Clean Technology International Corporation Shareholders

After Darrell, via his attorney, began his campaign of threatening letters to Jim Carroll, Jim decided to shut down the refractory operation at the Houston plant. This was in the approximate timeframe of my leaving the company as the Operations Officer. On March 18, 2008, I received a letter from Darrell requesting that I return whatever property I might have in my possession that he felt belonged to CTIC. I responded to his request on April 18, 2008. (See enclosed letter.) As I had become quite familiar with Darrell Lainhart and his methods, I sent this letter, along with the equipment I had in my possession, by registered mail, receipt requested. You will notice in the aforementioned letter, that there is a card attached that Darrell signed on April 21, 2008, showing he had received my letter and the equipment he had requested.

I had previously been in contact with Jim Carroll at the Houston plant, and had notified him that I had left the company, and that I still had in my possession a 5 gallon container of nano carbon material. Since Jim Carroll had been the overall project director of the Houston production facility, I asked him what he wanted me to do with the nano material in my possession. He requested that I send the nano material back to him. As he was also the owner of Black Diamond Materials LLC, which owned the production plant and the manufacturing machine that we were using in Houston, I had no problem with returning the material to him. That afternoon I sent the material to Jim via FedEx.

However, this is where the story gets interesting. After Darrell received my above mentioned letter, he talked with Jim Carroll and asked if Jim would send the nano material to him. Jim Carroll was still enthused about the potential of the company and wanted to give it every possible chance, so he agreed and subsequently did send the material to Darrell in Little Rock. Jim was fully aware of the research agreements we had received, or that were pending, and felt that no matter what the internal strife within the company, it was important to get as much of this material as possible into the hands of those companies that wanted to test its capabilities. Darrell therefore is in possession of the alleged missing/stolen nano material!

When you weave a web of deception, you may well be the person who gets caught in that web. In this case I can easily document and support all of the information I have provided above. I can prove my integrity in this matter, but can Darrell prove his?

While I am on the subject of integrity, I would like to present to you some information I became aware of during the ongoing investigation into Darrell Lainhart's previous endeavors. The following is a chronological listing of Darrell's activities since 1967. I guess some people would call this a "Rap Sheet" while others may view it as a historical web of deception.

ND 67-224 LR-3864: DARRELL LAINHART PERMANENTLY ENJOINED FROM VIOLATIONS OF THE ANTI-FRAUD PROVISIONS OF THE SECURITIES ACT IN THE OFFER AND SALE OF THE COMMON STOCKS (SECURITIES) OF VIKING CORPORATION.

U 4 DISCLOSEURES THAT, ON AUGUST 2, 1972, AN ACTION STYLED "STATE OF KANSAS, ET AL. VS MODERN MARKETING, INC, ET AL.," CASE NO.115202, WAS FILED IN THE DISTRICT COURT OF SHAWNEE COUNTY, KANSAS. WITHOUT ADMITTING OR DENYING ANY ISSUE OF FACT OR LAW ALLEGED, DARRELL LAINHART CONSENTED TO A PERMANENT INJUNCTION FROM DOING BUSINESS IN THE STATE OF KANSAS FOR VIOLATION OF THE KANSAS LOTTERY STATUTE, SECURITIES ACT, AND ANTI-PYRAMID STATUTE AS A RESULT OF THE MULTI-LEVEL MARKETING PROGRAM OF MODERN MARKETING, INC. MODERN MARKETING CEASED DOING BUSINESS AND COMPROMISED ITS DEBTS BY MAKING PAYMENT TO CREDITORS HAVING VALID CLAIMS.

ND 77-5 REL 34-13140: 11-16-67 COMMISSION'S STAFF ALLEGES THAT LAINHART WAS PERMANENTLY ENJOINED, BY CONCENT ; (U.S. DISTRICT COURT – EASTERN DISTRICT OF ARKANSAS) 8-12-72 COMMISSION'S STAFF ALLEGES THAT LAINHART WAS PERMANENTLY ENJOINED, BY CONSENT (Re: KANSAS SECURITIES ACT-DISTRICT COURT OF SHAWNEE COUNTY, KANSAS) PUBLIC ADMINISTRATIVE PROCEEDINGS ORDERED;

ND77-86 REL 34-13460: SUSPENDED FROM ASSOCIATION WITH ANY BROKER-DEALERS FOR 90 DAYS AND PLACING CERTAIN SANCTIONS ON LAINHART. ACTION TAKEN PURSUANT TO AN OFFER OF SETTLEMENT IN WHICH HE CONCENTED TO ORDER WITHOUT ADMITTING OR DENYING THE CHARGES. EFFECTIVE 5-1-77.

