Clean Technology International Corporation Shareholders

To Clean Technology International Corporation Shareholders

Many CTIC minority stockholders have inquired about how they could become involved in minority shareholders legal actions against the present management of CTIC.

The report below describes in detail the actions that have transpired since May 2009 in the stockholder fight to bring accountability and proper management in developing CTIC and its technology. A Concerned Stockholders Executive Committee (CSEC) has been appointed, and it explains the steps and procedures to be followed for those who desire to assist in this endeavor.

In summary, minority stockholder have three options available to them. These are as follows: 1) Direct participation as a plaintiff in a minority shareholder lawsuit, 2) Information gathering or administrative support, or 3) Helping with the legal expenses for the minority shareholders legal actions. It should be noted that in regard to litigation (option #1), Col. Danny Cross has, at his own expense, already initiated legal action against those described below and there are others, such as Jim Carroll and Dr. David Kemp, who are initiating their own legal suit and will join as Interveners in Col. Cross action.

Your decision to participate should be with the understanding that the first and third options involve some financial risk in the event legal actions fail to prevail. However, the CSEC is confident that we, as minority stockholders, have legitimate cause to pursue legal remedy for the events and circumstances surrounding the lack of accountability and mismanagement of CTIC. We believe it is worth the fight. We hope you will participate.

Please read the "Report" below, and if you have questions, contact us by e-mail or telephone. We will make every effort to keep you informed, and make the information about this proceeding as transparent as possible.

NEWS
REPORT TO CONCERNED SHAREHOLDERS OF CTIC

June 11, 2009 - An executive committee of concerned CTIC shareholders convened in Little Rock, Arkansas on Saturday, May 2, 2009. A Concerned Shareholders Executive Committee (CSEC) was appointed by the attendees of an earlier concerned shareholders' meeting in Houston, Texas, on Saturday, April 18, 2009. The purpose of the Houston meeting was to begin developing and pursuing legal actions against Diamond Capital Corporation, Darrell Lainhart and other responsible CTIC management.

The members of the newly formed Concerned Shareholders Executive Committee (CSEC) include:

Bob Black, President of Gold Coast Refractory
Jim Carroll, President of Southwest Heat Treat
Dr. David Wardlaw
John Sawyer, President of Sawyer Industries
Tom Strickland, President of Systemedic Corporation
Dr. David Kemp
Col. Danny Cross
Richard Fulenwider

The Little Rock Meeting

After six-hours of closed session discussions on Saturday morning, May 2, in Little Rock, the Committee determined to initiate specific legal actions. One of these actions will be a lawsuit initiated by a group of shareholders, on behalf of all minority shareholders. (All CTIC shareholders are minority shareholders, with the exception of Diamond Capital Corporation, which is controlled by the Lainharts.) This action is designed to protect the rights of all CTIC minority shareholders of record.

The Committee unanimously voted to take legal actions in an effort to return to the CTIC treasury the approximately 260 million shares of common stock transferred to the Lainharts/Diamond Capital Corporation in the past ten years for less than fair market value. In addition, the Committee set a goal of seizing the personal assets we believe the Lainharts/Diamond Capital Corporation have acquired during the past ten years using the proceeds from the sale of CTIC stock to the minority shareholders (approximately 30 million shares of stocks have been purchased by the minority shareholders at an estimated cost of $22,000,000).

The Committee also agreed to set up a CleanTech Concerned Shareholders Legal Fund for the purpose of helping finance the legal and administrative costs that will arise from these actions. Committee members have already committed a substantial amount of their own money toward financing legal efforts. However, since we are all minority shareholders and are in this together, the Committee wanted to give all concerned minority shareholders an opportunity to become involved.

At 5:00 p.m., on May 2, the Committee participated in an open forum with other concerned shareholders, from Little Rock and the central Arkansas area, who previously had been invited to attend at that time. Considering the somewhat short notice given, there was an excellent turnout of approximately thirty people. The purpose of this informal meeting was to update shareholders on the various actions the Committee was taking, as well as to give them an opportunity to meet the members of the Committee. The Committee also wanted to receive the other shareholders� input regarding the actions being contemplated, to answer their questions about the Committees planned actions, and to communicate how they, as individuals, could participate in these legal actions.

