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The following is a copy of Correspondence that was submitted to the Arkansas Securities Department, prior to an all day meeting with them on the 8th of July, 2008.:

Arkansas Securities Department
Heritage West Bldg. suite 300
201 East Markham
Little Rock, Arkansas 72201

ONE PERSON’S STORY: EVERYONE’S  STORY

My name is Danny Cross. I am a 10-year shareholder of CTIC, as well as the former Senior Vice President and Chief Operations Officer for CTIC at the Houston Texas nano production facility. My story is straightforward and probably very much like your own. I will provide extensive information about my background and experiences on this website.

I would like to begin by sharing information I received in the mail from another stockholder several months ago. This information consisted of a 26-page document, dated, November 16, 1998, which highlighted portions of the background of Darrell Lainhart, the Chief Executive Officer of CTIC. (This document will be posted on the website at a later date).

The letter and accompanying information dealt with a rescission (buyback) offer that was being offered to some of the CTIC stockholders of record. This rescission offer made available to those stockholders an option to surrender all of their shares of stock, (but not less than all) for the consideration they paid for their shares, plus six percent (6%) interest from date of purchase.

The reason given for the offer was that, “your purchase of shares of common stock of CTIC may not have been accomplished in accordance with an applicable exemption from state law. As CTIC shares are not registered and the exemption relied upon appears questionable…a rescission offer is appropriate”.

As part of the disclosure appendix of the document, a section, beginning on page 14, gave a brief summary of Darrell Lainhart’s professional life. I would like to share that with you at this point so you can get a better understanding of the issues we are going to be dealing with throughout the rest of this presentation.

Darrell Lainhart: Background

Viking Corporation: In 1967, Darrell Lainhart was employed as a life insurance salesman for a company called Viking Corporation. While working for this company, he became involved in the sale of Viking’s securities to the public by using printed materials. Because the collateral materials contained a misstatement of facts, the Securities and Exchange Commission initiated a civil action against him. Darrell Lainhart consented to the entry of a permanent injunction enjoining him from further violations of the securities laws.

Darrell then got into the Bond Brokerage business, where he eventually acquired security licenses with the State of Arkansas and with the National Association of Securities Dealers, Inc (“NASD”).

Delta Financial Investment Corporation: From 1983 through 1987, Darrell Lainhart was the president and chief executive officer of a company he set up called Delta Financial Investment Corporation in Little Rock, Arkansas. Delta Financial Investment Corporation was a broker-dealer and engaged in the sales of United States and municipal bonds in most states.

In 1987, Delta Financial took several market positions by buying securities without having them sold in United States government securities. The price dropped dramatically from the purchase price. These actions initiated an extensive investigation by the NASD as to Delta Financials conduct. In September of 1989 Darrell surrendered Delta Financial Investment’s NASD license, registration, and the Company was required to pay a $50,000 fine.

Further investigation into the company’s activities found that Delta Financial had failed to maintain its books and records properly, and as a result, on at least two occasions, was again fined by the NASD. Darrel Lainhart was also sanctioned in his capacity as the General Securities Principal and fined $7500 due to his failure to properly supervise the actions of the company. In addition, on at least three occasions, Delta Financial approved transactions that involved mark-ups on securities transactions that the NASD considered excessive. Once again, sanctions were levied against the Company, as well as against Darrell Lainhart.

On not fewer than three occasions, Delta Financial was sued by purchasers of securities alleging that the securities involved were sold by means of fraudulent representation by the securities representatives employed by Delta Financial. All of these cases were resolved by settlement prior to trial resulting in payment by Delta Financial.

The Arkansas Securities Department also revoked Delta Financial’s registration to operate in Arkansas in 1990. Due to the closing of Delta Financial, Darrell Lainhart became personally responsible for various state and federal tax obligations. Darrell Lainhart was without sufficient funds to pay his financial obligations. Some of Darrell Lainhart’s creditors obtained judgments for debts that had not been paid as of the publication (1998) of the aforementioned letter.

Finally, Edward Foster, an officer, director and shareholder of Delta Financial also filed a claim against Darrell Lainhart for fraud in the sale of Delta Financial shares by Lainhart. The case was eventually settled, but the obligation remains unpaid.

