PSI Distribution Inc.

(Formerly ProDril Services Incorporated)

P. O. Box 1990

Clarksdale, MS 38614

June 24, 2004

Dear Shareholder;

I have been acting as the administrator of ProDril since November 2003. This letter is to provide you with information concerning the status of our company and its technology.

Most of you are aware that financial support for the Company and its development efforts through stock sales ran out during the later part of 2002 and early 2003. There are various factors which contributed to this but the primary factor was the Company’s inability to produce a commercial field demonstration. When it became apparent that the prospects of raising additional capital were slim, the time and money still needed to prove the technology could be significant, and the consequences of running out of money were disastrous, the Board of Directors decided it would be wise to seek a buyer for the Company under some arrangement that would preserve as much of our stockholders interest as possible.

A single buyer was located and terms eventually negotiated. As a result, the Company’s Licensed Technology Rights and substantially all the assets of the Company have been sold. This process was voted upon and approved by a super majority of the shareholders of record during the October 2003 Shareholder Proxy Meeting in Dallas, Texas. Another three months was needed to actually close the deal which finally took place on January 23, 2004. The Buyer, Particle Drilling Inc. of Houston (PDI), has contracted to pay our Company 18% of their net earnings before income taxes, depreciation, and amortization (EBITDA), if and when generated, until we have received a total of $67,500,000.00. PDI will also pay our Company 1.2% of PDI’s gross revenue, if and when PDI generates revenues.

When funds are received by the Company, after paying expenses and debts of the Company, such funds will be accounted for and disbursed to shareholders.

There is no current information concerning the activities or progress of PDI’s efforts from which the Company can estimate when it may expect to receive the first funds as a result of the PDI transaction.

Since there was no cash paid to the Company from the PDI sale, the Company has no operating capital and it has taken quite some time to get files and stockholder information transferred from Cody, Wyoming to me in Clarksdale, MS. All Board members and management have resigned, except myself, and I will remain as the sole director of the Company until the next annual shareholder meeting expected to take place later this year.

ProDril Services Incorporated was required by the sale transaction to change its name and the new company name is PSI Distribution Inc. PSI Distribution Inc. has established a web page to provide a cost effective method of communications with each of you vs. expensive mailings. The web page address is www.pdrlinfo.com.

I will provide periodic updates if there is any meaningful information, news or a need to communicate with you.

Yours truly

Jack Bobo, Director