The Committee stressed that it was important to provide only a general overview of the planned actions at this time, except to the shareholders who will be noted as plaintiffs in the lawsuit. The Committee then outlined to the attendees several avenues that would allow concerned shareholders to become involved in the legal actions:

Direct participation as plaintiffs in the Minority Shareholders lawsuit
Gathering information and providing administrative support
Helping with the legal expenses by contributing to the CleanTech Concerned Shareholders Legal Fund

The Committee stressed that it was not soliciting any shareholder to commit money to the legal fund without a clear understanding that those funds would be at risk, because success in our legal efforts cannot be guaranteed.

For those who wish to help by providing financial support, the Committee has set up a CleanTech Concerned Shareholders Trust Fund at a bank in Little Rock, Arkansas, to be overseen by an officer of the bank. The officer will keep records of all contributors and amounts. Any unused or un-needed contribution will be returned to participating shareholders on a pro-rata basis. In the event of our prevailing and seizing assets from this legal action, the shareholders who made legal fund contributions would be, with court approval, given priority for reimbursement of contributed funds. This, of course, would depend on success in liquidating and seizing assets.

The Arkansas Security Dept. investigation (initiated in July of 2008) against Darrell and Mattie Lainhart/Diamond Capital is still ongoing. Many shareholders have been called to testify under oath (approximately 30-40), and the Arkansas Securities Dept. appears to be aggressively pursuing this investigation. We anticipate positive results on this front shortly.

The Committee, specifically the Subcommittee noted below, will keep shareholders apprised of progress in this effort to form a new management team and maximize shareholder opportunity for success with our waste stream remediation and carbon nano technologies.

If you are a CTIC shareholder who is concerned about the management of CTIC and your invested money, and may desire to participate jointly in litigation efforts and/or contribute financially to this effort, please respond to: ctshareholders@gmail.com. . More information on how to proceed will then be provided to you, including the bank address for direct deposit.

Also, please advise if a different email should be used, or if you want to remove your name/email from this list. We desire to keep you informed in a timely fashion as to what is transpiring with the above mentioned actions. You can also stay informed by visiting the NEWS section on the homepage of cleantechnanoshareholders.com.

We appreciate your interest and welcome your feedback and comments via our email address: ctshareholders@gmail.com.

The CSEC Litigation Sub-Committee of the Concerned Shareholders Executive Committee

Tom Strickland Dr. David Wardlaw Bob Black ctshareholders@gmail.com. (877) 591-3754

One Shareholder's Experience

Danny Cross is a 10-year shareholder of Clean Technology International Corporation (CTIC). Danny's experiences with CITC provide a unique perspective, in that as a shareholder his experiences are parallel to many of our own, but he has also been involved in the inner workings of the company as a volunteer.

Danny was first drawn to the company by an acquaintance who told him about the exciting potential of CTIC's toxic waste remediation process. Danny was skeptical of the claims being made about the technology, so before investing in the company, he went so far as to travel to Little Rock, Arkansas, for a demonstration of the process, bringing with him samples of over 20 toxic waste substances to be treated. Afterward, Danny paid to have the treated samples tested by a lab in Florida, his home state. The test results were amazing and confirmed the reality of the claims made for the technology, so he invested in the company.

Since becoming a shareholder, Danny has been both directly and indirectly involved in the activities of the company. Volunteering his services, he was first appointed by CEO Darrell Lainhart to be the Director of Oversight and functioned in this position for a number of years. Then, for the past two and a half years, he has served as the Senior Vice President and Chief Operations Officer at our Nano production facility in Houston, Texas. All of the services Danny provided in these CTIC positions were without remuneration and carried out at his own expense.

As a stockholder with more than 2 million shares of stock, Danny volunteered to provide this service because, like the rest of the shareholders, he strongly believed in the technology and its potential.

Danny's enthusiasm for the technology led him to introduce many of his friends and relatives to Darrell Lainhart, who presented himself as the CEO and Managing Consultant of CTIC. During numerous visits to Pensacola, Florida, Darrell made a number of sales presentations resulting in the sale of stock to 62 of Danny's friends and relatives. These sales represented well over a million dollars worth of CTIC stock.

Over the ensuing years, Darrell constantly created a great deal of hype around all of the great and wonderful things in which CTIC was said to be involved. Danny's enthusiasm therefore remained very high. As time passed, additional friends approached him about buying more stock. He even invited Darrell to travel with him to Costa Rica to meet many of his business and personal friends there. Again, Darrell did a convincing sales job, and sold another $450,000 worth of stock to them over the years.

Darrell continually related new incidents in CTIC's progress, each a little rosier than the previous one. The US Government was interested; a number of state governments were interested; businesses in the private sector were interested. However, as time passed it became apparent to Danny that Darrell was just relating one great story after another with nothing really happening -- particularly the ever illusive IPO, which Darrell was always assuring us, was just 3-6 months away.