Property Foreclosure: In June of 1990, Darrell Lainhart and his wife, Irene, (also known as Mattie) lost a .88-acre piece of property they had owned in Sherwood, Arkansas, as part of a $325,000 foreclosure sale. I only emphasize these actions to establish the apparent vulnerable financial position of Darrell and Irene Lainhart in the early 1990’s.

DANNY CROSS: SHAREHOLDER, SENIOR V.P., CHIEF OPERATIONS OFFICER
As a way of establishing creditability with those of you whom I have never met, I offer a short synopsis of my background. This is to provide you with accurate information which is diametrically opposed to the personal attacks that Darrell Lainhart has, as of late, initiated against me in various letters sent to a number of stockholders (these letters will also be published on our website).

I retired from the United States Marine Corps as a Lieutenant Colonel and went into business in the private sector some 20 years ago. I have been quite fortunate in both my military and private sector endeavors. During my twenty years of service to my country, I received some twenty medals and numerous awards for my actions, both in combat as well as in various diplomatic roles. I also had an opportunity to serve as a judge on a Military Court of Appeals in Washington D.C. for several years. Since entering the private sector, I have, over the years, acquired a number of companies both nationally and internationally. I have also served as president and CEO of a number of different companies and am acutely aware of the fiduciary responsibility of a director or officer of a corporation to the stockholders.

As I indicated earlier, I became a stockholder of CTIC approximately 10 years ago. Since that time, I have been both directly and indirectly involved with the activities of this company. I was first appointed as the Director of Oversight for a number of years; then for the past two and a half years, I have served as the Senior Vice President and Chief Operations Officer at our Nano production plant in Houston, Texas. All of the service I have provided in the CTIC positions were without remuneration and were done at my own expense.

As a stockholder with more than 2 million shares of stock, I volunteered to provide this service because, like you, I strongly believed in the technology and its long-term potential. My positions at the Houston CTIC facility provided me with a day-to-day familiarity as well as a keen insight into the workings of that site. (Reasons for my departure will become evident as we go forward.)

THE BEGINNING

In 1998, I was contacted by a friend of mine, who proceeded to tell me about a “new revolutionary technology” that could clean up virtually any hazardous, toxic or nuclear waste on the planet. Of course, I did not believe him and said so, thus pretty much ending the telephone call.

At a later time, he again called to let me know that CTIC was going to be giving a demonstration of the technology in Little Rock Arkansas, and asked if I could possibly acquire some toxic or hazardous waste and deliver it to Little Rock. After some effort, I was able to locate some superfund site hazardous materials.

I traveled to Little Rock and after observing the treatment of the material in one of CTIC’s small proto-type machines, I collected the treated material, returned to Pensacola, and, at my own expense, had the material tested at a private certified lab. The lab results showed that there were over 20 various chemicals, compounds, and hazardous mixes of materials in the sample of the untreated waste. However, after the lab ran the tests several times on the treated material to insure that the first test results were not in error, they released the report to me. The net results were that all of the various materials treated by the CTIC machine came back with a rating of BDL, which means “below detectable levels”. I was impressed.

I made another trip to Little Rock to meet the man who was in charge of this entire operation. That man was, as you all know, Darrell Lainhart. He made a presentation to me, along with a group of other people, relating the plans he had for moving CTIC forward, with an eye to taking it public in the not too distant future. He further explained that he would be willing, (at that time) to sell some of the CTIC stock because CTIC needed money to cover on-going expenses for its continual research and development and other operating costs. I asked Darrell how I might be able to purchase these stocks. He told me that Rex Roberson had set up a company that was purchasing stock from CTIC and that I would be able to purchase the stocks through this company. The combination of the lab test results, the great presentation Darrell made regarding the potential of this unbelievable new breakthrough technology, and its environmental impact on mankind, and the company being positioned to go public in a short period of time, prompted my purchase. I made my first $100,000 purchase of stocks through a company named River Ridge Inc.

