Section 4 - Matters Related to Accountants and Financial Statements
Item 4.02 Non-Reliance of Previously Issued Financial Statements or Related Audit Report or Completed Interim Review

          (a) In connection with preparing the financial statements for the fiscal period ended July 31, 2010, management of PSI Corporation (the “Company”) became aware that an aggregate of $1,030,548 of accounts payable were overstated and all of such accrued expenses could be written off. Individually, all such accounts payable were immaterial as related to the quarterly filings to which they were booked. In the aggregate, these payoffs amounted to over a $1,030,548, which the new CEO Eric Kash, with the assistance of Bristol Services and Ohab and Company, PA, were able to create a comprehensive list detailing the explanation for each write-off. This 8-k does not state which previously filed reports are in error due to an overstatement of liabilities, and thus may not fully represent the financial condition of the company at the time.

          Upon the resignation of David Foni on June 30, 2010 as Chief Executive Officer and a director, the Chief Financial Officer of the Company, Eric Kash, retained a new accountant as well as a consultant with significant SEC accounting experience, John Miller of Bristol Services. We also retained Ohab & Company, PA to assist with our financials. Upon a review of the books and records of the Company and a comprehensive forensic audit, it was determined that an aggregate of $1,030,548 of accounts payable were justifiable overstated. For example, For example, $204,545 owed to Blue Jeans Equities was written off because we paid them the settled amount. The $116,939 owed to a former vendor was forgiven by the company which acquired their assets. A former accounting firm forgave their bill. The payable owed to a bank was a personal loan of the former CEO of Friendlyway, the predecessor of PSI. All the amounts should have been written off in the previous filings.

          The Company does not intend to file restated financial statements for any of the previous quarters because none of the overstated accounts payable resulted in any increase in cash flow to the Company. The annual audited financial statements for the fiscal year end October 31, 2010 will properly reflect the overstated accounts payable.

          Management did not discuss any of the items above with the Company’s independent accountants.

- 2 -