimately  be determined by final judicial decision  from  which
there  is  no  further  right  to appeal  (hereinafter  a  "final
adjudication")  that  such  indemnitee  is  not  entitled  to  be
indemnified for such expenses under this section or otherwise.

10.3 Right of Indemnitee to Bring Suit

     The  rights  to  indemnification and to the  advancement  of
expenses  conferred  in Sections 10.1 and 10.2  of  these  bylaws
shall be contract rights. If a claim under Sections 10.1 and 10.2
of  these  bylaws  is not paid in full by the Corporation  within
sixty  (60) days after a written claim has been received  by  the
Corporation, except in the case of a claim for an advancement  of
expenses,  in  which case the applicable period shall  be  twenty
(20)  days, the indemnitee may at any time thereafter bring  suit
against  the  Corporation to recover an advancement  of  expenses
pursuant to the terms of an undertaking, the indemnitee shall  be
entitled  to be paid also the expense of prosecuting or defending
such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought  by
the  indemnitee to enforce a right to an advancement of expenses)
it  shall  be  a  defense  that, and (ii)  in  any  suit  by  the
Corporation to recover an advancement of expenses pursuant to the
terms  of  an  undertaking the Corporation shall be  entitled  to
recover  such  expenses  upon  a  final  adjudication  that,  the
indemnitee   has   not   met   any   applicable   standard    for
indemnification set forth in the Nevada General Corporation  Law.
Neither  the failure of the Corporation (including its  board  of
directors,  independent legal counsel, or  its  stockholders)  to
have  made a determination prior to the commencement of such suit
that   indemnification  of  the  indemnitee  is  proper  in   the
circumstances  because  the indemnitee  has  met  the  applicable
standard of conduct set forth in Nevada General Corporation  Law,
nor  an  actual  determination by the Corporation (including  its
board   of   directors,  independent  legal   counsel,   or   its
stockholders)  that  the indemnitee has not met  such  applicable
standard  of  conduct,  shall  create  a  presumption  that   the
indemnitee has not met the applicable standard of conduct or,  in
the  case of such a suit brought by the indemnitee, be a  defense
to such suit. In any suit brought by the indemnitee to enforce  a
right  to  indemnification  or  to  an  advancement  of  expenses
hereunder,  or  by the Corporation to recover an  advancement  of
expenses  pursuant to the terms of an undertaking, the burden  of
proving that the indemnitee is not entitled to be indemnified, or
to  such advancement of expenses, under this section or otherwise
shall be on the Corporation.

10.4 Non-Exclusivity of Rights

     The  rights  to  indemnification and to the  advancement  of
expenses conferred in this article shall not be exclusive of  any
other  right which any person may have or hereafter acquire under


                                  19
<PAGE>


any  statute,  the  Corporation's certificate  of  incorporation,
bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.

10.5 Insurance

     The  Corporation may maintain insurance, at its expense,  to
protect  itself and any director, officer, employee or  agent  of
the   Corporation  or  another  corporation,  partnership,  joint
venture, trust or other enterprise against any expense, liability
or  loss, whether or not the Corporation would have the power  to
indemnify  such  person against such expense, liability  or  loss
under the Nevada General Corporation Law.

10.6 Indemnification of Employees and Agents of the Corporation

     The  Corporation may, to the extent authorized from time  to
time  by the board of directors, grant rights to indemnification,
and  to  the advancement of expenses to any employee or agent  of
the  Corporation to the fullest extent of the provisions of  this
article  with  respect to the indemnification and advancement  of
expenses of directors and officers of the Corporation.

10.7 No Presumption of Bad Faith

     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 or not opposed to the best interests
of this Corporation, or, with respect to any criminal proceeding,
that  the person had reasonable cause to believe that the conduct
was unlawful.

10.8 Survival of Rights

     The  rights  conferred on any person  by  this  Bylaw  shall
continue as to a person who has ceased to be a director, officer,
employee  or  other agent and shall inure to the benefit  of  the
heirs, executors and administrators of such a person.

10.9 Amendments to Law

     For  purposes of this Bylaw, the meaning of "law" within the
phrase  "to  the  fullest  extent not prohibited  by  law"  shall
include,  but  not be limited to, the Nevada General  Corporation
Law,  as  the  same exists on the date hereof or  as  it  may  be
amended;  provided,  however,  that  in  the  case  of  any  such
amendment, such amendment shall apply only to the extent that  it
permits the Corporation to provide broader indemnification rights
than  the Act permitted the Corporation to provide prior to  such
amendment.


                                  20
<PAGE>


10.10     Savings Clause

     If  this Bylaw or any portion hereof shall be invalidated on
any   ground   by  any  court  of  competent  jurisdiction,   the
Corporation shall indemnify each director, officer or other agent
to the fullest extent permitted by any applicable portion of this
Bylaw  that  shall not have been invalidated,  or  by  any  other
applicable law.

10.11     Certain Definitions

     For  the purposes of this Section, the following definitions
shall apply:

     (a)  The term "proceeding" shall be broadly construed and shall
          include, without limitation, the investigation, preparation,
          prosecution, defense, settlement and appeal of any threatened,
          pending or completed action, suit or proceeding, whether brought
          in the right of the Corporation or otherwise and whether civil,
          criminal, administrative or investigative, in which the director
          or officer may be or may have been involved as a party or
          otherwise by reason of the fact that the director or officer 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, partnership, joint venture, trust
          or other enterprise.

     (b)  The term "expenses" shall be broadly construed and shall
          include, without limitation, all costs, charges and expenses
          (including fees and disbursements of attorneys, accountants and
          other experts) actually and reasonably incurred by a director or
          officer in connection with any proceeding, all expenses of
          investigations, judicial or administrative proceedings or
          appeals,  and any expenses of establishing a  right  to
          indemnification under these bylaws, but shall not include amounts
          paid in settlement, judgments or fines.

     (c)  "Corporation" shall mean Third-Order Nanotechnologies, Inc.,
          a Nevada corporation, and any successor corporation thereof.

     (d)  Reference to a "director" or "officer" of the Corporation
          shall include, without limitation, situations where such person
          is serving at the request of the Corporation as a director or
          officer of another corporation, partnership, joint venture, trust
          or other enterprise.

     (e)  References to "other enterprises" shall include employee
          benefit plans. References to "fines" shall include any excise
          taxes assessed on a person with respect to any employee benefit
          plan. References to "serving at the request of the Corporation"
          shall include any service as a director, officer, employee or
          agent of the Corporation which imposes duties on, or involves
          services by, such director, officer, employee or agent with
          respect to an employee benefit plan, its participants, or


                                  21
<PAGE>


          beneficiaries. A person who acted in good faith and in a manner
          the person reasonably believed to be in the interest of the
          participants and beneficiaries of an employee benefit plan shall
          be deemed to have acted in a manner "not opposed to the best
          interests of the Corporation" as referred to in this Bylaw.

                           SECTION 11
                           AMENDMENTS

     These  bylaws  may be altered, amended or repealed  and  new
bylaws may be adopted by the board of directors.

     The  foregoing bylaws were adopted by the board of directors
of the Corporation on January 15, 2007.


By:/s/Andrew Ashton
   --------------------------
   Andrew Ashton, Secretary

























                                  22
<PAGE>




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>form10sb-ex101.txt
<TEXT>
                                              [EXHIBIT 10.1]
                            LEASE

THIS AGREEMENT, made this 21st day of December 2005 between
Taub Investments herinafter called OWNER, with an address at
- ----------------
41 D Germay Drive, Wilmington, DE 19804
- ---------------------------------------

                             AND

PSI-TEC CORPORATION hereinafter called TENANT with an
- -------------------
address at Beacon Hill Development Center, 2320  Lighthouse
           ------------------------------------------------
Lane, Wilmington, DE 19810.
- --------------------------

PREMISES

     WITNESSETH, That Owner has leased to Tenant as Tenant
has leased from owner, all those certain premises in the
state of Delaware, New Castle County, described as follows:
41 A Germay Drive, Wilmington, DE 19804 consisting of
- -----------------------------------------------------
approximately +/- 1,400 square feet of warehouse/office
- -------------------------------------------------------
space as shown on Exhibit A upon the following terms and
- ---------------------------
conditions:

TERMS/RENT

  1.   The term of this lease is Three(3) years beginning on
                                 --------------
     the first day of January 2006, and ending on the 31st day of
     December, 2008 at the rent of

Year                         Monthly rent
- -----------------------------------------
1/1/06 to 12/31/06            $675.00

1/1/07 to 12/31/07            $695.00

1/1/08 to 12/31/08            $716.11

Each beginning on the 1st day of January, 2006, and
continuing on the 1st day of each month thereafter, at the
office of 41 D Germay Drive, Wilmington, DE, 19804 during
business hours, or at such other place as owner may in
writing from time to time direct, and Tenant does for
itself, it's successors and assigns, covenant the promise to
pay said rent without further notice.  Rents are due
promptly on the first day of each month; and in the event
the Tenant becomes delinquent for more than 5 days after the
due date, Tenant authorizes Landlord to impose a 95%0 per
month late charge; and in the event the Tenant becomes
delinquent for more than (30) days after the due date,
Tenant authorizes the Landlord to enter premises and take
possession.  The owner shall have the right to change locks,
discontinue utilities in the Tenant's name and to take any
legal action necessary to recover delinquent rents.  A late
fee in the amount of 5% of the monthly rent shall be charged
if rent is not paid in full by the 5th day after the due
date.

USE OF PREMISES


                                                                1
<PAGE>


  2. Tenant may use and occupy said premise for the
     following purpose:  Warehouse, laboratory and general office
                         ----------------------------------------
     and for no other purpose, except with the prior written
     consent of the Owner.

  Tenant shall comply with all applicable City, County and
  State Laws, ordinances, and regulations, and with the
  rules and regulations of the Local Board of Underwriters
  with respect to use and occupancy of the said premises.
  Tenant shall not permit the conduct of any business,
  trade or occupation on said premises, or anything to be
  done thereon, which may void or make voidable any policy
  of insurance held by Owner thereon.  Tenant shall keep
  the demise and all improvements and fixtures in good
  condition, order and repair, throughout the term of the lease.


POSSESSION

  3. Tenant agrees that in the event of the liability of
     Owner to deliver possession of the premises at the
     commencement of the lease term, Owner shall not be liable
     for any damage caused thereby, nor shall this lease be void
     or voidable, but Tenant shall not be liable for any rent
     until such time as Owner can and does offer to deliver
     possession of the premises to Tenant and the total rent
     payable by Tennant and the commencement date of the lease
     term shall both be adjusted accordingly.



SERVICES

  4. The parties agree that each shall, subject to further
     provisions hereof, furnish and pay for the services and
     items assigned to them below, in addition to the other
     considerations recited herein:

     A.  Heat as required                                     Tenant
     B.  Air Conditioning as required                         Tenant
     C.  Electricity for ordinary lighting and for office
         machines                                             Tenant
     D.  Maintenance of plumming, heating air conditioning    Tenant
         and electric equipment
     E.  Water and Sewer rent(pro rata share)                 Tenant
     F.  Clearing of ice and snow from sidewalks; sanding     Tenant
         And or salting
     G.   Replacement of broken window glass                  Tenant
     H.   Janiter and cleaning service                        Tenant
     I.   Window washing                                      Tenant
     J.   Ordinary repairs                                    Tenant
     K.   Ordinary repairs and maintenance                    Tenant
     L.   Structural repairs                                  Tenant
     M.   Parking lot maintenance, including plowing, etc     Tenant
          When necessary ( pro rata share CAM)


                                                                2
<PAGE>


     N.   Roof repairs and maintenance                        Tenant
     O.   Rubbish removal                                     Tenant
     P.   Security                                            Tenant
     Q.   Light bulb replacement                              Tenant
     R.   Overhead door and opener repair & maintenance       Tenant
     S.   Real estate taxes & hazards insurance               Tenant


     Owner shall not be liable for any failure to furnish
     the services  and items assigned to it above if such
     failure is due to a shortage of materials, supplies,
     labor, services and other cause beyond it's control.

SIGN

  5. No  sign,  advertisement, notice shall be inscribed,
     painted or affixed on any part of the outside or inside of
     said building without the written consent of the Owner,
     which consent Owner agrees not to withhold reasonability.

SUBLETTING

  6. Tenant  shall not sublet, transfer or in any  manner
     dispose of the said premises or any part thereof, for all or
     any part, of the term hereby granted, without the prior
     written consent of the owner, such consent shall not be
     unreasonably  withheld.  If the Tenant merges  into  or
     consolidates  with, or liquidates  or  sells  al  or  a
     substantial part of it's assets to any person, corporation
     or organization of any kind, such action shall constitute an
     assignment or transfer of the premises within the meaning of
     the lease.

PEACEABLE SURRENDER OF PREMISES

  7. On  the  last day of the lease term as  presently written,
     or  on  the last day of any renewal  or  extension thereof,
     or  upon  sooner  termination  by  mutual  written agreement,
     Tenant shall peaceably surrender the premises in as good a
     condition  as reasonable and  proper  use will permit.  Any
     personal property left upon the premises  shall be  deemed
     abandoned by the Tenant.  Tenant shall leave  the premises
     broom clean.

ALTERATIONS

  8. Tenant shall not make any alterations, additions or
     improvements  to the said premises without the prior written
     consent of the owner.  In no event shall any structural
     change or any other change or modification be made to
     structure, heating, electrical or pluming services be
     undertaken by Tenant or employee or agent of Tenant.  Any
     approved additions, alterations or improvements shall be
     done in accordance wit the applicable State and County Laws
     and Ordinances and building and zoning rules and
     regulations.  Tenant hereby expressly assumes full
     responsibility for all damages and for injuries which may
     result, to any person or property by reason of or resulting
     from said alterations, additions or improvements and shall
     hold owner harmless with respect thereto.


                                                           3
<PAGE>


  Any alterations, additions, or improvements made in, to
  or on the premises shall, unless otherwise provided by
  written agreement, be the property of Owner, and shall
  remain upon and be surrendered with the premises, except
  for the Tenants Trade fixtures.  Tenant shall pay, when
  due, any and all sums of money that may be due for any
  and all labor, services, materials, supplies or equipment
  alleged to have been furnished or to be furnished to or
  for Tenant in, on or about the premises, and which may be
  secured by any mechanic's materialmen's or other lien
  against the premises or of Owner's interest therein, and
  Tenant shall cause each such lien to be fully discharged
  and released at the time and performance of any
  obligation secured by and such lien matures or becomes
  due.


LIABILITY

  9. Owner in no event shall be liable for any damage or
     injury to Tenant or any agent or employee of Tenant, or to
     any person or persons coming upon the said premises in
     connection with the occupancy by Tenant or otherwise , or to
     any goods, chattels, or other property of Tenant, or any
     other person or persons which may, during the term of this
     lease, be located in said premises, caused and contributed
     by water, rain, snow, breakage of pipes, leakage, or by any
     other cause except the willful negligence of the Owner, it's
     agents or employees.