As time went by, I became more involved in what was going on with CTIC. Darrell and I were in regular contact by telephone. At some point, Darrell indicated to me that the company needed additional financial resources to keep it “moving forward”. (That was always his favorite term). As I had indicated to him, I had some friends and relatives that might be willing to invest in this technology. He suggested that I might want to set up an investment company, much like River Ridge, the company Rex Roberson had previously created. I asked why it would be necessary to buy stocks through a stand-alone company instead of just allowing the investors to purchase directly, on an individual basis, from CTIC. Darrell told me that he could not take money directly from an individual at that time, because CTIC was poised to go public in, possibly 90 to 120 days, and that if he sold stock directly to the public, it would prevent us from going public in that timeframe.

DUNCAN FIDELITY INVESTMENTS

Having a large number of business and personal friends as well as family, and wanting them to share in this great opportunity, I introduced them to Darrell . This was in late 1998 and early 1999. Because so many wanted to “buy in”, I was persuaded by Darrell to set up an investment company called Fidelity Duncan Investments which would give the small investors an opportunity to invest. We are now sixty-two individual sales to shareholders later and the rest is history.

The many sales presentations Darrell made followed a common theme:

• The technological possibilities and capabilities were unlimited.
• Every business entity and governmental agency desperately needed what we had to offer.
• We were moving forward toward a possible IPO within the next few months, etc.
• If anyone wanted to buy CTIC stock at $1 a share, now was the time to do it, because when it hit the market it would sell for at least $25 a share. He further stated on a number of occasions that he thought the stocks were worth more than $25 per share, and that he had no intention of selling his family-owned stock at that price. Darrell did a convincing sales job. The result: people wanted in.

Over the next 4 to 6 months, Fidelity Duncan received $547,000 from my friends and relatives for the purpose of purchasing CTIC stocks at a $1 per share. Everything seemed fine until Darrell came to Pensacola to make another sales pitch to a group of people, and to collect money for the anticipated stock purchases by Fidelity Duncan Investments.
 
At that time, and for the first time, Darrell presented a document to me to sign as the President of Fidelity Duncan Investments. (This was after I had already collected the $547,000 from my friends and relatives.) I was to agree that I had not been solicited by Darrell to purchase these stocks; that I had seen the financial statements of CTIC; that I was a sophisticated investor; and that Duncan Fidelity had a net value of over $500,000.
 
I had no problem agreeing to the net value of the company as we had collected more than the $500,000 figure. However, I stated to Darrell that the wording about the solicitation agreement, about having viewed the financials, and about being a sophisticated investor was unclear to me. He indicated he would supply me with the financials, as soon as he received them from his accountant. (The accountant was said to be sorting out the mess Darrell’s previous partner, Thomas Harlan, had created while in charge of the company.)

Many years have gone by and to date, I have never had  an opportunity to review those records (even after a number of requests). His explanation of the wording about not being solicited to purchase stock was that he had not presented me with any kind of video or audio presentations; therefore, for him to be legally representing the stock sale, I had to state that he had not actively solicited me to purchase. Since he had not, at that time, shown me any audio or video presentations, I agreed.

His explanation of the wording about my being a “sophisticated” investor was that if I, in any way, actively bought and sold stocks on the stock market through a broker, then I would be considered a sophisticated investor. Since I had actually done some minor trading on the stock market via a broker in the past, I signed the document.

The second shock came when Darrell requested that I write the first of many checks to a company named Diamond Capital Corp. After asking Darrell why I would be writing a check to an unknown company vs. CTIC, he told me Diamond Capital had been set up to receive the operating capital on behalf of CTIC, and that the money would be funneled to CTIC as operational demands required it. This was characterized as a safety net for all of us, as there was always a possibility that CTIC could, because of its unknown liabilities, be sued, and then all of our money, if it was in a CTIC bank account, would be tied up in litigation.

I wrote the check to Diamond Capital Corporation. After approximately 2 months, Darrell had his attorney, Tom Stone, send me a stock certificate for a block of 547,200 shares of stock issued to Fidelity Duncan Investments.