ND 78-55: PUBLIC ADMINISTRATIVE PROCEEDCINGS INSTITUTED AGAINST DARRELL LAINHART (RESULTS). CENCURED, PURSUANT TO OFFER OF SETTLEMENT, WITHOUT ADMITTING OR DENYING ALLOGATIONS. LAINHART AGREED TO REPAY CERTAIN ADVANCES AND FEES WHICH WERE PAYED TO HIM DURING (rest of record is missing).

# N-277 COMPLAINT FILED IN DISTRICT #5 JON R. BRITTENUM AND ASSOCIATES, INC. AND DARRELL LAINHART.

STATE OF AR. NO. 80-26-S: DARRELL W. LAINHART, NOTICE OF THE INSTITUTION OF FORMAL ADMINISTRATIVE PROCEEDING. ON 05-27-80 THE COMPLAINT WAS DISMISSED.

SETTLEMENT AGREEMENT WAS ENTERED. U4 DISCLOSURES CASE NO. 80-2114 FILED IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS, SECOND DEVISION: FARYEWICZ AND ASSOCIATES, INC. AND EDWARD COBB vs THE TWIN CITY BANK vs JOHN L. FARYEWICZ AND ASSOCIATES, INC. AND DARRELL LAINHART. IT WAS ALLEGED THAT DURING LAINHART'S EMPLOYMENT AT TWIN CITY BANK HE BREACHED FIDUCIARY DUTIES. FAILED TO DETERMINE CUSTOMER SUITABILITY, ENGAGED IN UNAUTHORIZED TRADING OF BONDS, AND VIOLATED FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS.

APPLICATION OF DARRELL LAINHART FOR MODIFICATION OF AN APRIL 22, 1977 ORDER IMPOSING REMEDIAL SANCTIONS WHICH PLACED LIMITATIONS ON MR. LAINHART'S SECURITIES RELATED ACTIVITIES.

COMPLAINT NO. NEW-480. COMPLAINT FILED BY DISTRICT N0. 5 AGAINST DELTA FINANCIAL INVESTMENTS CORPORATION (Darrell Lainhart as the CEO) DARRELL LAINHART, GANDY L. BAUGH, DATHRYN J. WILSON AND CATHERINE M. RISINGER ALLEGING VIOLATIONS OF ARTICLE III, SECTIONS 1 AND 21 OF THE RULES OF FAIR PRACTICE IN THAT RESPONDENT MEMBER, ACTING THROUGH RESPONDENT LAINHART…FAILED TO MAKE AND PRESERVE AN ACCURATE SECURITIES POSITION RECORD; FAILED TO MAKE AND CONDUCT AN ACCURATE SECURITIES POSITION COUNT; FAILED TO IMMEDIATELY GIVE TELEGRAPHIC NOTICE OF THE POSITION RECORD INACCURACIES AND WITHIN FORTY-EIGHT HOURS OF SUCH NOTICE, TO FILE A REPORT STATING WHAT STEPS HAD BEEN TAKEN TO CORRECT THE SITUATION; RESPONDENT MEMBER…FAILED AT VARIOUS TIMES TO MAKE AND PRESERVE AN ACCURATE RECORD OF THE COMPUTATION OF NET CAPITAL AND/OR RESERVE REQUIREMENT ON THE FOCUS PARTS I AND II FILED WITH THE ASSOCIATION; ENGAGED IN A SECURITIES BUSINESS AT TIMES WHEN IT FAILED TO MAINTAIN MINIUM REQUIRED NET CAPITAL…FAILED TO GIVE IMMEDIATE TELEGRAPHIC NOTICE OF THE NET CAPITAL DEFICIENCIES; … FAILED TO ACCURATELY COMPUTE THE AMOUNT REQUIRED TO ON DEPOSIT IN THE SPECIAL RESERVE DEPOSIT TO SAID ACCOUNT THE AMOUNT REQUIRED IN ACCORDANCE WITH SEC RULE 15c3-3. FAILED TO GIVE IMMEDIATE TELEGRAPHIC NOTICE OF THE FAILURE TO MAKE SAID DEPOSITS; …WITHDREW FUNDS FROM THE SPECIAL RESERVE BANK ACCOUNT AND FAILED TO MAKE A TIMELY RECORD OF THE COMPUTATION ON THE BASIS OF WHICH SUCH WITHDRAWAL WAS MADE;… FAILED TO OBTAIN PROPER WRITTEN RESERVE BANK CONTRACTS AND NOTIFICATIONS;…FAILED TO MAKE AND PRESERVE ACCURATE LEDGERS REFLECTING EXPENSES ACTUALLY INCURRED BY OR PROPERLY ALLOCATED TO THE RESPONDENT (Darrell Lainhart) MEMBER.