OWNER'S INSPECTON

  10. Owner and persons designated by it to have the
      right to enter the said premises at reasonable hours to
      examine the same and to do such work as Owner is
      obligated to do under the terms hereof, or to do such
      work as Owner shall deem necessary for the safety or
      preservation of the said premises; provided however, that
      the same shall not interfere reasonably with the conduct
      of the Tenant's business.

FIRE

  11. If fire or casualty to the rental unit occurs without
      fault of the part of Tenant, or other person on premises
      with Tenant's consent, thereby rendering the premises or
      appurtenances necessary to the use thereof partially or
      wholly unusable, the Tenant may:

  a) if the premises is totally destroyed by fire or other
     casualty; immediately quit the premises and notify Owner in
     writing of Tenant's election to quit within (1) week after
     vacating, in which case the rental agreement shall terminate
     as of the date of such notice.  If Tenant fails to notify
     Owner of Tenant's election to quit Tenant shall be liable
     for rent accruing to the date of Owner's actual knowledge of
     Tenant's vacation, or impossibility of further occupancy ;
     or,

  b) if continued occupancy is otherwise lawful, Tenant may
     vacate any part of the premises rendered unusable by the
     fire or casualty, in which case the Tenant's liability for


                                                           4
<PAGE>


     rent shall be no more than the market value of that part of
     the premises which Tenant continues to use and occupy.


INDEMNITY

 12. Tenant for itself, it's successors and assigns,
     covenants and agrees to indemnify and hold harmless Owner,
     it's successors and assigns, of and from any and all damages
     and for liability from anything whatsoever for arising from
     or out of, or in connection with the occupancy of the said
     premises by Tenant, it's agents or servants, and for itself,
     it's successors and assigns, does hereby release Owner, it's
     successors and assigns from any change or damage of
     liability arising from anything in connection with the
     occupancy of the Tenant of the said premises, unless the
     same shall be caused by the negligence of the Landlord, it's
     agents, or employees.

 13. In the event Tenant's occupancy causes any increase in
     premium for the fire, boiler and/or casualty rates on the
     leased premises or the building of which they are a part
     above the rate for the least hazardous type of occupancy
     legally permitted in the leased premises, the Tenant shall
     pay the additional premium on the fire boiler and/or
     casualty insurance policies by reason thereof.  The Tenant
     shall also pay in such event, any additional premium on the
     rent insurance policy that may be carried by the Owner for
     it's protection against rent loss through fire..  Bills for
     such additional premium shall be rendered by Owner to Tenant
     at such times as Owner may elect, and shall be due from, and
     payable by Tenant when rendered, and the amount thereof
     shall be deemed to be, and paid as additional rent.

BREACH OR DEFAULT BY TENANT

  14. Any breach by Tenant of any conditions of this lease,
      not including payment of rent, may be cured by Owner for the
      account of and at the expense of Tenant, and any sums so
      advanced shall be paid to Owner on the first day of the
      following month.

  Should Tenant be in default of any of the terms or conditions of
  this lease, while such default continues, neither the whole or
  any part of the furniture, equipment or supplies located in the
  premises shall be removed there from, except with the written
  consent of Owner, first obtained.


REAL ESTATE TAXES AND BUILDING INSURANCE

 15. Tenant will pay it's pro rata share all real property
     taxes which have been, or may be assessed by any lawful
     authority against the land and improvements.  Should such
     aforesaid taxes exceed, in any subsequent lease year, the


                                                           5
<PAGE>


     amount paid for the first full year of taxes assessed
     against the land and improvements, the Tenant shall pay as
     additional rent Tenant's proportionate share of the total
     increase, based upon the percentage of increase over the
     taxes in the first lease year.  Tenant shall also pay for
     it's pro rata share of Owner's cost of fire, hazard and
     liability insurance maintained by owner for the building and
     common areas which the premises is a part.  Invoices for the
     above items shall be payable by Tenant within 15 days of
     receiving invoice from owner.

INSURANCE

  16. Tenant shall maintain in full force and effect, at it's
      sole cost and expense, during the term of this lease or any
      renewal or extension thereof, (i) public liability insurance
      including contractual liability, with respect to the leased
      premises in companies and in form acceptable to Owner,
      providing on an occurrence basis, a minimum combined single
      limit of One Million Dollars ($1,000,000) per occurrence and
      Two Million Dollars ($2,000,000) in the aggregate, and (ii)
      fire and extended coverage insurance on Tenant's personal
      property, including inventory, trade fixtures, floor
      coverings, furniture and other property, and Tenant's
      leasehold improvements.  Such a policy shall name Owner and
      Tenant as insured's as their interest shall appear, and
      shall be affected by valid and enforceable policies issued
      by insurers of recognized responsibility satisfactory to
      Owner.  Policy shall also contain a provision that said
      policy shall not be cancelled except after Ten (10) days
      written notice  to Owner.  The policy shall expressively
      waive and bar any claim of subrogation against Owner.
      Appropriate certificates shall be furnished to Owner by
      Tenant to prove issuance of such policies and their coverage.

PERSONAL PROPERTY TAXES

  17. Tenant shall be liable for the payment of all taxes
      levied against any personal property or trade fixtures
      placed in, on, or about the premises, including shelves,
      counters, vaults, vault doors, wall safes, partitions,
      machinery, electrical or electronic equipment.  If Owner is
      required to pay any of such taxes, Tenant, upon demand,
      agrees to reimburse Owner therefore.

BANKRUPTCY

  18. In the event Tenant shall file voluntary petition in
      bankruptcy, make an assignment for the benefit of creditors,
      or be adjudged a bankrupt, or if a receiver, trustee, or
      custodian is appointed for Tenant by any court, or if Tenant
      files any petition for relief under any section of the
      bankruptcy laws of the United States now in force or
      hereafter enacted, or if Tenant takes advantage of any
      insolvency act of ant state or the United States now in


                                                           6
<PAGE>


      force or hereafter enacted, or if the interest of the Tenant
      shall be sold under any execution or other legal process,
      issued out of any court, or if Tenant shall abandon or
      vacate the said premises during the said term, or if Tenant
      shall break any promise or covenant on it's part to be
      performed, then in any such even it shall be lawful for
      owner, at any time thereafter, at it's option, while the
      same continues, if it shall continue for a period of Ten(10)
      days, upon ten(10) days written notice Tenant to enter said
      premises and again have possession thereof and occupy the
      same as id the lease had not been made, and thereupon this
      lease and everything contained herein upon the part of the
      owner to be done and performed  , shall cease and become
      null and void, without prejudice to the right of Owner to
      recover from Tenant by distraint  , attachment or other
      legal process, all rents or additional rents due and owing
      according to the terms of this lease, or any damages
      resulting from the violation of this lease or the terms
      hereof.

SECURITY DEPOSIT

  19. Tenant has deposited with Owner $1,575.00, receipt
      whereof is hereby acknowledged, a security for the full and
      faithful performance of each and every term, provision,
      covenant and condition of this lease.  In the event Tenant
      defaults in respect of any of the terms, provisions,
      covenants or conditions of this lease, including but not
      limited to the payment of rent, Owner may use, apply, or
      retain the whole or any part of such security for the
      payment of any rent in default or for any other sum which
      owner may spend or be required to spend, by reason of
      Tenant's default.  Should tenant faithfully and fully comply
      with all the terms, provisions, covenants, and conditions of
      this lease, the security deposit or any balance thereof
      shall be returned to Tenant at the expiration of the term
      hereof.  Tenant shall not be entitled to any interest on
      said security deposit.

  20. The failure of owner to insist upon a strict
      performance of any of the terms, conditions and covenants
      herein, shall not be deemed a waiver of any rights or
      remedies that owner may have and shall not be deemed a
      waiver of any subsequent breach or default in the terms,
      conditions and covenants herein contained.

EMINANT DOMAIN

  21. If the whole or any part of the premises leased to
      Tenant shall be taken by any public authority under the
      power of eminent domain, then the term of this lease shall
      cease on the part so taken on the date possession of the
      part is surrendered and any unearned rent paid or credited
      in advance shall be refunded, and from that day, Tenant
      shall have the right either to cancel this lease and to
      declare the same null and void, or to continue in possession
      of the remainder of the premises under the terms herein


                                                           7
<PAGE>


      provided, except that the rent shall be reduced in
      proportion to the portion of the premises taken.  Tenant
      shall notify owner within thirty (30) days after
      notification by the owner and/or such public authority of
      the intention to take a portion of the premises leased to
      tenant of it's intention to cancel the lease; otherwise, the
      lease shall continue on the terms and conditions
      hereinbefore stated as to the portion not taken for the
      remainder of the term.  Tenant shall not be entitled to
      receive any part of any award or awards that may be made to
      or received by owner.  Tenant at it's own expense may take
      independent proceedings against the public authority
      exercising the power of eminent domain to prove and
      establish any damage Tenant may have sustained.

ABSENCE FROM PREMISES

  22. At any time during the term of this lease or any
      renewal or extension thereof, Tenant agrees to inform owner
      in writing, if and when premises are due to be unoccupied
      for an extended period of time (10 working days or more);
      such notice will be given no later than the first day of
      such absence.

  23. Time is of the essence of this lease.

SUBORDINATION

  24. Tenant agrees that this lease shall be subordinate
to any mortgages or trust deeds which may now be in effect
or hereafter be placed upon the real property of which the
demised premises form a part, and to any and all advances
made or to be made thereunder.

NOTICES

  25. Any notice provided for herein shall be given by
      registered mail , postage prepaid, addressed, if to Owner at
      Taub Investments at 41 Germay Drive, Wilmington, DE 19804
      and if to Tenant at PSI-TEC Corporation; Beacon Hill
      Development Center, 2320 Lighthouse Lane, Wilmington, DE
      19810 Atten: Andrew Ashton

TERMINATION

  26. Subject to the options to renew provided in the Rider,
      it is agreed that this lease shall be terminate without
      notice by either party, upon the expiration of the period
      specified in Paragraph 1 hereof.

HOLDOVER


                                                           8
<PAGE>


  27. Any holding over after the expiration of the term
      hereof, without the written consent of owner, shall be
      construed to be a tenancy from month to month at one and one
      half (1and 1/2) hereinbefore specified .  If owner's written
      consent is granted, the rent shall be at the amount being
      paid at expiration date of this lease.

RIDER

  28. A Rider consisting of One(1) pages , with sections
      numbered consecutively N/A through N/A is attached hereto
      and made part hereof.

NO OPTION

  29. The submission of this lease for examination does not
      constitute a reservation of or option for the leased
      premises and this becomes effective as a lease only upon
      execution thereof by Owner and Tenant.  If this lease is not
      executed by both parties and fully executed copies delivered
      to both parties by then, this lease shall be null and void.

COMMISSION

  30. In consideration of it's services in negotiating this
      lease, Owner, it's successors or assigns, agrees to pay
      Stoltz Realty Co. it's successors or assigns, a commission
      equal to four percent (4%) upfront for the term of this
      lease and for any extension or renewal.  In the event said
      commission is not paid within thirty(30) days of the due
      date, Stoltz Realty Co. shall have the right to accelerate
      payment of the balance of future commissions base upon the
      Tenant exercising all options to renew and extend this lease
      and all such future commissions shall become due and payable
      at once upon demand.

  If the tenant or any assigns of tenant or any form of ownership in
  which tenant is connected with, purchase the real estate which the
  premises are a part, during the term of this lease or any extension
  thereof, and for 180 days after this lease, or any extension thereof,
  expires, Owner, it's successors or assigns, agrees to have Stoltz
  Realty Co., it' successors or assigns, represent the owner in the
  transaction and pay a commission equal to 6 percent of the sales
  price (gross consideration),

       The owner agrees that these commission
  covenants shall survive any sale, conveyance, lease
  or other transfer of the building and any breach
  hereof shall constitute a lien against the building
  that shall run with the building.

HAZARDOUS SUBSTANCES

  31. During the term of this lease or any extension, renewal
      or expansion thereof the tenet agrees not to generate,
      manufacture, store, treat, dispose, release or threaten


                                                           9
<PAGE>


      release of any hazardous waste or substance by tenant or by
      agent, employee or invitee of tenant on or about any of the
      property. Tenant also agrees that all the activity of the
      tenant shall be conducted in compliance with all applicable
      federal, state and local laws, regulations and ordinances.
      Tenant authorizes landlord and it's agents to enter the
      properties and premises to make sure such inspections and
      tests, as landlord may deem appropriate to determine
      compliance of the property with this section of the lease.
      If tenant does generate, manufacture, store, treat, dispose,
      release or threaten to release any hazardous waste on the
      property, tenant shall become liable for cleanup and the
      cost to cleanup the property.  Tenant also agrees to
      indemnify, hold harmless the landlord against any and all
      claims, losses, liabilities, damages, penalties and expenses
      which landlord may directly or incur or suffer as a result
      from a breach of this section of the lease.  Tenant also
      agrees not to store any junk cars or parts anywhere outside
      of the premises during the term or extension of this lease.

OUTSIDE STORAGE & LOITERING

Tenant agrees not to store or place any junk, damaged cars,
automobile parts or material outside the premises.  Tenant
understands that no loitering, drag racing, or any excessive
noise or music is permitted on or around the premises.
Tenant further understands that no pets are allowed on the
premises.  The existence of any of these violations shall be
determined by the sole discretion of the Owner.

     As used herein, the neuter gender shall be construed as
feminine or masculine gender, as the case may be.

     This agreement shall bind and benefit the parties
hereto and their respective Executors, Administrators,
Heirs, Successors and Assigns.



                   SIGNITURE PAGE TO FOLLOW:




                                                           10
<PAGE>


       IN WITNESS WHEREOF, the parties have caused this
       lease to be executed on the date first above
       written.

       SEALED AND DELIVERED
       IN THE PRESENCE OF:

                                     OWNER: Taub
       Investments

       _________________________     _______________________
       Witness                       Sylvan Taub

                                     Tenant:PSI-TEC
       Corporation


       __________________________    ________________________(seal)
       Witness                       By:
                                     Tenant:PSI-TEC
       Corporation




       ________________________      ________________________(seal)
       Witness                       By:
















                                                           11
<PAGE>






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<FILENAME>form10sb-ex102.txt
<TEXT>
                                                 [EXHIBIT 10.2]


February 3, 2007


RE: Acknowledgement of Continuation of Genova Executive Consulting Services
    -----------------------------------------------------------------------
      This letter confirms that Third-Order Nanotechnologies has agreed to
continue the engagement of Ron Genova's services as Interim CEO, as defined
in the prior Consulting Agreement of record, until adequate funding
(>$1M cum) is raised through a 506 offering or other instrument. Third-Order
agreed to continue to remunerate Mr. Genova at his prior billing rate of
$8,000/month, and Mr. Genova agreed to defer payment for services from
September, 2006 through the month when funding is received (projected to
be February, 2007). Third-Order also agreed to reimburse Mr. Genova for
all expenses incurred on behalf of the Company during the aforementioned
period.  Payment shall be made to Mr. Genova within 15 days after receipt
of funding. Also, per prior verbal assurance from Frederick Goetz, Jr.,
Mr. Genova is entitled to a bonus payment of $50,000.00 for services
rendered to date. This bonus has been accrued and will be paid within
15 days after funding is received.