Times seemed good. Darrell kept telling me and my stockholder friends and family that things are going great. And, according to Darrell, the federal government was very interested in our technology as well. He said a number of evaluation tests had been done by the government, with just unbelievable results, and a contract was imminent. Most importantly, the ever-elusive IPO was just around the corner.
CTIC MOVES TO NEVADA

Darrell wove one story after another, each being better than the one before. In 2001, Darrell notified everyone that he and Irene, the president of CTIC, are moving the company to Nevada, and that there was to be a 3 for 1 split in shares from the new company. Darrell further said that if I would dissolve the Fidelity Duncan Investments Company, he would be able to issue the 3 for 1 split stocks directly from CTIC to all of the individual investors.

Everyone was upbeat because the stocks had been transferred into their own names and they have tripled their ownership in CTIC stock. However, also at that time, as I recently discovered, a few stockholders from Little Rock, Arkansas, were given an opportunity to accept a rescission offer to sell their stock back to Diamond Capital Corp., a company they had unknowingly purchased their stock from previously. (I wonder why neither my stockholder friends nor I were ever given that opportunity).

I now had more time to focus on how to handle the potential expansion and advancement of the company Darrell constantly promoted. I recruited a friend of mine, who had been the president of a North American division of Heinz Catsup, to help devise a corporate structure for CTIC. After many days, we developed an operational structure that would allow for the expansion of CTIC as the growth demands required. At that time, Darrell appointed me as the Director of Oversight. This title, when the company was actually up and operating, would charge me with the responsibility to ensure that all licensees and plant managers were carrying out their responsibilities as directed by the CEO of the company. All of this really looked good on paper.

Over the ensuing 4 years, Darrell became what one could call, a “Dream Merchant” by constantly creating hype around all of the great and wonderful things that CTIC was achieving. My enthusiasm was still very high. As time passed, and the stories got better, more friends approached me about buying more stock. I even invited Darrell to travel with me to Costa Rica to meet many of my business and personal friends there. Again, he did a convincing sales job. Over the years, Darrell sold another $450,000 worth of stocks to them.

Each CTIC story line that Darrell came up with was 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. It seemed as though, “if you build it, they will come” was our destiny. However, as time passed it became apparent that we were just going from one great story/dream to another with nothing actually happening. Particularly the ever illusive IPO!

By now I was being inundated with questions from stockholders as to what was happening. It became more and more apparent that the return on our investments was nothing more than stories of great possibilities and more promises of an IPO. Yet days became months, and months became years, with no customers, no formal business plan, no financial reports and no IPO.
THE BOTTOM LINE

In 2005, after much discussion with Rex Roberson, the person who originally encouraged me to get involved, and the person who had reportedly brought over 100 investors into the company, we came to the conclusion there was definitely something awry concerning the management, operational abilities, focus, and real purpose of the company. We further discussed the possibility I might offer my expertise, free of charge, because the company (according to Darrell) was always struggling to pay expenses. Rex adamantly agreed this was a way to help get the Houston facility operational and would show our shareholders there was something positive happening..

When we approached Darrell offering my assistance, he was quite reluctant. Rex was still raising money (according to Rex) for him, so with Rex’s pressure, Darrell finally relented. In September of 2005, I went to Houston for the purpose of determining if we had a viable technology, and to determine how it was being managed.

Given my background in professional management, I was in for the shock of my life. I observed for about a week before I said or did anything. I can honestly say I don’t think I have ever walked into such a dysfunctional operation in my life. As I once said, “If I didn’t know better, this could only be this bad by design.”

Over the next months, I began to make adjustments in personnel, as well as testing, procedures. I could not understand why our Chief Technical Officer, Tony Wagner, rarely came to Houston. He was the inventor of the CTIC technology and was said to be the one most knowledgeable concerning its scientific capabilities. One would think he would want to be involved in the testing process and procedures, both as the inventor and as a chemist. However, in the two and a half years I worked in the Houston plant, Tony Wagner did not come to Houston more than (a best guess) a half-dozen times. When he did make an appearance, it was usually only for a few hours. Yet Darrell continued to put great store in Tony’s chemistry and technological expertise evidenced by Tony’s salary(loan) of $10,000 a month.

