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U.S. Starcom Announces Strategic Investment and Changes to Its Board of Directors

U.S. Starcom, Inc. (PINKSHEETS: USTA), a provider of telecommunications, financial and transaction-based services and products targeting the Latin communities in the U.S., announced that it has closed on a $3.12 million strategic financing with the Sigma Opportunity Fund, LLC ("Sigma"). The financing is comprised of a non-convertible, $2.0 million, 8% Senior Subordinated Secured Note due in 2011 (the "Note") and a $1.12 million equity investment. The Company expects to net approximately $2.87 million after transaction expenses and fees.

Of the proceeds, $2 million will be held in an interest-bearing escrow account and, upon release, are expected to go primarily towards the expansion of the Company's Bell Latino division. Interest earned on the funds in escrow will go directly to the Company, effectively reducing the interest rate paid on the Note.

In conjunction with the financing, the Company's Board of Directors and shareholders approved a 1:10 reverse stock split that will go into effect Monday, September 29, 2008. The number of fully diluted shares post-financing and post-reverse stock split will be approximately 12.6 million, down from approximately 74.5 million fully diluted shares pre-financing and pre-reverse stock split. Subject to the completion of its audit, the Company has agreed to file a registration statement with the SEC for the resale of the shares of common stock and the shares of common stock underlying the warrants sold in this transaction. The Company's shares are presently traded on Pink Sheets under the symbol USTA.PK. After the reverse stock split takes effect, the shares will be traded under the symbol USTI.PK.

Under the terms of the equity investment, and after giving effect to the reverse stock split, U.S. Starcom will issue Sigma approximately 4.05 million shares of Common Stock and Warrants to purchase approximately 1.14 million shares of Common Stock at $0.01/share. Management, members of the board of directors and Sigma will own approximately 70% of the Company's fully diluted shares.

As part of the financing, U.S. Starcom's Board of Directors was reconstructed as follows:

--  The new board will consist of seven directors and one observer.
--  U.S. Starcom will appoint three directors.
--  Sigma will appoint two directors and one observer. Mr. Thom Waye,
    Sigma's Managing Partner, will be one of the two Sigma directors.
--  Two independent directors will be jointly appointed by the Company and
    Sigma.
--  A separate press release will follow, specifying in more detail the
    recent reorganization in management and the reconstructed board.
    

"This transaction provides us with the financial resources to execute our Bell Latino expansion strategy and facilitates our ability to capitalize on the many growth opportunities in our industry," said John DiDomenico, Chairman and CEO of U.S. Starcom. "The addition of Sigma, a well respected private equity fund, as a long-term strategic partner significantly strengthens our core. I expect Sigma's active involvement to serve as a catalyst for our evolution as a public company, continued revenue growth, sustainable operational and financial excellence, reduced execution risk, solid corporate governance and wider capital markets exposure to high quality institutional investors."

Mr. Thom Waye is the manager of the Sigma Opportunity Fund, LLC. He is currently the Chairman of Avatech Solutions, Inc. and a Director of Berliner Communications, Inc. Prior to forming Sigma, Mr. Waye was a partner and managing director at ComVest Venture Partners, L.P. Before joining ComVest, Mr. Waye was at AIG, where he was Vice President in AIG's private equity group. In addition, Mr. Waye previously led Motorola's and Unisys' New York-based non-banking, financial services sales and marketing efforts. Mr. Waye holds an MBA in Accounting and Finance from the University of Chicago Graduate School of Business and a B.Sc. from Syracuse University.

Thom Waye commented, "U.S. Starcom, through its Bell Latino division, has the potential to emerge as a leading transaction-based services provider to a fast growing, yet underserved, segment of the U.S. population. In parallel to the development of Bell Latino, the Company's core Telecom division provides a solid, profitable base of operations, which is also positioned for further growth. We are excited to partner with U.S. Starcom both strategically and financially and look forward to working closely with management over the next few years to build the Company into a more profitable and expansive public company."

About U.S. Starcom, Inc.

U.S. Starcom provides diversified communication, financial and transaction-based services, primarily targeted at the emerging U. S. Latino communities and business markets. The Company's Telecom division provides direct international wholesale telecom services and products, including long distance termination and pre-paid calling cards. The Bell Latino division operates a chain of neighborhood based, multi-service finance and micro communication hubs, designed to fulfill the needs of the U.S. Latino community. In a secure, culturally friendly and affordable environment, Bell Latino Centers enable customers to transfer funds, pay bills, photocopy, fax, access internet services, purchase international communications products, services, cell phones and other basic necessities.

About Sigma Opportunity Fund

The Sigma Opportunity Fund is a private equity fund that provides growth capital for Micro-Cap public companies operating in the IT, Telecom and Technology industries. The Fund has an active, long-term investment approach and works closely with management to unlock shareholder value and provide guidance and assistance in the areas of finance, capital markets, operations, strategy and business development. For more information about Sigma please visit http://www.sigmacp.com.

The statements in this press release, which are not historical fact, are forward-looking statements. These statements include, without limitation, statements regarding our future prospects, the expected growth of our business, the ability to achieve our sales and profitability goals, our perception of future industry trends and the potential positive impact our business prospects, and other such statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from ours expectations. Such risks and uncertainties include, without limitation, the risk that future trends we have identified do not materialize or if they materialize that they do not have the beneficial effect we anticipate, as well as the risk that we will not be able to achieve our sales and profitability goals. All forward-looking statements in this document are made as of the date hereof, based on information available to us on the date hereof, and we disclaim any intention or obligation to revise any forward-looking statements, including, without limitation, financial estimates, whether as a result of new information, future events or otherwise.