Genova Executive Business Consulting



/s/Ron Genova
- -----------------------
Ron Genova - Principal





Third-Order Nanotechnologies, Inc.



/s/Frederick J. Goetz
- ----------------------------------------
Frederick J. Goetz - President, Director








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>6
<FILENAME>form10sb-ex103.txt
<TEXT>
                                                 [EXHIBIT 10.3]

                 Memorandum of Understanding

      The purpose of this memorandum  of understanding is to
set  forth  certain non-binding understandings  and  binding
agreements  between  Third-Order Nanotechnologies,  Inc.,  a
Nevada  corporation ("TDON"), and Photon-X, LLC, a  Delaware
limited liability company ("Photon X") , with respect to our
recent   discussions   regarding  the  two-phase   strategic
alliance  as  described  below.   TDON  and  Photon  X   are
sometimes  referred to herein as a "party" and  collectively
as the "parties."

1.0   Understanding.   The  following  section  reflects  our
      understanding of the matters described but are not legally
      binding and do not impose an enforceable obligation  on
      either of us to negotiate or conclude an agreement regarding
      the supposed strategic alliance on such terms.  This is not
      a complete statement of all terms and conditions of the
      proposed  strategic alliance, but provides a basis  for
      further negotiations.

1.1   Phase One.

       A.   Alliance Structure.  TDON shall enter into a "fee for
            ------------------
            services" agreement with Photon-X, which shall be payable by
            TDON to Photon-X, 50% up front an  50% upon completion of
            Phase One, or at Photon-X's discretion, accrued for
            conversion into Third-Order common stock equity and/or
            warrants pursuant to the terms of any such equity offering
            conducted by TDON at the time of it's secondary offering.

       B.   Product/Service.  Produce and evaluate waveguide
            ---------------
            structures based on Third-Order's revolutionary Cyclic
            Surface Conduction (CSC) polymer materials.  The envisioned
            activities to be performed by Photon-X may potentially
            include working with additional parties (eg. Universities,
            lead customers, etc.).

       C.   Scope.  Third-Order will assist Photon-X  in
            -----
            understanding the molecular composition of it's material
            platform, suggest processing conditions, and participate in
            characterization testing.  Waveguide processing shall take
            place at Photon-X's facility.

1.2  Phase Two.

       A.   Alliance Structure.  TDON shall enter into a "Fee for
            ------------------
            Services" agreement with Photon-X, which shall be payable by
            TDON to Photon-X, 50% up front and 50% upon completion of
            Phase Two.  Charges shall be reviewed on a monthly basis by
            Third-Order.  The parties shall enter into good faith
            negotiations regarding potential establishment of strategic
            alliance, creation of a Joint Venture, etc.


<PAGE>


       B.   Products/Services.  To design, develop, produce and
            -----------------
            market electro-optic components based on Third-Order's
            polymer technology.

       C.   Scope.
            -----

              i.  Third-Order and Photon-X will provide the necessary
                  level of engineering resources to design and process
                  electro-optic devices based upon Third-Order's materials
                  and Photon-X's unique processing capabilities. The
                  companies will endeavor to use best reasonable efforts to
                  create devices with optimized electr-optic performance and
                  strong market demand potential (eg. 40Gb/s and 100Gb/s EO
                  Modulators).
             ii.  Characterization and qualification testing may occur at
                  Third-Order's facility, Photon-X's facility, at both
                  locations, and/or at a third party facility as required.
            iii.  Limited quantities (not to exceed 21 units) of devices
                  created under Phase Two may be marketed by either party
                  through the party's market channel(s) as a vehicle to
                  develop appropriate markets; however no commitment to
                  volume production and/or pricing should be made by either
                  party unless and until a final alliance Structure is
                  established.

                               Section 2
                   Certain Covenants and Restrictions

2.0   Agreement.  By signing this Memorandum of
      Understanding,  the parties agree that the following
      paragraphs will constitute a legally binding and enforceable
      agreement between the parties.  In consideration of the
      significant expenses that both parties will incur in
      pursuing a strategic alliance with respect to the mutual
      undertakings described, the parties agree as follows:


2.1   Mutual Non-Disclosure Agreements. Simultaneously with
      this memorandum of Understanding, each of the parties
      shall execute a Mutual Non-Disclosure agreement that
      shall enable appropriate detailed discussions to take
      place relative to work plans, time lines, technical
      specifications, production techniques, IP contributions
      and the possibility of further agreements between Third-
      Order and Photon-X.

2.2   Good Faith Negotiations.  The parties shall negotiate
      in good faith and use their best efforts to arrive at
      agreements with respect to the strategic alliance as
      described herein.


<PAGE>



2.3   Access to Information.  The parties shall make
      available to each other all information necessary to
      effectuate the intent of this Memorandum of Understanding.
      To facilitate such exchange of information, the parties
      shall each provide to each other a designated person of
      contact.


2.4   Confidentiality and Public Announcements.  Both parties
      agree to allow public disclosure of the existence of this
      Memorandum of Understanding between the parties and
      publications of test results; however, the parties shall
      consult with each other and agree as to the timing, content,
      and form before issuing any press release or other public
      disclosure related thereto, and such permission will not be
      unreasonably withheld by either party.  Notwithstanding the
      previous sentence, nothing herein shall prohibit TDON from
      making: (i) a public disclosure regarding this Memorandum of
      Understanding, the creation of a strategic alliance between
      the parties, and/or the publication of test results if, in
      the opinion  of it's legal counsel, such disclosure is
      required by law; and (ii) reasonable and customary
      disclosures without Photon-X's approval to select capital
      sources as may be necessary in connection with obtaining any
      financing which may be sought in connection with TDON's
      business.

      Further Photon-X acknowledges that during the period of
      it's Memorandum of Understanding and the terms of the
      strategic alliance contemplated herein, Photon-X, and
      personnel at Photon-X, may become aware of "material
      non-public information"  (as defined under applicable
      securities laws) regarding TDON.  Photon-X understands,
      and it will communicate to persons having knowledge of
      any such information, that they are required under
      applicable securities of TDON while in possession of
      this information and to refrain from disclosing this
      information to anyone accept as required pursuant to
      this Memorandum of Understanding and the terms of the
      strategic alliance contemplated herein.

                          Section 3
                           General

3.1   Expenses.  Each party shall pay it's own expenses
      (including but not limited to legal, accounting and other
      professional services) in connection with all negotiations
      and activities relating to this Memorandum of Understanding.


3.2   Termination.  Each party has the right to terminate
      this Memorandum of Understanding at any time with or without
      cause.  This Memorandum of Understanding shall automatically
      terminate if no strategic alliance is created by the parties
      by August 31, 2008.  Following termination, neither party
      shall have any obligations under this Memorandum of
      Understanding, other than is set forth in section 2 herein.


<PAGE>


3.3   Exclusive understanding.  Both parties agree that this
      Memorandum of Understanding is the complete and exclusive
      statement  of understanding between the parties and
      supersedes all prior agreements, whether oral or written,
      with respect to the subject matter hereof.


3.4   Non-Exclusive Agreement.  This Memorandum of
      Understanding shall not limit the scope of either party's
      business operations, or prevent either of the parties from
      entering into any other agreement with any third party with
      respect to any matter.


3.5   Binding Effect.  This Memorandum of Understanding is
      intended to be a  confirmation of interest between the
      parties in pursuing negotiations for a strategic alliance
      based on the terms hereof, and, other than as set forth in
      Section 2 herein, shall not constitute a binding agreement
      between the parties hereto.  Neither party intends, in
      setting forth in this Memorandum of Understanding, the
      provisions of a possible strategic alliance, to create, for
      itself or any other person, any legally binding obligation
      of liability.  No agreement shall be binding, unless and
      until each party has reviewed and approved (in it's sole
      discretion) a definitive written agreement incorporating all
      the terms, conditions and obligations of the parties, has
      had such agreement reviewed by legal counsel, and has duly
      executed and delivered such agreement.  The legal rights and
      obligations of each party shall be only those that are set
      forth in the definitive written agreement.


3.6   Counterparts.  This Memorandum of Understanding may be
      executed in any number of counterparts; each of which when
      so executed and delivered shall be deemed an original, and
      such counterparts together shall constitute only one
      original.

IN WITNESS THEREOF, THE PARTIES HAVE ENTERED INTO THIS
Memorandum of Understanding as of December 7, 2006.
                                  ----------------


THIRD-ORDER NANOTECHNOLOGIES, INC.         PHOTON-X, LLC

By:/s/ Frederick Goetz                     By:/s/ Yongming Cai
   -------------------------------            -----------------
   Frederick Goetz, Jr., President            Yongming Cai, CEO



<PAGE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>7
<FILENAME>form10sb-ex104.txt
<TEXT>
                                                           [EXHIBIT 10.4]


                                                           Final


         Triple Play Communications (TPC) Corporation's
       Design Services Agreement with PSI-TEC Corporation
                            (Phase 1)

     This Design Services Agreement (the "Agreement") is made and
entered  into  on  August  8th , 2006,  by  and  between  PSI-TEC
Corporation  ("Client")  and  Triple  Play  Communications  (TPC)
Corporation  ("Provider")  (collectively  referred  to   as   the
"Parties").

The Parties agree as follows:

1.  SERVICES:   Client shall engage Provider for  the  specific
    project described in the Statement of Work, Exhibit A, attached
                                                ---------
    hereto (the "Project"). Provider agrees to exercise the highest
    degree  of  professionalism, and to utilize its  expertise  and
    creative talents in completing such Project. In completing  the
    Project, Provider agrees to provide its own equipment, tools and
    other  materials  at  its own expense.  Client  will  make  its
    facilities  and equipment available to Provider when necessary.
    Provider  shall perform the services necessary to complete  the
    Project  in  a  timely and professional manner consistent  with
    industry standards, and at a location, place and time which the
    Provider  deems  appropriate. Provider may not  subcontract  or
    otherwise delegate its obligations under this Agreement without
    Client's prior written consent.

2.  TIME OF COMPLETION: The Project shall commence on August 8th,
    2006, and shall be completed on or before November 30,  2006
    pursuant  to  the  times described in the  Statement  of  Work,
    Exhibit A.  Time is of the essence.

    ---------
3.  COMPENSATION:   For the Project, Client shall pay Provider a
    total fee of $120,000.   Payment shall be made as follows:

     A.   $25,000 to be paid on August 8th , 2006, initial payment
          to commence the Project.
     B.   $45,000 to be paid on September 30, 2006, corresponding
          to delivery  of  an acceptable preliminary market
          opportunity assessment, Item #1 in Exhibit A.
                                             ---------
     C.   $50,000 to be paid on November 30, 2006, corresponding to
          delivery and acceptance of Items #2 through #6 given in
          Exhibit A.

          ---------
4.  EXPENSES:   No  additional expenses are anticipated  in  the
    fulfillment  of  the  Statement of Work,  Exhibit  A;  however,
                                              ----------
    should  any  unforeseen  expense issues  arise,  Provider  must
    supply  a  written request for a defined amount of  anticipated
    incremental  expenditure to, and receive written  authorization
    from, Client prior to incurring any said expense.

5.  INDEPENDENT CONTRACTOR.  Provider's relationship with Client
    will  be that of an independent contractor and nothing in  this
    Agreement  should  be construed to create a partnership,  joint


<PAGE>


    venture,  or  employer-employee relationship. Provider  is  not
    the  agent  of  Client  and  is  not  authorized  to  make  any
    representation,  contract, or commitment on behalf  of  Client.
    Provider  will  not  be entitled to any of the  benefits  which
    Client  may  make  available to its employees,  such  as  group
    insurance,  profit-sharing  or  retirement  benefits.  Provider
    will  be  solely responsible for all tax returns  and  payments
    required  to  be  filed with or made to any federal,  state  or
    local  tax authority with respect to Provider's performance  of
    services and receipt of fees under this Agreement. Client  will
    regularly report amounts paid to Provider by filing Form  1099-
    MISC  with  the  Internal Revenue Service as required  by  law:
    Because Provider is an independent contractor, Client will  not
    withhold   or   make   payments  for  social   security;   make
    unemployment  insurance or disability insurance  contributions;
    or   obtain   worker's  compensation  insurance  on  Provider's
    behalf.  Provider  agrees  to accept  exclusive  liability  for
    complying  with all applicable state and federal laws governing
    independent contractors, including obligations such as  payment
    of  taxes,  social security, disability and other contributions
    based  on fees paid to Provider, its agents or employees  under
    this  Agreement. Provider hereby agrees to indemnify and defend
    Client  against  any  and  all  such  taxes  or  contributions,
    including penalties and interest.

6.  TRADE SECRETS-INTELLECTUAL PROPERTY RIGHTS.

    6.1.  Proprietary Information. Provider agrees during the  term
          -----------------------
    of  this  Agreement and thereafter that it will take all  steps
    reasonably  necessary to hold Client's Proprietary  Information
    (as  defined  below)  in  trust and confidence,  will  not  use
    Proprietary  Information in any manner or for any  purpose  not
    expressly  set forth in this Agreement, and will  not  disclose
    any  such  Proprietary Information to any third  party  without
    first  obtaining Client's express written consent on a case-by-
    case  basis.  The Client and Provider will mutually agree to  a
    specific  level  of  Proprietary  Information  which   can   be
    disclosed  during  Provider  discussions  with  third   parties
    regarding  market assessments and component or module  designs.
    By   way   of  illustration  but  not  limitation  "Proprietary
    Information"  includes  (a)  trade  secrets,  inventions,  mask
    works,  ideas,  processes, formulas, source and  object  codes,
    data,   programs,   other   works  of   authorship,   know-how,
    improvements,    discoveries,   developments,    designs    and
    techniques   (hereinafter   collectively   referred    to    as
    "Inventions");   and  (b)  information  regarding   plans   for
    research,  development,  new products, marketing  and  selling,
    business  plans, budgets and unpublished financial  statements,
    licenses,  prices and costs, suppliers and customers;  and  (c)
    information  regarding  the skills and  compensation  of  other
    employees  of  Client. Notwithstanding the other provisions  of
    this   Agreement,   nothing  received  by  Provider   will   be
    considered to be Client Proprietary Information if (1)  it  has
    been  published or is otherwise readily available to the public
    other  than  by  a breach of this Agreement; (2)  it  has  been
    rightfully  received  by Provider from a  third  party  without
    confidential   limitations;  (3)  it  has  been   independently
    developed for Provider by personnel or agents having no  access
    to  the Client Proprietary Information; or (4) it was known  to
    Provider prior to its first receipt from Client.