In March of 2006, after many tests, trials and errors, I accidentally discovered the “carbon nanosphere chain” (CNSC) material that is receiving considerable attention today. Over the next six to eight months, with the help of Dr. Vesselin Shanov of the University of Cincinnati, I managed to produce a quality product of CNSC material.

Once it was determined that we had created a viable product and that it appeared to have unbelievable capabilities, Jim Carroll, the owner of South West Heat Treat Inc., agreed to partner with CTIC, under the name of Black Diamond Materials LLC, (BDM) to build a large reactor unit with the potential to produce CNSC material in much higher volume than the smaller proto-type machine we were last using in Houston. This partnership helped bring to light what had been happening in the Houston Plant since 1998.

Jim Carroll (BDM) agreed to take on the funding of the large reactor, and I was authorized to oversee the manufacturing and operation of this endeavor on CTIC’s behalf. However, because Jim Carroll (BDM) was the one investing his money in the operation, he was to be the person on the ground to get the operation up and running.

As this was the first commercial-scale reactor to be built for the purpose of treating the materials that we were using, the engineering and design became somewhat complicated. Jim Carroll’s (BDM) technical expert and CTIC’s technical expert, Tony Wagner, got together, and using the CTIC patented equipment design, along with other outside input as a guide, designed the machine that is presently sitting idle at the Houston plant. Instead of the 4 months initially allotted for the design and construction of this reactor, and due to the various engineering errors made by both of our technical experts, we were unable to become operational for almost 13 months.

We were moving into a new and revolutionary technology, so it was understandable why there were delays. In September and early October of 2007, I began a number of tests with the new reactor. After this shake-out period, and many modifications and adjustments later, we were able to create small amounts of nano material from this new machine. On October 31, and November 2, 2007, we had a breakthrough in the operating and functioning of the machine. After 8 hours and 20 minutes of total run time, two 55-gallon drums of nano material were produced. This was far and away the most material we had ever produced, particularly in such a short period of time.

CTIC’s technical officer/chemist Tony Wagner was still in Austin but was advising me on a daily basis as to how to handle the chemical aspect of the process. At that time, I had no reason to doubt his expertise as to how the chemical process worked. Unfortunately, that was a mistake. Although we had been able to produce material in volume, there were many secondary actions and reactions occurring. While I am not a chemist, Tony’s explanations regarding the chemical reactions did not match what I was observing at the Houston facility.

Jim Carroll, the financer of the operation, asked if it would be agreeable to bring in a PhD chemist from the University of Virginia. I thought it was a great idea—the more knowledge we had to help overcome some of the problems we were experiencing, the better. At Jim Carroll’s expense, he brought in the chemist, who spent four days running a variety of tests on-site at the Houston plant. His analysis, as reflected in his written report, was considerably different than the explanation of the chemical process, Tony had put forward over the past two and a half years. When Darrell found out that Jim had brought in an outside chemist, he was livid. This certainly makes one wonder—why?

Due to an apparent lack of understanding by Tony Wagner of the overall process, and after continuing with many tests using his theory, the by-products from the production process clogged the reactor tunnel. After many days of effort, it was determined that the reactor tunnel could not be cleared, short of removing the molten aluminum (80,000 lbs), cooling the reactor, and then removing the silica carbide tunnel. It would then be necessary to replace the old tunnel with a new one, as well as make necessary modifications to the original design.

Jim Carroll (BDM) determined that until we had resolved the issues surrounding the chemical reactions happening within the process, it would be unwise to continue spending large amounts of his money on this reactor. Jim stated that he was at a standstill as to what further actions could be taken to rectify the continuing chemical problems. This was an ongoing problem during the processing and creation of the carbon nanosphere chains. This is when I learned that Jim Carroll and his main company, Southwest Heat Treat, had been funding all of CTIC’s costs at his plant for the past 10 years—counter to what we as stockholders in CTIC had been led to believe.
The Demise

In October 2007, Tom Strickland, an investor in Little Rock, and I set up a meeting with EADS, the parent company of European Airbus. Airbus was one of 10 different companies that he or I had contacted, or that had contacted us, about the use of CTIC’s CNSC material. This meeting with Airbus was designed to have them review our progress with the characterization of our CNSC material. The meeting was scheduled and conducted at the University of Cincinnati on October 21, 2007.