By this time, Danny was being inundated with questions from his stockholder friends and relatives about what was happening (or rather not happening) with CTIC. It became more and more apparent to him that the return on stockholder investments so far consisted only of stories of great possibilities, and more promises of an IPO. Days became months, and months became years, with no customers, no formal business plan, no financial reports and no IPO

Danny came to the conclusion that something definitely was awry concerning the management, operational abilities, focus, and real purpose of the company. At the time, Houston, Texas, was where CTIC was conducting most of its research and development, so in September, 2005, Danny volunteered his services and went to Houston as the Chief Operations Officer, hoping to find out what the problems were and to help get things on track.

Danny's position at the Houston CTIC facility provided a day-to-day familiarity, as well as a keen insight, into the workings of that site. As the Chief Operations Officer he was directly involved in the discovery and the follow-on research and development of the material that came to be known as Carbon Nanosphere Chains (CNSC). He was further involved in the testing and subsequent production of large volume runs of CNSC material utilizing the first "commercial-scale (80,000 lb. capacity) reactor". This newly discovered CNSC material seemed to represent an even greater potential for CTIC in the exciting new field of nano technology.

However, problems with the production process, and unsuccessful efforts to solve them, brought back to the surface some of the issues and concerns regarding Darrell's methods and practices. Eventually the person, who had been funding the Houston facility, shut it down, because he had reached an impasse with Darrell over how to get the reactor functioning again. Soon after, with the Houston facility standing idle, Danny also reached a similar point with Darrell and left the company.

Over the last three years, and particularly recently, Danny accumulated a good deal of alarming information about CTIC and Darrell's practices:

The CTIC office in Cincinnati was funded by another large shareholder, not by CTIC.
The 80,000 lb. capacity commercial-scale reactor, the building in Houston where it is housed, and its related operating expenses since 1998 were financed by another large stockholder, not by CTIC.
The medium sized machine that was used in Houston for approximately 4 years was paid for in the form of a loan from the 1st Tennessee Bank, with another large shareholder/ board member co-signing on and taking ultimate responsibility for paying off the loan.
The current CleanTechNano website was created and designed at the expense of another stockholder.
A disclosure document, which apparently went to some CTIC stockholders in the past, relates that Darrell Lainhart has been involved in previous questionable, perhaps fraudulent, dealings in the insurance and bond businesses?dealings which resulted in sanctions, fines, and tax liabilities.
There is an internet listing of a foreclosure on some property owned by Darrell and his wife Irene (Mattie), apparently indicating a lack of liquidity on their part just before he became involved with CTIC.
The Lainharts/Diamond Capital Corporation have made acquisitions of large land holdings (4,000+acres), homes, an antique automobile collection with a building to house them, land improvements, including impoundment dams, and numerous pieces of (according to Darrell) personally owned heavy construction equipment, an extensive gun collection, and many, many other expensive possessions and luxury items that apparently have been acquired since Darrell began selling CTIC stock.
A company named Diamond Capital Corporation now owns the vast majority of all common stocks (93% according to Darrell Lainhart) and 100% of all preferred stocks of CTIC. This does not reflect the large volume of stocks that have also been issued to his two brothers, nephews, son, daughter, and a trust fund that is controlled by Irene Lainhart.
In most cases, when stockholders thought they were purchasing CTIC stocks from CTIC, they were in fact purchasing shares of CTIC stocks that were owned by Diamond Capitol Corporation. Our shares actually were being re-sold to us by Diamond Capital, with the proceeds going to Diamond Capital. Irene (Mattie) Lainhart is the 100% shareholder of Diamond Capital Corporation and is free to use the funds of Diamond Capital however she chooses.

There have been large increases in the percentage of total outstanding shares of CTIC stock owned by Diamond Capital, even though Diamond Capital has been selling a substantial number of its shares to many of us as investors. This action, despite major purchases by new CTIC investors has vastly diluted the value (if any) of our stocks to a point, that if we were ever to go public, the only one to truly benefit from this company's technology, would be Diamond Capital Corporation. These revelations are disturbing. If most of the company's major projects have been financed by individual shareholders out of their own pockets, as appears to be the case, it is alarming to ponder where the proceeds have gone from what we believed were our CTIC stock investments.

For more information about Danny Cross' experiences with Darrell Lainhart and CITC, you may read a copy of a letter he sent to the Arkansas Securities Department that goes into these issues in great detail. (Click Here!)

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