                                                           2
<PAGE>


  6.2.  Third Party Information. Provider understands that Client
        -----------------------
  has  received and will in the future receive from third parties
  confidential   or   proprietary   information   ("Third   Party
  Information")  subject to a duty on Client's part  to  maintain
  the  confidentiality of such information and use  it  only  for
  certain  limited purposes. Provider agrees to hold Third  Party
  Information on confidence and not to disclose to anyone  (other
  than  Client  personnel who need to know  such  information  in
  connection  with their work for Client) or to  use,  except  in
  connection  with  Provider's  work  for  Client,  Third   Party
  Information  unless  expressly  authorized  in  writing  by  an
  officer of Client.

  6.3.  No Conflict of Interest. Provider agrees during the  term
        -----------------------
  of  this  Agreement not to accept work or enter into a contract
  or  accept  an  obligation, inconsistent or  incompatible  with
  Provider's  obligations under this Agreement or  the  scope  of
  services  rendered for Client. Provider warrants  that  to  the
  best  of its knowledge, there is no other existing contract  or
  duty  on  Provider's  part inconsistent  with  this  Agreement,
  unless  a  copy of such contract or a description of such  duty
  is  attached  to this Agreement as Exhibit B. Provider  further
                                     ---------
  agrees  not  to  disclose  to Client, or  bring  onto  Client's
  premises,  or induce Client to use any confidential information
  that belongs to anyone other than Client or Provider.

  6.4.  Disclosure  of Work Product. As used in  this  Agreement,
        ---------------------------
  the  term  "Work Product" means any Invention, whether  or  not
  patentable,  and  all  related know-how, designs,  mask  works,
  trademarks,   formulae,  processes,  manufacturing  techniques,
  trade  secrets, ideas, artwork, software or other copyrightable
  or  patentable works, information regarding plans for research,
  development,  new  products, marketing  and  selling,  business
  plans,  budgets and unpublished financial statements, licenses,
  prices and costs, suppliers and customers.  Provider agrees  to
  disclose  in  writing  to Client, or any person  designated  by
  Client,  all  resulting  Work  Product  as  described  in   the
  deliverables  of  Exhibit A ("Client Work Product").   Provider
  represents that any Work Product relating to Client's  business
  or  any  Project which Provider has made, conceived or  reduced
  to  practice at the time of signing this Agreement ("Prior Work
  Product") has been disclosed in writing to Client and  attached
  to  this  Agreement as Exhibit C. Due to the  highly  technical
                         ---------
  nature of these tasks, it is anticipated that the Provider  may
  not  predict  exactly  all  Prior  Work  Product  necessary  to
  complete  all tasks for the Client, in which case, the Provider
  may  update  Exhibit C as necessary subsequent to signing  this
               ---------
  Agreement;   which  updates  shall  require  Client's   written
  approval,  which shall not be unreasonably withheld by  Client.
  If  disclosure  of  any  such Prior Work  Product  would  cause
  Provider   to  violate  any  prior  confidentiality  agreement,
  Provider  understands that it is not to list  such  Prior  Work
  Product  in Exhibit C but it will disclose a cursory  name  for
              ---------
  each  such  invention, a listing of the party(ies) to  whom  it
  belongs,  and  the fact that full disclosure as to  such  Prior
  Work  Product  has not been made for that reason.  A  space  is
  provided in Exhibit C for such purpose.
              ---------

  6.5.  Ownership  of  Work Product. Provider shall  specifically
        ---------------------------
  describe  and  identify in Exhibit C all technology  which  (a)
                             ---------
  Provider  intends  to use in performing under  this  Agreement,


                                                           3
<PAGE>


  (b)  is either owned solely by Provider or licensed to Provider
  with  a right to sublicense and (c) is in existence in the form
  of  a  writing or working prototype prior to the Effective Date
  ("Background Technology").  Due to the highly technical  nature
  of  these  tasks, it is anticipated that the Provider  may  not
  predict   exactly  all  Background  Technology   necessary   to
  complete  all tasks for the Client, in which case, the Provider
  may   update   Exhibit  C  as  necessary  after  signing   this
                 ----------
  Agreement;   which  updates  shall  require  Client's   written
  approval,  which shall not be unreasonably withheld by  Client.
  Provider   agrees  that  any  and  all  Inventions   conceived,
  written,   created  or  first  reduced  to  practice   in   the
  performance of work under this Agreement shall be the sole  and
  exclusive property of Client.

  6.6.  Assignment of Client Work Product. Except for  Provider's
        ---------------------------------
  rights  as described in Exhibit C, Provider irrevocably assigns
                          ---------
  to  Client  all right, title and interest worldwide in  and  to
  the   Client  Work  Product  and  all  applicable  intellectual
  property  rights related to the Client Work Product,  including
  without  limitation,  copyrights,  trademarks,  trade  secrets,
  patents,  moral  rights,  contract and  licensing  rights  (the
  "Proprietary  Rights").  Except as set  forth  below,  Provider
  retains  no  rights to use the Client Work Product  and  agrees
  not  to  challenge  the validity of Client's ownership  in  the
  Client   Work   Product   unless  Provider   receives   written
  permission from the Client. Provider hereby grants to Client  a
  non-exclusive, royalty-free, irrevocable and world-wide  right,
  with   rights   to   sublicense  through  multiple   tiers   of
  sublicensees, to reproduce, make derivative works of,  publicly
  perform,  and  publicly display in any form or medium,  whether
  now  known or later developed, distribute, make, use  and  sell
  Background  Technology and any Prior Work Product  incorporated
  or  used  in  the  Client  Work  Product  for  the  purpose  of
  developing  and  marketing Client products,  but  not  for  the
  purpose  of  marketing  Background  Technology  or  Prior  Work
  Products  separate from Client products. Provider  retains  the
  right to use the raw marketing data portion of the Client  Work
  Product for other Provider projects that are unrelated to  this
  Agreement   and  that  are  non-competitive  to  the   Client's
  business.

  6.7. Waiver or Assignment of Other Rights. If Provider has  any
       ------------------------------------
  rights  to  the Client Work Product that cannot be assigned  to
  Client,  Provider  unconditionally and irrevocably  waives  the
  enforcement  of  such  rights, and all  claims  and  causes  of
  action  of any kind against Client with respect to such rights,
  and  agrees, at Client's request and expense, to consent to and
  join in any action to enforce such rights. If Provider has  any
  right  to  the Client Work Product that cannot be  assigned  to
  Client  or  waived  by  Provider, Provider unconditionally  and
  irrevocably  grants to Client during the term of  such  rights,
  an  exclusive,  irrevocable, perpetual, worldwide,  fully  paid
  and  royalty-free  license, with rights to  sublicense  through
  multiple   levels   of  sublicensees,  to   reproduce,   create
  derivative works of, distribute, publicly perform and  publicly
  display  by  all  means  now  known or  later  developed,  such
  rights.

  6.8.  Assistance. Provider agrees to cooperate with  Client  or
        ----------
  its  designee(s),  both  during and  after  the  term  of  this
  Agreement,  in  the  procurement and  maintenance  of  Client's
  rights  in  Client Work Product and to execute, when requested,


                                                           4
<PAGE>


  any  other  documents deemed necessary by Client to  carry  out
  the  purpose of this Agreement. Provider agrees to execute upon
  Client's  request a signed transfer of copyright to  Client  in
  the  form  attached  to this Agreement as  Exhibit  D  for  all
                                             ----------
  Client   Work   Product   subject  to   copyright   protection,
  including,   without  limitation,  computer  programs,   notes,
  sketches, drawings and reports.

  6.9.  Enforcement of Proprietary Rights. Provider  will  assist
        ---------------------------------
  Client  in  every proper way to obtain, and from time  to  time
  enforce,  United States and foreign Proprietary Rights relating
  to  Client Work Product in any and all countries. To  that  end
  Provider  will  execute, verify and deliver such documents  and
  perform  such other acts (including appearances as  a  witness)
  as  Client  may  reasonably request for use  in  applying  for,
  obtaining,  perfecting,  evidencing, sustaining  and  enforcing
  such   Proprietary  Rights  and  the  assignment  thereof.   In
  addition,   Provider   will   execute,   verify   and   deliver
  assignments  of  such  Proprietary  Rights  to  Client  or  its
  designee.  Provider's obligation to assist Client with  respect
  to  Proprietary Rights relating to such Client Work Product  in
  any and all countries shall continue beyond the termination  of
  this  Agreement,  but  Client shall compensate  Provider  at  a
  reasonable  rate after such termination for the  time  actually
  spent by Provider at Client's request on such assistance.

  6.10.  Execution  of Documents. In the event Client  is  unable
         -----------------------
  for  any  reason, after reasonable effort, to secure Provider's
  signature  on  any  document  needed  in  connection  with  the
  actions  specified  in  the preceding  sections  6.8  and  6.9,
  Provider hereby irrevocably designates and appoints Client  and
  its  duly  authorized  officers and agents  as  its  agent  and
  attorney  in  fact,  which  appointment  is  coupled  with   an
  interest,  to act for and in its behalf to execute, verify  and
  file  any such documents and to do all other lawfully permitted
  acts  to  further the purposes of the preceding paragraph  with
  the  same  legal force and effect as if executed  by  Provider.
  Provider  hereby waives and quitclaims to Client  any  and  all
  claims,  of  any nature whatsoever, which Provider now  or  may
  hereafter  have  for  infringement of  any  Proprietary  Rights
  assigned hereunder to Client.

7.  PROVIDER  REPRESENTATIONS  AND  WARRANTIES.  Provider  hereby
    represents  and warrants that (a) the Client Work Product  will
    be  an  original  work of Provider and any third  parties  will
    have  executed  assignment of rights reasonably  acceptable  to
    Client;  (b)  neither the Client Work Product nor  any  element
    thereof will infringe the Intellectual Property Rights  of  any
    third  party;  (c)  neither the Client  Work  Product  nor  any
    element thereof will be subject to any restrictions or  to  any
    mortgages, liens, pledges, security interests, encumbrances  or
    encroachments;  (d)  Provider  will  not  grant,  directly   or
    indirectly,  any rights or interest whatsoever  in  the  Client
    Work Product to third parties; (e) Provider has full right  and
    power  to  enter  into and perform this Agreement  without  the
    consent  of  any  third  party;  (f)  Provider  will  take  all
    necessary   precautions  to  prevent  injury  to  any   persons
    (including   employees  of  Client)  or  damage   to   property
    (including   Client's  property)  during  the  term   of   this
    Agreement;  (g) Provider agrees to abide by any and all  rules,
    policies  and  procedures as communicated to  Provider  by  the
    Client;  (h)  to the extent required by law, the Project  shall


                                                           5
<PAGE>


    be  performed  by individuals duly licensed and  authorized  by
    law  to  work  on  the  Project; and (h) should  Client  permit
    Provider   to  use  any  of  Client's  equipment,   tools,   or
    facilities  during the term of this Agreement, such  permission
    shall  be gratuitous and Provider shall be responsible for  any
    injury  to  any person (including death) or damage to  property
    (including  Client's  property) arising  out  of  use  of  such
    equipment,  tools or facilities, whether or not such  claim  is
    based  upon  its  condition  or on the  alleged  negligence  of
    Client in permitting its use.

8.  INDEMNIFICATION. Provider will indemnify and hold  harmless
    Client,   its  officers,  directors,  employees,  sublicensees,
    customers   and  agents  from  any  and  all  claims,   losses,
    liabilities, damages, expenses and costs (including  attorneys'
    fees  and  court costs) which result from a breach  or  alleged
    breach of any representation or warranty of Provider (a "Claim")
    set  forth in Section 7 of this Agreement, provided that Client
    gives Provider written notice of any such Claim and Provider has
    the right to participate in the defense of any such Claim at its
    expense. From the date of written notice from Client to Provider
    of any such Claim, Client shall have the right to withhold from
    any payments due Provider under this Agreement the amount of any
    defense costs, plus additional reasonable amounts as security for
    Provider's obligations under this Section 8.

    Provider,  at  its  sole  cost  and  expense,  shall   maintain
    appropriate  commercial liability insurance. A  Certificate  of
    Insurance  indicating  such  coverage  shall  be  delivered  to
    Client  upon request. The Certificate shall indicate  that  the
    policy  will not be changed or terminated without at least  ten
    (10)  days'  prior notice to Client, shall name  Client  as  an
    additional  named  insured and shall  also  indicate  that  the
    insurer has waived its subrogation rights against Client.

9.  GOVERNMENT OR THIRD PARTY CONTRACTS.

    9.1   Government  Contracts. In the event that  Provider  shall
          ---------------------
    perform  services under this Agreement in connection  with  any
    Government contract in which Client may be the supplier,  prime
    contractor  or subcontractor, Provider agrees to abide  by  all
    laws,  rules  and regulations relating thereto. To  the  extent
    that  any  such  law,  rule  or  regulation  requires  that   a
    provision  or  clause  be included in this Agreement,  Provider
    agrees  that  such provision or clause shall be added  to  this
    Agreement  and  the  same shall then  become  a  part  of  this
    Agreement.

    9.2   Security.  In  the  event the services  of  the  Provider
          --------
    should  require  Provider  to  have  access  to  Department  of
    Defense  classified material, or other classified  material  in
    the  possession of Client's facility, such material  shall  not
    be  removed  from Client's facility. Provider agrees  that  all
    work  performed under this Agreement by Provider which involves
    the  use  of  classified  material  mentioned  above  shall  be
    performed  in a secure fashion (consistent with applicable  law
    and  regulations for the handling of classified  material)  and
    only at Client's facility.


                                                           6
<PAGE>


    9.3   Ownership.  Provider also agrees to  assign  all  of  its
          ---------
    right, title and interest in and to any Client Work Product  to
    a  Third Party, including without limitation the United States,
    as directed by Client.

10. TERMINATION.

    10.1.   Termination  by  Client.  Client  may  terminate   this
            -----------------------
    Agreement  at  its  convenience  and  without  any  breach   by
    Provider  upon  fifteen  (15) days'  prior  written  notice  to
    Provider.  Client may also terminate this Agreement immediately
    in  its  sole  discretion upon Provider's  material  breach  of
    Section 6 and/or Section 10.3.

    10.2.  Termination  by Provider. Provider  may  terminate  this
           ------------------------
    Agreement  at any time that there is no uncompleted Project  in
    effect upon fifteen (15) days' prior written notice to Client.

    10.3.  Noninterference with Business. During and for  a  period
           -----------------------------
    of  two  (2)  years immediately following termination  of  this
    Agreement  by either party, Provider agrees not to  solicit  or
    induce  any employee or independent contractor to terminate  or
    breach  an  employment, contractual or other relationship  with
    Client.

