DEAR SCTN SHAREHOLDER/INVESTOR:

This letter is to update you on the Company's progress since our last shareholder letter. Smart Chip Technologies (PINKSHEETS: SCTN) management continues to make significant strides in implementing a business plan to build a base for significant shareholder value.

DEBT REDUCTION

We have reduced our unaudited, non statute barred debt from a peak of $22M to approximately $2M including $600K of debt allocated to Phoenix Technology Holdings ("PTH") and $300K to the IRS. SCTN plans on completely eliminating debt in the next year as PTH has a commitment to make minimum payments of $800K in May 2009 and $1.6M in May 2010. The Company is dedicated to and continues to pay the approximately 20 remaining creditors. Once the debt is eliminated, the Company will be in a position to be profitable for the first time in its history.

FUNDING

Funding for the Company has been difficult to obtain due to our debt history, lack of filings, our low share price and old debt to tax agencies. PTH has periodically and continues to fund SCTN in order to assist the company in moving forward to profitability.

REVENUES

PTH is committed to pay a minimum $800K by May 2009, $1.6M by 2010, $3.2M by 2011, $6.4M by 2012 and $10M yearly thereafter to maintain the exclusive licensing agreement between PTH and SCTN. PTH has indicated that the May 2009 payment is planned to be met.

LICENSE, TRANSACTION, PROFESSIONAL SERVICE REVENUES

PTH continues to sign new customers some of which are already performing production transactions.

The Voice Blast and Email Blast products have been successfully piloted with SMS Blast being piloted next. These Blast offerings are significant since the Blast Offerings are attracting customers which can be transitioned to more advanced incentive deployments after successfully executing the Blast program. The Blast program is a very attractive offering for merchants since it represents opportunities with Return on Investment exceeding 100% which can be deployed within one week. This is the short term strategy.

PTH is in the process of certifying the incentives system with several US acquirers/ISOs to facilitate a larger distribution channel for the technology. Some of the acquirers and ISOs that PTH is certifying with have a merchant base of over 200,000 merchants. The advantage of certifying with the acquirers and ISOs is that typically there will be no need for system modification or integration after certification thus leading to quick deployments and revenues. This is the medium term strategy.

Finally, PTH is in discussions with several large clients for deployment in 2009. These opportunities typically require system modification or integration and therefore are long term in nature. Due to their long sales cycle, these types of opportunities are significantly exposed to the current credit crisis, corporate changes and technology changes. The large deployments have a long sales cycle of close to one year and therefore this is the longer term strategy.

SEC FILINGS

The filings remain a high priority for the Company since this will lead to more transparency, the ability to move off Pink Sheets to OTCBB and lead to an increase in SCTN awareness by a new shareholder base.

LEGAL DISPUTES

The Company has one legal dispute remaining. SCTN plans to file a motion dismiss the TII claims.

KEY FOCUS ITEMS

Our focus items continue to be (1) increase license, transaction and professional services revenue and (2) completion of filings.

SUMMARY

The Company has made significant and substantial progress since the last shareholder letter. The management of the company is committed to the ultimate success and profitability of the Company and believe that the Company is in the best overall condition than it has ever been.

Regards,

Miki Radivojsa
CEO and President

Contact: Equiti-trend Advisors LLC (800) 953-3350 toll-free U.S. & Canada (858) 436-3350 international callers

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