The meeting went very well and the Airbus representatives showed a great deal of interest. The director of their team asked me to send him a non-compete/non-disclosure contract so we could move forward as a team on the research and development of our material. The EADS team leader indicated the research and testing they needed to do would take considerable time. When pressed on that matter, he indicated, at least a year.

After the meeting, when the Airbus team had departed the campus, Dr. Shanov and I were sitting in the conference room discussing some of the details of the meeting when I overheard Darrell, who was standing just outside the door of the conference room, telling someone on the telephone how the meeting with Airbus had gone. I was greatly troubled as to his fabricating and overstating what had taken place in that meeting.

Later that night, I confronted Darrell about what he had said on the telephone. Our relationship, at this time, had started to deteriorate. This incident, combined with the revelation that Jim Carroll was the true source of funding for the operations at the Houston plant produced a red flag. Then I discovered from Cincinnati personnel that (according to them) John Sawyer, a large stockholder in CTIC, had been paying for the costs of the Cincinnati CTIC office space, as well as for the computer programmer CTIC utilized in Cincinnati. This news raised the red flag even higher. Where was all the money being raised by CTIC stock sales (supposedly for research and development and operating expenses of the company) actually going?

After that meeting and because of the apparent shut-down of the operation in Houston, Darrell requested I contact Arkansas Refractory, a company I had been working with in Benton Arkansas. I set up a meeting with them to discuss the cost, design and their capability to build a new nano refractory machine for our needs. The meeting was scheduled to be held at Darrell’s farm in Hot Springs. Arkansas. However, the meeting with Arkansas Refractory was not nearly as significant as what I subsequently discovered while in Hot Springs.
NICE WORK, IF YOU CAN GET IT

Darrell picked me up at the airport and we drove to his newly refurbished get-away house, which sits on 12.5 acres in Hot Springs. He also proudly showed me his climate-controlled steel building that housed (according to Darrell) 30–40 antique cars. I did not personally count them.

Then I was shown his gun collection. He showed me hundreds of weapons he had collected. Next was his coin collection. Then his 48-foot RV and the antique Rolls Royce. However, this was just the tip of the iceberg.

We next drove approximately 12 miles to his “Pride and Joy”, his 4400-acre farm which he had dubbed “Little Switzerland.” After touring the farm for the next two days, I counted at least 21 pieces of heavy construction and farm equipment scattered around the farm. He also was in the process of making road improvements and had remodeled a sizeable building called “The Lodge” for the purpose of housing approximately 10 to 12 hunters during deer hunting season. Numerous heated and cooled tower deer stands had been constructed, and improvements were nearly completed on two very large concrete dams. The dams spanned two sections of a river/stream and were built with reinforced steel and were wide enough for two vehicles to cross. It was mind-boggling, yet I said nothing.

After we left Hot Springs and headed back to the airport in Little Rock, Darrell decided that he needed to stop at his residential home in Sherwood, Arkansas, to pick up some items before we traveled on to the airport. This turned out to be a large house located on a lake, and is, according to Darrell, valued at approximately $2,000,000. He also showed me the new T-Bird convertible purchased for his wife Mattie, who is President of both CTIC and Diamond Capital Corporation. Darrell is the CEO of both corporations.

According to Darrell, the aforementioned assets were held in the Diamond Capital Corporation. The litany of assets mentioned above serves to highlight the apparent dramatic economic improvement that seems to have befallen Darrell and Mattie. As you recall in the 1991-92 timeframe, many tax levies, personal judgments and property foreclosures were the norm in Darrell and Mattie’s life. According to Darrell, he began working for CTIC in 1993, so this accumulation of wealth apparently began then or in the years afterward.

On the way to the airport, Darrell suggested that my work for CTIC, particularly the last two and a half years, should be rewarded with CTIC stocks. I asked him what he thought my time was worth. After some thought, he stated between 10 and 12 million shares. That’s when it became horrifyingly clear to me that the CTIC stocks must be worthless.