    10.4.  Return  of  Client  Property. Upon  termination  of  the
           ----------------------------
    Agreement,   completion  of  this  Agreement  or   earlier   as
    requested  by Client, Provider will deliver to Client  any  and
    all   drawings,  notes,  memoranda,  specifications,   devices,
    formulas, and documents, together with all copies thereof,  and
    any  other  material containing or disclosing any  Client  Work
    Product, Third Party Information or Proprietary Information  of
    Client.  Provider further agrees that any property situated  on
    Provider's  premises and owned by Client, including  disks  and
    other  storage media, filing cabinets or other work  areas,  is
    subject  to  inspection by Client personnel at  any  time  upon
    Client's 48 hours written notice to Provider.

11. GENERAL PROVISIONS.

    11.1.  Governing  Law.  This Agreement  will  be  governed  and
           --------------
    construed  in accordance with the laws of Delaware  as  applied
    to  transactions  taking place wholly within  Delaware  between
    Delaware residents. Provider hereby expressly consents  to  the
    personal  jurisdiction of the state and federal courts  located
    in  New  Castle  County, Delaware for any lawsuit  filed  there
    against  Provider  by Client arising from or  related  to  this
    Agreement.

    11.2.  Severability. In case any one or more of the  provisions
           ------------
    contained in this Agreement shall, for any reason, be  held  to
    be  invalid,  illegal  or unenforceable in  any  respect,  such
    invalidity,  illegality or unenforceability  shall  not  affect
    the  other  provisions of this Agreement,  and  this  Agreement
    shall   be   construed   as  if  such   invalid,   illegal   or
    unenforceable  provision had never been  contained  herein.  If
    moreover, any one or more of the provisions contained  in  this
    Agreement shall for any reason be held to be excessively  broad
    as  to  duration, geographical scope, activity or  subject,  it


                                                           7
<PAGE>


    shall  be  construed by limiting and reducing it, so as  to  be
    enforceable  to  the extent compatible with the applicable  law
    as it shall then appear.

    11.3.  No  Assignment. This Agreement may not  be  assigned  by
           --------------
    Provider  without  Client's consent,  and  any  such  attempted
    assignment shall be void and of no effect.

    11.4.  Notices.  All notices, requests and other communications
           -------
    under this Agreement must be in writing, and must be mailed  by
    registered  or  certified  mail,  postage  prepaid  and  return
    receipt  requested, or delivered by hand to the party  to  whom
    such  notice is required or permitted to be given.  If  mailed,
    any  such notice will be considered to have been given five (5)
    business  days  after  it  was  mailed,  as  evidenced  by  the
    postmark.  If  delivered  by hand,  any  such  notice  will  be
    considered  to have been given when received by  the  party  to
    whom  notice  is  given,  as evidenced  by  written  and  dated
    receipt of the receiving party, the mailing address for  notice
    to either party is as follows:

    Client:                            Provider:

    PSI-TEC Corporation                TPC Corporation
    Ron Genova - Interim CEO           Keith Riffee - President
    2601 Annand Drive, Suite 16        PO Box 121287
    Wilmington, DE  19808              West Melbourne, FL 32912-1287

    Either  party  may  change its mailing  address  by  notice  as
    provided by this section.

    11.5.  Legal  Fees. If any dispute arises between  the  parties
           -----------
    with  respect  to  the matters covered by this Agreement  which
    leads  to  a proceeding to resolve such dispute, the prevailing
    party  in  such  proceeding shall be entitled  to  receive  its
    reasonable  attorneys' fees, expert witness  fees  and  out-of-
    pocket  costs  incurred in connection with such proceeding,  in
    addition to any other relief it may be awarded.

    11.6.  Injunctive Relief. A breach of any of  the  promises  or
           -----------------
    agreements   contained  in  this  Agreement   may   result   in
    irreparable  and  continuing damage to Client for  which  there
    may  be  no  adequate  remedy at law, and Client  is  therefore
    entitled  to seek injunctive relief as well as such  other  and
    further relief as may be appropriate.

    11.7.   Survival.  The  following  provisions   shall   survive
            --------
    termination of this Agreement: Section 6, Section 7, Section  8
    and Section 10.3.

    11.8.  Export.  Provider  agrees not  to  export,  directly  or
           ------
    indirectly,  any  U.S.  source  technical  data  acquired  from
    Client  or  any  products  utilizing  such  data  to  countries
    outside the United States, which export may be in violation  of
    the United States export laws or regulations.

    11.9.  Waiver.  No  waiver by Client  of  any  breach  of  this
           ------
    Agreement  shall  be  a waiver of any preceding  or  succeeding
    breach.  No waiver by Client of any right under this  Agreement


                                                           8
<PAGE>


    shall  be  construed  as a waiver of any  other  right.  Client
    shall  not  be  required  to  give  notice  to  enforce  strict
    adherence to all terms of this Agreement.

    11.10  Binding Effect.  The covenants and conditions  contained
           --------------
    in  this Agreement      shall apply to and bind the Parties and
    the  heirs,  legal  representatives, successors  and  permitted
    assigns of the Parties.

    11.11  Cumulative  Rights.  The  Parties'  rights  under   this
           ------------------
    Agreement  are  cumulative,  and  shall  not  be  construed  as
    exclusive of each other unless otherwise required by law.

    11.12.  Entire Agreement. This Agreement is the final, complete
            ----------------
    and  exclusive  agreement of the parties with  respect  to  the
    subject  matter  hereof and supersedes  and  merges  all  prior
    discussions  between us. No modification  of  or  amendment  to
    this  Agreement,  nor  any  waiver of  any  rights  under  this
    Agreement,  will be effective unless in writing and  signed  by
    the party to be charged.

  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first written above.

CLIENT:                            PROVIDER:

By:_______________________         By:___________________________
   Ron Genova, Interim CEO            Keith Riffee, President

















                                                           9
<PAGE>

<TABLE>
<CAPTION>

                            EXHIBIT A
                           ----------

       Attached Statement of Work (SOW) in MS Excel format
- -------------------------------------------------------------------------------------
<S>                         <C>                                         <C>
                                                                        Date
                                                                      Complete
Prioritized                                                          (No Later
Item #                      Description                                 Than)
- -------------------------------------------------------------------------------------
    Deliverable:  Initial market opportunity assessment for 40G
    polymer modulator for commercial applications and higher speed
    (100GHz+) for military/aerospace applications (PowerPoint
    document)
    Perform initial market opportunity assessment for 40G
    (commercial) & 100G+ (military/aerospace) modulators and system
    applications.  This opportunity assessment will include
    discussions with 15 to 20 market leaders (identified by initials,     Template:
    position, and company) and includes:                                   8/15/06
    -  key technical and market trends at 40G (commercial) & 100G+
    (military/aerospace) applications                                     Preliminary
1   -  special emphasis on modulator technology options together with       Version:
    the technical and cost discriminators required in these markets        9/05/2006
    -  estimate of total available market (TAM) through 2011 for
    modulators and, if possible, systems                                    Final
    -  competitive offerings and current market share (Modulator           Version:
    vendors include: JDSU, Covega, Avanex, Sumitomo, Fujitsu, etc.;         9/15/06
    Systems vendors include: Mintera, StrataLight, Cisco, Juniper,
    Siemens, etc)
    -  anticipated modulator component pricing, estimate cost targets
    to enable large market share
    -  summary revenue and gross margin potential through 2011
    -  SWOT analysis
    -  risks and mitigation plan
- -------------------------------------------------------------------------------------
    Deliverable:  Summary of options and trades for several modulator
    packaging solutions (PowerPoint document)
    Explore 40G modulator packaging options, both discrete and
    integrated with a driver and/or low cost DFB.  Provide options
2   and trades for several available solutions while meeting all         30-Sep-06
    technical requirements.  (May have to subcontract
    mechanical/packaging engineering assistance, need to discuss
    details before quoting cost for this effort during first 3
    months, may have to complete as follow-on task)
- -------------------------------------------------------------------------------------
    Deliverable:  Target specification for 40G modulator based on
    various packaging options (Word document)
    Generate target specification for a 40G modulator component based
3   on recommended packaging options.  This specification includes       15-Oct-06
    requirements from the packaging options evaluation as well as:
    -  optical, electrical, mechanical, qualification, and cost
    requirements
- -------------------------------------------------------------------------------------

</TABLE>
                                                           10
<PAGE>

<TABLE>
<CAPTION>

<S>                         <C>                                         <C>



    Deliverable:  Initial market opportunity assessment for 40G 300-
    pin MSA transponder (PowerPoint document)
    Perform initial market opportunity assessment for 40G 300-pin MSA
    transponder.  This opportunity assessment will include
    discussions with 10 to 15 market leaders (identified by initials,
    position, and company) and includes:
    -  key technical and market trends for 300-pin modules at 40G
4   -  discussion on potential timing for 40G in pluggable form          30-Oct-06
    factor
    -  key 300-pin technical and cost discriminators required in the
    market
    -  potential customer feedback on required reach at 40G (largest
    volume potential)
    -  overview of total available market (TAM) through 2011
    -  anticipated module pricing, estimate cost target to achieve
    large market share
    -  competitive offerings and current market share (40G
    transponder vendors include: CoreOptics, Intel, Kodeos, JDSU,
    etc.)
    -  summary revenue and gross margin potential through 2011
    -  SWOT analysis
    -  risks and mitigation plan
- -------------------------------------------------------------------------------------

    Deliverable:  Summary of options and trades for a 40G 300-pin MSA
    transponder (PowerPoint document)
    Perform a module trade evaluation matrix for a 40G 300-pin MSA
    transponder module, include the following specific items:
5   -  desired type of FEC                                               15-Nov-06
    -  desired type of EDC and/or ODC
    -  recommendation modulation type(s)
    -  recommendation of DSP versus microcontroller
    -  recommendation on SERDES component
- -------------------------------------------------------------------------------------
    Deliverable:  Target specification for a 40G 300-pin MSA
    transponder module
    (Word document)
6   Generate target specification for a 40G 300-pin MSA transponder      30-Nov-06
    module.  This specification includes requirements for the
    following:
    -  optical, electrical, mechanical, qualification, and cost
    requirements
- -------------------------------------------------------------------------------------
    Perform conceptual/preliminary design for a 40G packaged polymer     Follow-on
7   modulator.  Include preliminary test plan for Alpha and Beta            task,
    modules and suggested design for evaluation card.                   next quarter
- -------------------------------------------------------------------------------------
    Perform preliminary design for a 40G 300-pin MSA transponder         Follow-on
8   module.  Include preliminary test plan for Alpha and Beta modules       task,
    and suggested design for evaluation card.                           next quarter
- -------------------------------------------------------------------------------------
</TABLE>


                                                           11
<PAGE>


                            EXHIBIT B
                            ---------
                 Conflict Of Interest Disclosure





















                                                           12
<PAGE>

                            EXHIBIT C
                            ---------

                  Prior Work Product Disclosure

1. Except as listed in Section 2 below, the following is a
complete list of all Prior Work Product that have been made or
conceived or first reduced to practice by Provider alone or
jointly with others prior to my engagement by Client:

[ ] No inventions or improvements.
[X] See below:

  a. Software based control of optical transceiver and transponder circuits
  b. Distributed processing control
  c. Active modulation and power control formats and algorithms
  d. Hardware and software algorithms for Thermo-electric cooler (TEC)
     controls
  e. Software based control performance monitoring and diagnostics
  f. Active extinction ratio control
  g. Low cost laser driver control
  h. Optical receiver bias and control circuitry
  i. Transmit and receive signal path electronics control and monitoring
  j. Serdes interface circuitry
  k. Optical transceiver and transponder packaging

[ ] Additional sheets attached.

2. Due to a prior confidentiality agreement, Provider cannot
complete the disclosure under Section 1 above with respect to
inventions or improvements generally listed below, the
proprietary rights and duty of confidentiality with respect to
which Provider owes to the following party(ies):

Invention or Improvement Party(ies) Relationship:

  1.   ___________________________
  2.   ___________________________
  3.   ___________________________

[ ] Additional sheets attached.




                Background Technology Disclosure

The following is a list of all Background Technology which
Provider intends to use in performing under this Agreement:


                                                           13
<PAGE>


  a.  Market assessment survey forms and questions
  b.  Product specification and datasheet formats
  c.  Optical, electrical, and mechanical requirements for modules
      and components necessary to meet Telecom and Datacom industry standards
  d.  Methods for revenue, TAM, and gross margin calculations
  e.  Forecast information gathered from various market research firms
  f.  Methods for performing trade studies and similar component analysis






















                                                           14
<PAGE>



                            EXHIBIT D
                            ---------

                     Assignment Of Copyright

For  good and valuable consideration which has been received, the
undersigned  sells, assigns and transfers to Client,  a  Delaware
corporation, and its successors and assigns, the copyright in and
to  the  following  work,  which was  created  by  the  following
indicated author(s):

Title:

Author(s):

Copyright Office Identification No. (if any):

and all of the right, title and interest of the undersigned,
vested and contingent, therein and thereto.

Executed _______________________[date].

Signature: ____________________________

Printed Name: ________________________















                                                           15
<PAGE>





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>8
<FILENAME>form10sb-ex105.txt
<TEXT>

                                                           [EXHIBIT 10.5]

                      MANAGEMENT AGREEMENT

     THIS MANAGEMENT AGREEMENT is dated February 28, 2007 by  and
between   UNIVERSAL   CAPITAL  MANAGEMENT,  [INC.,   a   Delaware
corporation] ("Manager"), and THIRD-ORDER NANOTECHNOLOGIES, INC.,
a Nevada corporation ("TDON").

                           BACKGROUND

     TDON desires to obtain from the Manager, and the Manager  is
willing  and  able  to provide to TDON, management  services  and
other assistance in accordance with and subject to the terms  and
conditions set forth in this Agreement.

     For   and  in  consideration  of  the  mutual  benefits  and
covenants   set  forth  below,  and  other  good   and   valuable
consideration,  the  receipt and adequacy  of  which  are  hereby
acknowledged, the parties hereto, intending to be legally  bound,
hereby agree as follows:

1.   Appointment as Manager.
     ----------------------

     (a)  TDON hereby engages Manager to provide management services
and  other  assistance  in accordance  with  the  terms  of  this
Agreement.   The Manager shall and hereby agrees to  devote  such
time  as  is  reasonably necessary to provide such  services  and
assistance.

2.   Scope of Services.
     -----------------

     (a)   Manager hereby agrees to provide to TDON the following
services  (as  amended  from  time  to  time,  collectively,  the
"Services"):

          (i)  Strategic Planning.  Manager shall assist TDON management
     in the strategic planning process to include but not be limited to
     analysis of potential markets, competition, product marketing
     approaches, pricing and future product utility.

         (ii)  Significant Managerial Assistance.  Manager shall provide
     TDON with day to day managerial assistance on issues such as
     employment, payroll, and benefits; real estate leasing; utility
     utilization; capital expenditures; personnel; and other related
     matters.

        (iii)  Financial Reporting Services.  Manager shall assist in
     providing  TDON on a quarter-annual basis a balance sheet, income
     statement and statement of cash flow for TDON.  Such financial
     reports shall be completed not later than thirty (30) days after
     the end of the quarter-annual period reported on.  Income
     statements will be based on generally accepted accounting
     principles as in effect in the United States of America,
     consistently applied from period to period and in accordance with
     the terms of contracts and service agreements.

         (iv)  Tax Reporting Services.  Manager shall assist in the
     preparation of  sales and use tax returns for all jurisdictions
     in which TDON is then subject to reporting as determined by TDON
     for goods or services sold.  Not later than the 10th business day
     of each calendar month in which a sales/use tax liability is due
     to  be paid TDON, Manager shall provide TDON with the amount of


<PAGE>


     such liability.  Such returns shall be delivered to TDON for
     execution no later than three (3) days prior to the filing due
     date for any such return.


          (v)  Accounts Payable Services.

               A.   Manager shall provide  for the usual and ordinary
          business aspects of the accounts payable process for TDON,
          including but not limited to:

                    (I.) Maintaining vendor master

                   (II.) Processing vendor invoices
                  (III.) Executing vendor payments from TDON's funds
                   (IV.) Processing travel expense reports
                    (V.) Executing employee payments for travel expense
                         from PSI-TEC's funds
                   (VI.) Stop payment administration
                  (VII.) 1099 Misc. reporting
                 (VIII.) Invoice filing
                   (IX.) Documentation retention

               B.   Manager shall direct and oversee  TDON's outstanding
     accounts payable from TDON's funds (if available) to contracted
     payment terms and consistent with past business practice.

     (a)  Investment Banking Consultation Services. Manager  will
     assist  TDON  in  seeking  funding and  in  preparation  for
     entering  the public market. Manager will provide TDON  with
     various  options  and methods for attaining  its  investment
     banking and public market goals.

     (b)To the extent that Manager is able in the ordinary course
     of  business, Manager shall provide or cause to be provided,
     all personnel, facilities, equipment, systems and management
     necessary  or appropriate to provide such Services.   In  no
     event  will Manager be required to stay in business or  take
     other  extraordinary measures solely to provide the Services
     to  TDON;  provided,  that Manager  shall  provide  Services
     pursuant to this Agreement in the same order of priority  as
     it  provides  the  same  or  similar  services  to  its  own
     departments    or    divisions   except   where    Manager's
     extraordinary business needs require otherwise and  provided
     TDON  is  notified in advance of any delay and the  Services
     are provided to TDON at the next available opportunity.


                                  2
<PAGE>


     (c)During the Term of this Agreement, TDON may from time  to
     time  request  that  Manager  provide  special  services  or
     projects  in  addition to the Services  identified  in  this
     Section  2, and Manager may in its sole discretion agree  to
     provide  such additional services or projects.   If  Manager
     agrees to provide such additional services or projects,  the
     Parties shall negotiate in good faith to establish the terms
     (including,  without limitation, price) for  providing  such
     additional  services or projects and following agreement  on
     such  terms, this Section 2 shall be amended to include such
     additional services and projects.

3.   Term and Termination
     --------------------

     (a)  This Agreement shall be effective as of the date first
set forth above and, subject to the provisions of section (b) of
this Section  3,  shall terminate on February 28, 2008  (the
"Term").  The Term shall be automatically extended from year to
year in the absence of ninety (90) days' notice from one party
to the other.

     (b)  Notwithstanding the provisions of subsection (a) of this
Section 3, (i) Manager can terminate this Agreement at any time
upon thirty (30) days' notice to TDON upon TDON's failure to pay
the amounts required hereunder and (ii) TDON can terminate this
Agreement after thirty (30) days' notice to Manager of Manager's
material failure to fulfill its obligations hereunder and
Manager's failure to correct such failure during such time
period.

4.   Compensation.
     ------------

     (a)  Within thirty (30) days of the signing of this agreement
TDON  shall pay Manager for the Services by delivering to Manager
one million (1,000,000) Shares of common stock of the Company. If
the Term of this Agreement extends beyond February 28, 2008, TDON
shall pay for continuing Services hereunder by delivering five
hundred thousand (500,000) additional Shares to Manager in advance
of March 1, 2008 and each March 1 thereafter during the Term.

     (b)  In addition, TDON shall reimburse Manager for third party
and out-of-pocket expenses actually and reasonably incurred by
Manager in performing the Services; provided that expenses of
Affiliates of Manager shall not be deemed third party expenses
for purposes of this Section 4.

5.   Non-Exclusive Contract. The Manager acts as adviser to other
     ----------------------
clients and may  give advice, and  take action, with respect to any
such client which may differ from the advice given, or the timing or
nature  of action taken, with respect to TDON.

6.   Delegation and Assignment.  With TDON's prior written consent,
     -------------------------
which consent shall not be unreasonably  withheld or delayed, Manager
may delegate all or part of its duties to perform Services hereunder;
provided, that Manager' costs associated with any duties so delegated
shall  not be  deemed out-of-pocket expenses added to the price of
Services pursuant to Section 4.  Notwithstanding the foregoing, Manager
shall be entitled to delegate all or any part of its duties  to one or
more of its Affiliates upon notice to TDON; provided, however, that
Manager and its delegee  Affiliate(s) shall be jointly and severally
liable for performance of Manager's obligations under this Agreement.
TDON  shall not assign  or subcontract its rights, duties, or
obligations under this Agreement.


                                  3
<PAGE>


7.   Confidential Information
     ------------------------

     (a)  Each party shall treat as confidential all Confidential
Information  of  the  other party that  comes  to  its  knowledge
through  this  Agreement.  Each party shall take  such  steps  to
prevent disclosure of such Confidential Information to any  third
person  as  it  would take in protecting its own  proprietary  or
confidential  information and shall not use any portion  of  such
Confidential Information for any purpose not authorized herein.

    (b)  No party shall be under any obligations with respect to any
Confidential Information:
        (i)  which is, at the time of disclosure, available to the
    general public;

       (ii)  which becomes at a later date available to the general
    public through no fault on the part of such party and then only
   after such later date;
      (iii)  which such party can demonstrate was in its possession
   before receipt from the other party; or
       (iv)  which is disclosed to such party without restriction on
   disclosure by a third party who has the lawful right to disclose
   such information.
   (c)  The confidentiality obligations of this Section 7 shall
survive the termination of this Agreement.

8.   Independent Contractor.   Manager  is  and  shall remain at all
     ----------------------
times  an  independent contractor  of TDON in the performance of all
Services hereunder, and all persons  employed by Manager to perform
such Services shall be and remain employees solely of Manager and
subject only to the supervision of Manager's supervisory  personnel.
With respect to Manager's employees providing  services  under  this
Agreement, Manager shall be responsible for the payment of all
salaries  and  benefits  and all income  taxes,  social security
taxes,  employment compensation taxes and other employment taxes
and  withholdings with respect to such employees and all fringe
benefits  program expenses, such as insurance costs,  pension or
retirement plans, vacation, sick leave and similar matters, with
respect  to  such  employees.  Manager  shall  be  entitled to
determine which of its employees shall provide the Services.

9.   Force Majeure.
     -------------

     (a)  Neither party shall be liable for any loss or damage for
delay or non-performance under this Agreement resulting from  the
operation of any applicable law, rule, ordinance or regulation of
any  governmental  entity  or  regulatory  agency,  or  from  any
requirement   or  intervention  of  civil,  naval   or   military
authorities or other agencies of the government, or by reason  of
any other causes whatsoever not reasonably within the control  of
such  party,  including, but not limited to, acts  of  God,  war,
riot,  insurrection,  civil violence or disobedience,  blockages,
embargoes, sabotage, epidemics, fire, strikes, lock-outs or other
industrial or labor disturbances, lightning, hurricanes, cyclonic
storms,  explosions  and delay of carriers;  provided,  that  the
affected  party  notifies  the  other  party  promptly   of   the
occurrence   of  the  cause  and  thereafter  exerts   reasonable


                                  4
<PAGE>


commercial  efforts  to  overcome the  cause  of  prevention  and
hindrance and to resume performance; and provided, further,  that
the  settlement  of  strikes, lock-outs and other  industrial  or
labor disturbances shall be entirely within the discretion of the
affected  party, and the affected party shall not be required  to
make  settlement  of strikes, lock-outs and other  industrial  or
labor  disturbances by acceding to the demands  of  any  opposing
third  party  or parties when such course is unfavorable  in  the
affected party's judgment.

     (b)  If Manager' performance under this Agreement is suspended
or rendered impractical by reason of any cause covered by subsection
(a) of this Section 9 ("Force Majeure") for a period in excess of
twenty (20) days, TDON  shall have the right to terminate this
Agreement with respect to the disrupted Services immediately upon
written notice to Manager.  An event of Force Majeure shall not
operate to extend the Term or to limit amounts payable for
Services rendered on or prior to the actual date of the event of
Force Majeure.

10.  Limitation of Liability.   Notwithstanding any other provision of
     -----------------------
this Agreement to  the contrary, Manager shall not be liable to TDON
by reason  of  any error  of  omission or  commission, performance or
failure  to perform or delay in performing any Services under this
Agreement, for any damages, including, but not limited  to, special,
incidental or consequential damages, suffered by TDON beyond  a refund
to  TDON of all charges paid by TDON to Manager for the Services that
caused such damages, unless  Manager  shall  have gently of gross
negligence or willful misconduct.  The provisions of this Section 10
shall survive termination of this Agreement.

11.  Indemnification.   TDON shall and hereby agrees to indemnify and
     ---------------
hold  harmless the  Manager and each of its officers, directors, and
employees from and against any and all claims of any third parties
brought against  Manager and all Damages and Expenses incurred by Manager
except  such claims or Damages and Expenses, as the case may be, as
shall conclusively be shown to have resulted from  Manager's gross
negligence or willful misconduct.  The provisions of this Section 11
shall survive the termination of this Agreement.

12.  Manager's  Investment  Representations.   Manager   hereby
     --------------------------------------
represents and warrants to and with TDON that:

     (a)  Manager will be acquiring the Shares for its own account as
principal and not with a view to, or for sale in connection with, any
distribution of all or any of such Shares.  Manager  hereby agrees
that  it  will  not, directly or indirectly, assign, transfer, offer,
sell, pledge, hypothecate or otherwise dispose of  all or  any  of such
Shares (or solicit any offers  to buy, purchase or otherwise acquire
or take a pledge of any  of  such Shares) except in accordance with the
registration provisions  of the Securities Act of 1933 (the "Securities
Act") or an exemption from  such registration provisions or any
applicable  securities laws.

     (b)  Manager (i) is knowledgeable and experienced with respect
to the financial, tax and business aspects of the ownership of
investments such as the Shares and of the business contemplated by
TDON and is capable of evaluating the risks and merits of acquiring
the Shares and in making a decision to proceed with this investment,
has not relied on any representations, warranties or agreements of
TDON or others, and (ii) can bear the economic risk of an investment
in Shares for an indefinite period of time and can afford to suffer
the complete loss thereof.


                                  5
<PAGE>


     (c)  Manager has evaluated the risks involved in investing in
the Shares and has determined  that the Shares are a suitable
investment for Manager.  Specifically, the aggregate amount of
the investments the Manager has in, and Manager's commitments to,
all similar investments that are illiquid  is reasonable in
relation to Manager's net worth, both  before and after the
acquisition of the Shares pursuant to this Agreement.

     (d)  Manager understands and acknowledges that the Shares have
not  been registered  under  the Securities  Act  or  any  state
securities laws and are being offered and sold  in  reliance  on
exemptions provided in the Securities Act and  state  securities
laws  for transactions not involving any  public  offering  and,
therefore,  cannot  be  resold  or transferred  unless  they are
subsequently  registered  under  the  Securities  Act  and  such
applicable state securities laws or unless an exemption from such
registration is available.  Manager also understands that TDON
does  not have any obligation or intention to register the Shares
for sale under the Securities Act or any state securities laws or
of supplying the information which may be necessary to enable the
Manager  to sell Shares and that  Manager has no right to require
the  registration of the Shares under the Securities  Act,  any
state securities laws or other applicable securities regulations.

     (e)   Manager  has no contract, understanding, agreement or
arrangement with any person to sell, transfer or pledge  to such
person  or  anyone else any of the Shares which the Manager will
acquire  pursuant to this Agreement and that Manager  has no
present  plans  to enter into any such  contract,  undertaking,
agreement or arrangement.

13.  Definitions.
     -----------

     (a)  "Affiliate" means, with respect to a Person, another Person
who  Controls, is Controlled by or is under common  Control  with
the first such Person.

     (b)  "Confidential Information" means any and all information of
either party that might reasonably be considered confidential,
secret, sensitive, proprietary or private. To the extent
practical, Confidential Information shall be marked "proprietary"
or "confidential."  Confidential Information shall include the
following:
          (i)  data, know-how, formulae, processes, designs, sketches,
     photographs, plans, drawings, specifications, samples, reports,
     lists, financial information, studies, findings, inventions and
     ideas, computer programs and software, or proprietary information
     relating to either party or the methods or techniques used by
     either party;

         (ii) data, documents or proprietary information employed in
     connection with the marketing and implementation of each party's
     products, including cost information, business policies and
     procedures, revenues and markets, distributor and customer lists,
     and similar items of information; and


                                  6
<PAGE>


        (iii) any other data or information obtained by either party
     during the term of this Agreement which is not generally known to
     and not readily ascertainable by proper means by third persons
     who could obtain economic value from its use or disclosure.
     (c)   "Control" means the ability, through stock  ownership,
contract, or otherwise, to control the business or officers of  a
Person.

     (d)  "Damages and Expenses" means costs, liabilities, and
expenses incurred in investigating, defending, and paying
settlements or judgments with respect to claims (including
reasonable attorneys' fees).

     (e)  "Holiday" means for purposes of this Agreement, a day, other
than a Saturday or Sunday, on which national banks with branches
in the Commonwealth of Pennsylvania are or may elect to be
closed.

    (f)  "Person" means an individual or entity.

    (g)  "Shares" means shares of common stock of TDON, par value
$0.001 dollars  per share acquired by Manager pursuant to this
Agreement.

14.  Miscellaneous.
      ------------

     (a)  Indulgences, Etc.  Neither the failure nor any delay on the
          ----------------
part  of either party to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof,
nor  shall  any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect
to any occurrence be construed as a waiver of such right, remedy,
power or  privilege  with respect to any other  occurrence.  No
waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.

     (b)  Controlling Law.  This Agreement and all questions relating
          ---------------
to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations
of actions), shall be governed by and construed in accordance
with the laws of the State of Delaware, notwithstanding any
conflict-of-laws doctrines of any jurisdiction to the contrary,
and without the aid of any canon, custom or rule of law requiring
construction against the draftsman.