Moving forward to January, 17, 2008, Darrell, Tony and I met in my hotel room in Houston to discuss the meeting Darrell and I had scheduled with Jim Carroll for the following day. After having the Christmas holidays to think about what I suspected was happening, I confronted Darrell and Tony about Tony’s level of knowledge of our technology. This exacerbated the downward spiral in my relationship with Darrell and Tony. At our scheduled meeting with Jim Carroll the next day, Jim confronted Darrell with the information he had regarding Tony’s explanation of our technology. He had documents with test results from Texas A&M University to further support his concerns, as well as results from the tests I had requested from the University of Cincinnati.

Approximately 10 days after the above mentioned meeting, Darrell had his attorney send the first of three threatening letters to Jim Carroll. Jim’s attorney responded. Jim then submitted a bill for all of the outstanding rents and services he had provided CTIC over the last 10 years, totaling over a million dollars.  This does not include the cost of the large refractory machine mentioned above. It was at this time that Jim also stopped any further operations and seized all equipment that CTIC had stored on his premises. That’s the bottom line, as of summer 2008, concerning operations in Houston.

However, that was not the bottom line regarding my efforts concerning the internal workings of CTIC. I began assimilating the information I had amassed; conversations I had with Darrell over the last 10 years, input from other shareholders, and personal experiences with the Lainharts. After researching the Federal Securities Laws, I have put together a scenario of what I believe Darrell and Irene Lainhart’s game plan has been regarding CTIC.

Even though I have been more directly involved in CTIC than most, I did not, until recently, realize that when Darrell was coming to Pensacola, Florida, to make sales presentations to potential investors, he was not representing CTIC, but was, in fact, representing Diamond Capital Corporation. We were not purchasing CTIC owned stocks as we were led to believe, but were, in many instances, purchasing Diamond Capital Corporation-owned CTIC stocks.

Here’s the difference: If the stocks had actually been purchased directly from CTIC, the money that Darrell was collecting from the sales would have gone to support the operations and costs of CTIC, as was intimated in all of his sales presentations. This money would then have to be accounted for via the Board of Directors. However, that’s not always what happened. When making presentations in Pensacola, Florida, and Costa Rica, Darrell was selling potential shareholders Diamond Capital-owned CTIC stock, and the money from those sales went directly to the Diamond Capital Corporation bank account, as was indicated by the bank deposits.

Since Mattie Lainhart is the president and 100% stockholder of Diamond Capital, this allowed her to disperse the money received from the stock sales in any form or fashion she chose. Then, when CTIC needed operational money, Diamond Capital would make a loan to CTIC, from the same money we thought was going to CTIC from our purchase of stocks. Mattie Lainhart has adamantly refused to allow stockholders to review the financial records of CTIC. She has managed to sell Diamond Capital-owned CTIC stocks to us, which one could assume would decrease the number of CTIC stocks owned by Diamond Capital Corporation, and yet she has vastly increased, not decreased, the percentage of CTIC shares she presently owns.
 
According to the CTIC stock ledger, Mattie Lainhart, as President of CTIC, has authorized the issuing of stocks to Diamond Capital Corporation (of which she is also the President) in the following amounts:
 
Feb. 28, 2002 ------- 24,272,950 shares to Diamond Capital Corp.

Dec. 9, 2003  --------225,000,000 shares to Diamond Capital Corp.

Aug. 16, 2005--------282,000    shares to Diamond Capital Corp.

for a Grand total of 249,463,950 common stocks to Diamond Capital Corp. Keep in mind that Mattie Lainhart also issued in 1998 all of CTIC’s “Preferred Shares” (3,000,000) to Diamond Capital Corp. That (according to Darrell) has now been increased to (9,000,000) “Preferred shares”. These Preferred shares carry a conversion ratio of 5 to 1. This means that Diamond Capital Corp. at its discretion, can convert the Preferred stocks to an additional (45,000,000) common stocks. It even gets better : CTIC (Mattie Lainhart as president has also issued large volumes of stocks to family members as indicated below:
 
Capital Heritage Irrevocable Trust (to Irene(Mattie) Lainhart)----2,500,000 shares of common stock on Jan 9, 2005.                                                                                                                           
 Marvin C. Lainhart--------750,000 shares of common stocks on July 29, 2003 and another 250,000 shares on March 15, 2005 (this is Darrell’s brother and a member of the Board of Directors) One could presume that these issues of stocks for Marvin were for his service on the Board of Directors that very seldom met.