     (c)  Notices.  All notices, requests, demands and other
          -------
communications required or permitted under this Agreement shall
be in writing and shall be deemed to have been duly given, made
and received only when delivered (personally, by courier service
such FedEx or by other messenger) against receipt or upon actual
receipt of registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below:

     If to:    Manager
               Universal Capital Management, Inc.
               2601 Annand Drive
               Suite 16
               Wilmington, DE 19808
               Attention: Michael D. Queen


                                  7
<PAGE>


     If to:    Third-Order Nanotechnologies, Inc.
               Fred R. Goetz, Jr.
               c/o Universal Capital Management
               2601 Annand Drive #16
               Wilmington, DE 19808
               Attention: Ms. Heather Fisher

     with a copy, given in the manner prescribed above, to:
               David M. Bovi
               David M. Bovi, P.A.
               319 Clematis Street, Suite 700
               West Palm Beach, FL 33401


In  addition,  notice  by  mail shall  be  sent  by  a  reputable
international  courier (such as FedEx) if posted outside  of  the
continental  United States.  Any party may alter the  address  to
which communications or copies are to be sent by giving notice of
such  change of address in conformity with the provisions of this
subparagraph for the giving of notice.

     (d)  Binding Nature of Agreement; No Assignment.  This Agreement
          ---------------------------
shall  be  binding upon and inure to the benefit of  the  parties
hereto and their respective successors and assigns.

     (e)  Provisions Separable.  The provisions of this Agreement are
          --------------------
independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others of them may
be invalid or unenforceable in whole or in part.

     (f)  Entire Agreement.  This Agreement contains the entire
          ----------------
understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein
contained.  The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with
any of the terms hereof.  This Agreement may not be modified or
amended other than by an agreement in writing.

     (g)  Section Headings. The Section and subsection headings in
          ----------------
this Agreement have been inserted for convenience of reference
only; they form no part of this Agreement and shall not affect
its interpretation.

     (h)  Gender, Etc. Words used herein, regardless of the number
          -----------
and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context indicates
is appropriate.

     (i)  Number of Days.  In computing the number of days for
          --------------
purposes of this Agreement, all days shall be counted, including
Saturdays, Sundays and Holidays; provided, however, that if the
final day of any time period falls on a Saturday, Sunday or
Holiday, then the final day shall be deemed to be the next day
which is not a Saturday, Sunday or Holiday.


                                  8
<PAGE>


     IN  WITNESS  WHEREOF, the Parties hereto have executed  this
Management Agreement



THIRD-ORDER NANOTECHNOLOGIES, INC.   UNIVERSAL CAPITAL MANAGEMENT, INC.



BY: /s/ Fred J. Goetz, Jr.         BY: /s/Michael D. Queen
    ------------------------          ------------------------
NAME: Fred J. Goetz, Jr.           NAME:  Michael D. Queen
      ----------------------             ---------------------
TITLE: President                   TITLE: President
       ---------------------             ---------------------

                                  9
<PAGE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>9
<FILENAME>form10sb-ex106.txt
<TEXT>
                                                           [EXHIBIT 10.6]

                     PSI-TEC HOLDINGS, INC.

                     2005 STOCK OPTION PLAN

1.   Purpose; Effectiveness of the Plan.
     ----------------------------------

(a)  The  purpose of this Plan is to advance the interests of the
     Company  and its stockholders by helping the Company  obtain
     and retain the services of directors, officers, employees,
     and consultants, upon whose judgment, initiative and efforts
     the Company is substantially dependent, and to provide those
     persons with further incentives to advance the interests of
     the Company.

(b)  This  Plan will become effective on the date of its adoption
     by  the  Board,  provided  this  Plan  is  approved  by the
     stockholders of the Company (excluding holders of shares  of
     Stock  issued  by  the Company pursuant to the  exercise of
     options  granted under this Plan) within twelve (12)  months
     before  or after that date.  If this Plan is not so approved
     by  the  stockholders  of the Company, any  options granted
     under  this  Plan will be rescinded and will be void.  This
     Plan  will remain in effect until it is terminated by the
     Board  or the Committee (as defined hereafter) under section
     9  hereof, or December 1, 2015, whichever is earlier, except
     that no  ISO (as defined herein) will be granted after  the
     tenth anniversary of the date of this Plan's adoption by the
     Board. This  Plan will be governed by,  and  construed  in
     accordance with, the laws of the State of Nevada.

 2.  Certain  Definitions.   Unless the  context  otherwise
     --------------------
     requires,  the following defined terms (together with other
     capitalized  terms  defined elsewhere  in  this  Plan)  will
     govern  the  construction of this Plan, and of  any stock
     option agreements entered into pursuant to this Plan:

(a)  "10%  Stockholder" means a person who owns, either  directly
     or indirectly by virtue of the ownership attribution provisions
     set forth in Section 424(d) of the Code at the time he or she is
     granted an Option, stock possessing more than ten percent (10%)
     of the total combined voting power or value of all classes of
     stock of the Company and/or of its subsidiaries;

(b)  "1933  Act" means the federal Securities Act of 1933, as amended;

(c)  "Board" means the Board of Directors of the Company;

(d)  "Called  for  under an Option", or words to similar  effect,
     means issuable pursuant to the exercise of an Option;

(e)  "Code"  means the Internal Revenue Code of 1986, as  amended
     (references herein to Sections of the Code are intended to refer
     to Sections of the Code as enacted at the time of this Plan's
     adoption by the Board and as subsequently amended, or to any
     substantially similar successor provisions of the Code resulting
     from recodification, renumbering or otherwise);


                                  1
<PAGE>


(f)  "Committee"  means  a committee of two  or  more  directors,
     appointed by the Board, to administer and interpret this Plan;
     provided that the term "Committee" will refer to the Board during
     such times as no Committee is appointed by the Board.

(g)  "Company" means PSI-TEC Holdings, Inc., a Nevada corporation;

(h)  "Disability"  has the same meaning as "permanent  and  total
     disability", as defined in Section 22(e)(3) of the Code;

(i)  "Eligible  Participants" means persons who, at a  particular
     time, are directors, officers, employees, sales representatives
     and consultants of the Company or its subsidiaries;

(j)  "Fair Market Value" means, with respect to the Stock and  as
     of the date an ISO is granted hereunder, the market price per
     share of such Stock determined by the Committee, consistent with
     the requirements of Section 422 of the Code and to the extent
     consistent therewith, as follows:

     (i)  If the Stock was traded on a stock exchange on the date in
     question, when the  Fair  Market  Value will be equal to the
     closing price reported by the applicable composite-transactions
     report for such date;

     (ii)  If the Stock was traded over-the-counter  on the date in
     question and was classified as a national market issue, then the
     Fair Market Value will be  equal to the last-transaction price
     quoted  by  the  NASDAQ system for such date;

     (iii)  If the Stock was traded over-the-counter on the date in
     question but was  not classified as a national market issue, then
     the Fair Market Value  will be equal to the average of the last
     reported representative  bid  and asked  prices  quoted  by  the
     NASDAQ system for such date; and

     (iv)  If none of the foregoing  provisions  is applicable, then
     the Fair Market Value will be  determined by the Committee in
     good faith on such basis as it deems appropriate.

(k)  Intentionally Left Blank.

(l)  "ISO"  has the same meaning as "incentive stock option,"  as
     defined in Section 422 of the Code;

(m)  "Involuntary Transfer" means a Transfer that occurs pursuant
     to  any of the following:  an assignment of Option Stock for
     the  benefit  of creditors of the Optionee;  a Transfer by
     operation of law, including, without limitation, a Transfer
     by  will  or under the laws of descent and distribution; an
     execution  of  judgment against the  Option  Stock or the
     acquisition  of  record or beneficial  ownership  of Option
     Stock by a lender or creditor; a Transfer pursuant to  any
     decree of divorce, dissolution or separate maintenance, any
     property settlement, any separation  agreement or any  other


                                  3
<PAGE>


     agreement   with  a  spouse  (except  for  estate planning
     purposes) under which a part or all of any Option Stock are
     Transferred or awarded to the spouse of the  Optionee or are
     required to be sold; or a Transfer resulting from the filing
     by  the Optionee of a petition for relief, or the filing of
     an  involuntary  petition against the  Optionee, under the
     bankruptcy laws of the United States or of any other nation;

(n)  "Just Cause Termination" means a termination by  the Company
     of an Optionee's employment by and/or service to the Company
     (or if the Optionee is a director, removal  of  the Optionee
     from the Board by action of the stockholders or, if permitted
     by applicable law and the by-laws of the  Company, the  other
     directors), in connection with  the  good  faith determination
     of the Company's board of directors (or of the  Company's
     stockholders if the Optionee is a director and the removal of
     the Options from the Board is by action  of  the stockholders,
     but in either case excluding the vote  of  the Optionee  if he
     or she is a director or a stockholder)  that the Optionee has
     engaged in any acts involving dishonesty or moral turpitude or
     in any acts that materially and adversely affect the business,
     affairs or reputation of the Company or its subsidiaries;

(o)  "NSO"  means  any  option granted under this  Plan  whether
     designated  by  the  Committee  as  a  "non-qualified stock
     option," a "non-statutory stock option" or otherwise, other
     than an option designated by the Committee as an ISO, or any
     option  so  designated but which, for any reason, fails to
     qualify  as an ISO pursuant to Section 422 of the Code and
     the rules and regulations thereunder;

(p)  "Option"  means  an  option granted pursuant to this Plan
     entitling  the  option  holder to acquire  shares of Stock
     issued by the Company pursuant to the valid exercise of the
     option;

(q)  "Option  Agreement" means an agreement between the Company
     and  an Optionee, in form and substance satisfactory to  the
     Committee in its sole discretion, consistent with this Plan;

(r)  "Option  Price" with respect to any particular  Option
     means the exercise price at which the Optionee may acquire
     each share of the Option Stock called for under such Option;

(s)  "Option Stock" means Stock issued or issuable  by  the
     Company pursuant to the valid exercise of an Option;

(t)  "Optionee"  means  an  Eligible  Participant  to  whom
     Options are granted hereunder, and any transferee thereof
     pursuant to a Transfer authorized under this Plan;

(u)  "Plan" means this 2005 Stock Option Plan of the Company;

(v)  "QDRO" has the same meaning as "qualified domestic relations
     order" as defined in Section 414(p) of the Code;

(w)  "Stock"  means shares of the Company's Common Stock,  $0.001
     par value;


                                  3
<PAGE>


(x)  "Subsidiary"   has   the   same   meaning   as   "Subsidiary
     Corporation" as defined in Section 424(f) of the Code;

(y)  "Transfer", with respect to Option Stock, includes,  without
     limitation,  a  voluntary or involuntary sale, assignment,
     transfer,  conveyance,  pledge, hypothecation, encumbrance,
     disposal,  loan,  gift, attachment or levy of such Option
     Stock; and

(z)  "Voluntary  Transfer"  means  any  Transfer other than an
     Involuntary Transfer.

3.   Eligibility. The Company may grant Options under this Plan
     -----------
     only to persons who are Eligible Participants as of the time
     of such grant.  Subject to the provisions of sections 4(d), 5
     and 6 hereof, there is no limitation on the number of Options
     that may be granted to an Eligible Participant.

4.   Administration.
     --------------

(a)  Committee. The Committee, if appointed by  the  Board,
     will administer this Plan.  If the Board, in its discretion,
     does  not  appoint such a Committee, the Board  itself will
     administer  this  Plan and take such other  actions as the
     Committee is authorized to take hereunder; provided that the
     Board may take such actions hereunder in the same manner as
     the  Board  may  take  other  actions under  the Company's
     articles of incorporation and by-laws generally.

(b)  Authority and Discretion  of Committee. The Committee will
     have full and final authority in its discretion, at any time
     and  from  time to time, subject only to the express terms,
     conditions and other provisions of the Company's articles of
     incorporation,  by-laws  and this  Plan,  and  the specific
     limitations on such discretion set forth herein:

     (i)  to  select and approve the persons who will be  granted
          Options   under  this  Plan from among  the Eligible
          Participants,  and to grant to any person  so selected
          one  or  more Options to purchase such number of shares
          of Option Stock as the Committee may determine;

     (ii) to determine the period or periods of time during which
          Options may be exercised, the Option Price  and  the
          duration of such Options, and other matters to  be
          determined   by  the  Committee  in  connection  with
          specific   Option  grants  and  Option  Agreements as
          specified under this Plan;

     (iii) to  interpret this Plan, to prescribe, amend  and
          rescind   rules and regulations relating to this  Plan,
          and  to  make  all  other determinations  necessary  or
          advisable for the operation and administration of  this
          Plan; and

     (iv) to delegate all or a portion of its authority under
          subsections (i) and (ii) of this section 4(b) to one or
          more directors of the Company who are officers of the
          Company, but only in connection with   Options granted to
          Eligible Participants who are not officers or  directors
          of  the Company, and subject to  such restrictions  and


                                  4
<PAGE>


          limitations (such as the  aggregate number  of  shares of
          Option Stock called for  by  such Options that may be
          granted) as  the  Committee  may decide to impose on such
          delegate directors.

(c)  Limitation on Authority.  Notwithstanding  the foregoing, or
     any other provision  of this Plan, the Committee will have no
     authority to grant Options to any of its members, unless
     approved by the Board.

(d)  Designation  of  Options.   Except  as otherwise  provided
     herein,  the  Committee will designate any Option granted
     hereunder either as an ISO or as an NSO.  To the extent that
     the Fair Market Value (determined at the time the Option  is
     granted) of  Stock  with respect  to  which  all ISOs  are
     exercisable for the first time by any individual during any
     calendar year (pursuant to this Plan and all other plans of
     the  Company and/or its subsidiaries) exceeds $100,000, such
     option  will  be  treated  as an NSO.   Notwithstanding the
     general  eligibility  provisions of section 3 hereof, the
     Committee  may grant ISOs only to persons who are  employees
     of the Company and/or its subsidiaries.

(e)  Option Agreements.  Options will be deemed granted hereunder
     only upon the execution and delivery of an Option Agreement by
     the  Optionee and a duly authorized officer of the  Company.
     Options will not be deemed granted hereunder merely upon the
     authorization of such grant by the Committee.

5.   Shares Reserved for Options.
     ---------------------------

(a)  Option Pool.  The aggregate number of shares of Option Stock
     that may be issued pursuant to the exercise of Options granted
     under this Plan will not exceed One Million (1,000,000) (the
     "Option Pool"), provided that such number will be increased by
     the  number  of  shares  of Option Stock  that  the  Company
     subsequently may reacquire through repurchase or  otherwise.
     Shares of Option Stock that would have been issuable pursuant to
     Options, but that are no longer issuable because all or part of
     those Options have terminated or expired, will be deemed not to
     have been issued for purposes of computing the number of shares
     of Option Stock remaining in the Option Pool and available for
     issuance.

(b)  Adjustments  Upon  Changes in Stock.  In the  event  of  any
     change  in the outstanding Stock of the Company as a  result
     of  a  stock  split,  reverse stock split,  stock  dividend,
     recapitalization,     combination    or    reclassification,
     appropriate proportionate adjustments will be made in:

     (i)  the aggregate  number  of  shares of  Option  Stock  in
          the Option Pool that may be issued pursuant to the exercise
          of Options granted hereunder;

    (ii)  the Option Price and the number of shares of Option Stock
          called for in each outstanding Option granted hereunder; and

   (iii)  other rights and matters determined on a  per share basis
          under this Plan of any  Option  Agreement hereunder.


                                  5
<PAGE>


     Any such  adjustments will be made only by the  Board, and
     when  so made will be effective, conclusive and binding  for
     all  purposes with respect to this Plan and all Options then
     outstanding. No such adjustments will be required by reason
     of  the  issuance or sale by the Company for cash  or  other
     consideration  of  additional  shares  of its Stock or
     securities  convertible into or exchangeable for  shares of
     its Stock.

 6.  Terms  of  Stock  Option Agreements.   Each  Option granted
     ------------------------------------
     pursuant to this Plan will be evidenced by an agreement (an
     "Option  Agreement") between the Company and the  person to
     whom such  Option  is  granted,  in  form  and  substance
     satisfactory to  the Committee  in  its  sole  discretion,
     consistent  with this Plan. Without limiting the  foregoing,
     each Option Agreement (unless otherwise stated therein) will
     be deemed to include the following terms and conditions:

(a)  Covenants  of Optionee.  At the discretion of the Committee,
     the person to whom an Option is granted hereunder, as a condition
     to the granting of the Option, must execute and deliver to the
     Company a confidential information agreement approved by the
     Committee.  Nothing contained in this Plan, any Option Agreement
     or  in  any other agreement executed in connection with  the
     granting  of an Option under this Plan will confer upon  any
     Optionee any right with respect to the continuation of his or her
     status as an employee of, consultant or independent contractor
     to, or director of, the Company or its subsidiaries.

(b)  Vesting  Periods. Except as otherwise provided herein,  each
     Option Agreement may specify the period or periods of time within
     which  each  Option  or portion thereof  will  first  become
     exercisable (the "Vesting Period") with respect to the total
     number of shares of Option Stock called for thereunder  (the
     "Total Award Option Stock"). Such Vesting Periods will be fixed
     by the Committee in its discretion, and may be accelerated or
     shortened by the Committee in its discretion.

(c)  Exercise of the Option.

     (i)  Mechanics and Notice.  An Option may be exercised to
          the extent exercisable (1) by giving written notice  of
          exercise to the Company, specifying the  number of full
          shares of Option Stock to be purchased  and accompanied
          by full payment of the Option Price thereof and the
          amount  of  withholding  taxes  pursuant   to subsection
          6(c)(ii) below; and (2) by giving assurances satisfactory
          to the Company that the shares  of  Option Stock  to  be
          purchased upon such exercise  are  being purchased for
          investment and not with a view to  resale in  connection
          with any distribution of such shares  in violation of the
          1933 Act; provided, however,  that  in the  event the Option
          Stock called for under the Option is  registered  under the
          1933 Act,  or  in  the  event resale  of  such Option Stock
          without such registration  would  otherwise be permissible,
          this second  condition will  be inoperative if, in the
          opinion of counsel  for the  Company, such condition is
          not required under  the 1933  Act,  or any other applicable
          law, regulation  or rule of any governmental agency.


                                  6
<PAGE>


    (ii)  Withholding  Taxes.  As a condition  to  the issuance  of
          the shares of Option Stock upon  full  or partial exercise
          of an NSO granted under this Plan, the Optionee  will pay
          to the Company in cash, or  in  such other  form  as  the
          Committee may determine  in  its discretion, the amount of
          the Company's tax withholding liability  required in
          connection with  such  exercise.  For  purposes  of this
          subsection 6(c)(ii), "tax withholding liability" will mean
          all federal and  state income taxes, social security tax,
          and any other taxes applicable to the compensation income
          arising from  the transaction required by applicable law
          to be  withheld by the Company.

(d)  Payment  of Option Price.  Each Option Agreement  will specify
     the  Option Price with respect to the  exercise  of Option Stock
     thereunder, to be fixed by the Committee in its discretion, but
     in no event will the Option Price for an ISO granted hereunder be
     less than the Fair Market Value (or, in case  the  Optionee is a
     10% Stockholder,  one  hundred  ten percent  (110%)  of such Fair
     Market Value)  of  the  Option  Stock  at  the  time such ISO is
     granted.  The Option Price will  be payable to the Company in
     United States dollars  in cash  or by check or, such other legal
     consideration as  may  be approved by the Committee, in its
     discretion.

(e)  Termination  of  the  Option.  Except as otherwise  provided
     herein,  each  Option Agreement will specify the  period  of
     time, to be fixed by the Committee in its discretion, during
     which the Option granted therein will be exercisable, not to
     exceed ten (10) years from the date of grant in the case of
     an  ISO  (the  "Option Period"); provided that the Option
     Period will not exceed five (5) years from the date of grant
     in  the case of an ISO granted to a 10% Stockholder. To the
     extent  not previously exercised, each Option will terminate
     upon  the expiration of the Option Period specified in the
     Option   Agreement; provided, however, that each such Option
     will terminate, if earlier:  (i) ninety (90) days after  the
     date  that the Optionee ceases to be an Eligible Participant
     for any reason, other than by reason of death or disability
     or a  Just Cause Termination; (ii) twelve (12) months after
     the date   that  theOptionee  ceases  to  be  an  Eligible
     Participant  by reason of such person's death or disability;
     or (iii) immediately as of the date that the Optionee ceases
     to  be  an  Eligible Participant by reason of a Just  Cause
     Termination.   In the event of a merger or consolidation or
     other  reorganization (a "Corporate Transaction") in  which
     the  Company is not the surviving corporation, or in which
     the  Company  becomes  a subsidiary of another  corporation,
     then  notwithstanding anything else herein, the  right to
     exercise  all then outstanding Options will vest immediately
     prior  to  such  Corporate Transaction  and  will  terminate
     immediately  after  such Corporate  Transaction;  provided,
     however,   that  if  the  Board,  in  its  sole  discretion,
     determines  that  such immediate vesting  of  the  right to
     exercise outstanding Options is not in the best interests of
     the  Company, then the successor corporation must agree to
     assume   the  outstanding  Options  or  substitute  therefor
     comparable options of such successor corporation or a parent
     or subsidiary of such successor corporation.

(f)  Options Nontransferable.  No Option   will   be transferable
     by the Optionee otherwise than by will or the laws of descent
     and distribution, or in the case of an NSO,  pursuant to a
     be  exercisable only by him  or  her,  or  the transferee of
     an NSO if it was transferred pursuant to a QDRO.


                                  7
<PAGE>


(g)  Qualification of Stock.  The right to exercise an  Option
     will  be further subject to the requirement that if at any
     time  the  Board  determines, in its  discretion,  that  the
     listing,  registration or qualification of the  shares of
     Option  Stock  called  for thereunder  upon any  securities
     exchange or under any state or federal law, or the  consent
     or approval of any governmental regulatory  authority, is
     necessary  or  desirable as a condition of or in connection
     with  the granting of such Option or the purchase of shares
     of Option Stock thereunder, the Option may not be exercised,
     in whole or in  part,  unless  and until such listing,
     registration, qualification, consent or approval is effected
     or  obtained  free of any conditions not acceptable to the
     Board, in its discretion.

(h)  Restrictions on Transfer of Option Stock.

     (i)  General Rules on Permissible Transfer of Option  Stock.
          Option Stock may be Transferred only after compliance
          with the specific limitations on the Transfer of Option
          Stock set forth below with respect to restrictions upon
          Transfer imposed by applicable state federal securities
          laws, and  certain  undertakings  of the  transferee
          (subsection 6(h)(iii)).  All Transfers of Option Stock
          not meeting the conditions set forth in this subsection
          6(h) are expressly prohibited.

     (ii) Effect of  Prohibited  Transfer.    Any  prohibited
          Transfer, whether Voluntary or Involuntary, is void and
          of no effect.  Should such a Transfer purport to occur,
          the Company may refuse to carry out the Transfer on its
          books,  attempt to set aside the Transfer, enforce any
          undertaking  or  right under this subsection 6(h), or
          exercise any other legal or equitable remedy.

     (iii)  Required  Undertaking.  Any  Transfer  that  would
          otherwise be permitted under the terms of this Plan is
          prohibited  unless the  transferee   executes   such
          documents as  the  Company may reasonably  require  to
          ensure  that  the  Company's  rights  under  an  Option
          Agreement  and this Plan are adequately protected  with
          respect  to  the Option Stock  so  Transferred.  Such
          agreements may  include,  without  limitation,  the
          transferee's agreement to be bound by all of the terms
          of  this  Plan, and of the applicable Option Agreement,
          as if he or she were the original Optionee.

     (iv) Intentionally Left Blank.

      (v) Intentionally Left Blank.

     (vi) Intentionally Left Blank.

    (vii) Intentionally Left Blank.

(i)  Additional  Restrictions on Transfer.  By accepting  Options
     and/or  Option Stock under this Plan, the Optionee will be
     deemed to represent, warrant and agree as follows:

          (i)   Securities Act of 1933.  The Optionee understands
          that the  shares  of  Option Stock  have  not been
          registered under the 1933 Act, and that such shares are


                                  8
<PAGE>


          not  freely  tradeable  and must be  held  indefinitely
          unless such shares are either registered under the 1933
          Act   or   an  exemption  from  such  registration is
          available. The Optionee understands that the Company is
          under no obligation to register the shares of  Option
          Stock.

          (ii)   Other Applicable Laws.  The Optionee further
          understands that Transfer of the Option Stock  requires
          full  compliance with the provisions of all  applicable
          laws.

          (iii)  Investment Intent.  (1) Upon exercise of  any
          Option, the Optionee will purchase the Option Stock for
          his  or  her  own  account  and not with  a view  to
          distribution within the meaning of the 1933 Act,  other
          than as may be effected in compliance with the 1933 Act
          and  the  rules and regulations promulgated thereunder;
          (2)  no  one else will have any beneficial interest in
          the  Option  Stock; and (3) he or she  has no present
          intention  of  disposing of the  Option  Stock at  any
          particular time.

(j)  Compliance with Law.  Notwithstanding any other provision of
     this Plan, Options may be granted pursuant to this Plan, the
     Option Stock may be issued pursuant to the exercise thereof by
     an Optionee,  only  after there has been compliance with all
     applicable federal and state securities laws, and all of the
     same will be subject to this overriding condition.  The Company
     will not be required to register or qualify Option Stock with
     the Securities and Exchange Commission or any State agency,
     except that the Company will register with, or as required by
     local law, file  for  and  secure an exemption from  such
     registration requirements from, the applicable securities
     administrator and other  officials of each jurisdiction in
     which  an  Eligible Participant would be granted an Option
     hereunder prior to such grant.

(k)  Stock Certificates.  Certificates representing  the  Option
     Stock  issued pursuant to the exercise of Options will  bear
     all legends required by law and necessary to effectuate this
     Plan's  provisions.  The Company may place a "stop transfer"
     order against shares  of  the  Option  Stock  until  all
     restrictions and conditions set forth in this  Plan  and  in
     the  legends  referred  to in this section  6(k)  have  been
     complied with.

(l)  Market Standoff.  To the extent requested by the Company and
     any underwriter of securities of the Company in connection
     with a firm commitment underwriting, no Holder of any shares
     of Restricted Stock will sell or otherwise Transfer any such
     shares not included in such underwriting, or not previously
     registered pursuant to a registration statement filed  under
     the 1933 Act, during the one hundred twenty (120) day period
     following the effective date of the registration statement
     filed  with  the  Securities  and  Exchange  Commission in
     connection with such offering.

(m)  Notices.   Any notice to be given to the Company  under the
     terms  of  an  Option  Agreement will be  addressed to the
     Company   at  its  principal  executive  office,  Attention:
     Corporate Secretary, or at such other address as the Company
     may designate in writing. any notie to be given to an
     Optionee  will be addressed to the Optionee at  the address
     provided  to  the Company by the Optionee.  Any such  notice
     will  be deemed to have been duly given if and when enclosed
     in  a  properly  sealed  envelope, addressed  as  aforesaid,


                                  9
<PAGE>


     registered and deposited, postage and registry fee  prepaid,
     in  a post office or branch post office regularly maintained
     by the United States Government.

(n)  Other  Provisions.  The Option Agreement  may  contain  such
     other terms, provisions and conditions, including restrictions
     on  the Transfer of Option Stock  issued  upon exercise  of any
     Options granted hereunder, not inconsistent with this Plan, as
     may be determined by the Committee in its sole discretion.

 7.  Proceeds from Sale of Stock.  Cash proceeds from the sale of
     ---------------------------
     shares  of  Option Stock issued from time to time  upon  the
     exercise  of Options granted pursuant to this Plan will be
     added  to the general funds of the Company and as such  will
     be used from time to time for general corporate purposes.

8.   Modification, Extension and Renewal of Options.  Subject  to
     ----------------------------------------------
     the terms and conditions and within the limitations of this Plan,
     the Committee may modify, extend or renew outstanding Options
     granted under this Plan, or accept the surrender of outstanding
     Options (to the extent not theretofore exercised) and authorize
     the granting of new Options in substitution therefor (to the
     extent  not  theretofore  exercised).   Notwithstanding  the
     foregoing, however, no modification of any Option will, without
     the consent of the holder of the Option, alter or impair any
     rights or obligations under any Option theretofore granted under
     this Plan.

9.   Amendment and Discontinuance.  The Board may amend,  suspend
     ----------------------------
     or  discontinue this Plan at any time or from time to  time;
     provided that no action of the Board will cause ISOs granted
     under this Plan not to comply with Section 422 of the Code unless
     the Board specifically declares such action to be made for that
     purpose and provided further that no such action may, without the
     approval of the stockholders of the Company, increase (other than
     by reason of an adjustment pursuant to section 5(b) hereof) the
     maximum aggregate number of shares of Option Stock in the Option
     Pool that may be issued under Options granted pursuant to this
     Plan. Moreover, no such action may alter or impair any Option
     previously granted under this Plan without the consent of the
     holder of such Option.

10.  Information to Optionees.  Prior to the termination or  full
     ------------------------
     exercise of an Option granted under this Plan, the  Company
     annually will  make available to each  holder  of  such  an
     Option the Company's financial statements (which statements
     need not be audited). At the discretion of the  Board,  an
     Optionee (and any investment advisers to whom the Optionee
     proposes to make such information available) may be required
     to  sign an agreement prohibiting disclosure or use of such
     financial information for any purpose whatsoever (other than
     determining whether to exercise an Option.

11.  Copies  of  Plan.  A copy of this Plan will be delivered  to
     ----------------
     each  Optionee at or before the time he or she  executes  an
     Option Agreement.

Date Plan Approved by Board of Directors: December 20, 2005.
Date Plan Approved by Stockholders: December 20, 2005.



                                  10
<PAGE>


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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