Julia Butler----- 750,000 shares of common stock on July 29, 2003 (this is Darrell’s daughter and the Secretary/Treasurer of CTIC)

James F. Lainhart-------- 300.000 shares of common stock received on July 29, 2003 (this is Darrell’s brother works as manager of the above mentioned farms  in Hot Spring AR.)

Ricky D. Lainhart----- 750,000 shares of common stock received on July 29,2003  (Darrell’s son who is on payroll and runs errands for Darrell and Mattie.)

Darrell Wayne Lainhart---- 300,000 shares of common stock received on July 29,2003 (Darrell’s nephew and former manager at the Hot Springs Farms.)

Marvin Allen Lainhart---- 300,000 shares of common stock received on July 29, 2003 (Darrell’s nephew and unknown affiliation with CTIC or Diamond Capital Corp.)

I only point these stock issues out to emphasize what I indicated earlier in this letter about the fiduciary responsibility of the Officers and Board of Directors of this Company. I wonder what these people paid for their stocks.

The President and CEO has no authority to issue stock unless the Board of Directors so authorizes it. According to one of the Board of Directors, who has been sitting on the Board since 2001, to his knowledge, there had been only 3 Board of Directors meetings in the last 7 years, and at no time was there ever a vote to increase Diamond Capital’s stock, family issued stocks  or to sell CTIC stocks, period.

 As shareholders, we individually or collectively have a right to expect and hold responsible (legally and civilly) the Board of Directors for the companies actions during the life of the Corporation. Therefore, you should be asking/demanding answers from your Board of Directors, as to the actions the officers of CTIC  (Darrell and Mattie)have apparently taken over the years. What part did the Board of Directors play in the decision making and approving of all of these stock sales over the years. If they in fact did, how can they justify these transactions, and if they did not, why did they allow it to happen. Shortly, we will post on this website the names and addresses of all of your Board of Directors.
 
After discovering the above, I began to research and investigate on my own. This is some of the information I have uncovered:

• CTIC has filed and received a rule 506-Reg. D Exemption which authorizes it to sell stocks, subject to some very rigid restrictions. The question still remaining to be answered is: if we, as shareholders, purchased restricted stocks, meaning that we cannot resell the stocks that we purchased, how can Diamond Capital Corporation re-sell stocks that they also purchased from CTIC?
• According to Darrell in my many discussions with him, CTIC had, to his best guess, over 300 shareholders. According to Darrell’s description of how much money individual shareholders had invested, and the information I knew regarding our group of investors, the potential investment figures could be many millions of dollars.
• On the numerous occasions I asked to look at the financial records, Darrell always indicated that his CPA was working on them for the purpose of getting the company ready to do a public offering.
• During the last three months, there have been at least 25 requests from different shareholders to have an opportunity to review the financial records, the Articles of Incorporation, the by-laws and the list and addresses of all shareholders. These requests have been summarily dismissed by the president, Mattie Lainhart. Why have Darrell and Mattie refused to allow us any type of access to our Company’s records, unless there is something they do not want us to see? Their management approach is much like the growing of mushrooms: “Keep them in the dark, feed them, and watch them grow.”
• During my discussions with stockholders, I learned that Darrell Lainhart had, on at least three separate occasions, made sales of stocks to stockholders in cash. These cash transactions consisted of approximately $87,500, and the requirement of cash payment was at Darrell’s insistence. The cash from two of these transactions was delivered to Darrell at a casino in Tunica Mississippi. Are there any other stockholders out there that have had to pay cash for their stock issue?

There is much more information that you as stockholders of CTIC, will be made aware of as time progresses. Presently there are on-going investigations into the actions, conduct, and fiduciary responsibilities of the principals as well as the Board of Directors of CTIC. It is our intent to pursue these actions to the maximum extent that the criminal as well as civil laws allow.

NOTE: TO READ THE FOLLOWUP LETTERS TO THE ABOVE, CLICK HERE!