THE ARKANSAS SECURITIES DEPARTMENT STAFF INSTITUTED FORMAL ADMINISTRATIVE PROCEEDINGS AGAINST DARRELL LAINHART AS PRINCIPAL OF DELTA FININCAL. THE COMPLAINT ALLEGES THAT DURING THE PERIOD FROM JANUARY 1, 1985 UNTIL APRIL 18, 1986, LAINHART WAS DESIGNATED BY DELTA AS A PRINCIPAL OF THE BROKER/DEALER. LAINHART WAS THE PERSON ACTING AS THE BROKER/DEALER, THE PERSON DIRECTLY CONTROLLING THE BROKER/DEALER, AND THE PERSON HAVING DIRECT SUPERVISION OVER THE PURCHASE AND SALE OF SECURITIES IN ARKANSAS IN ALL EVENTS AND TRANSACTIONS RECITED IN THIS COMPLAINT. EACH OF THESE TRANSACTIONS RESULTED IN A MARKUP TO THE CUSTOMER WHICH WAS IN EXCESS OF THE DEPARTMENT'S ESTABLISHED GUIDELINES. THE TRANSACTIONS WERE EFFECTED WITHOUT EXERCISING REASONABLE DILIGENCE RESULTING IN EACH TRANSACTION HAVING AN EXCESSIVE MARKUP CONSTIUTING A VIOLATION OF RULE 6.01 (1). EFFECTING TRANSACTIONS WITH EXCESSIVE MARKUPS ALSO CONSTITUTE A DISHONEST AND UNETHICAL PRACTICE IN THE SECURITIES BUSINESS UNDER SECTION 6 (a) (2) (G) OF THE ACT. BOTH VIOLATIONS CONSTITUTE GROUNDS FOR THE SUSPENSION OR REVOCATION OF THE REGISTRATION OF LAINHART. A HEARING BEFORE THE COMMISSIONER PURSUANT TO RULE 30.04 OF THE RULES OF THE ARKANSAS SECURITIES COMMISSIONER, WILL BE HELD ON JUNE 18, 1986 TO CONSIDER WHETHER THE REGISTERATION OF THE NAMED RESPONDENT SHOULD BE SUSPENDED OR REVOKED.

DECISION RENDERED WHEREIN RESPONDENT LAINHART…WAS SENSORED, FINED $10,000, AND JOINTLY AND SEVERALLY ACCESSED COSTS OF $6,761.53.

DECISION FINAL.

NASD COMPLAINT # - 480 DISCLOSES THAT A PENDING SUIT, WAS FILED ON FEBRUARY 9, 1987 IN THE U.S.DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS, WESTERN divISION (CASE NO. LRC87-101); "EDWARD FOSTER AND EDWARD KEVIN FOSTER, PLAINTIFFS, v. WILLIAM DARRELL LAINHART, DEFENDANT." THE COMPLAINT ALLEGES THE FOLLOWING: IN JULY OR AUGUST 1983, LAINHART APPROACHED THE FOSTERS WITH THE IDEA OF ESTABLISHING AN INVESTMENT BANKING FIRM. HE ASKED THEM TO PROVIDE FUNDS NECESSARY TO ESTABLISH THE FIRM. IN SEPTERMBER OR OCTOBER 1983, EDWARD KEVEN FOSTER (E.K. FOSTER) PROVIDED LAINHART WITH $150,000 TO BE USED TO ESTABLISH THE FIRM. IN NOVEMBER OR DECEMBER 1983, EDWARD FOSTER LOANED LAINHART $350,000 OUT OF EDWARD FOSTER'S PENSION AND PROFIT SHARING PLAN TO BE USED BY THE INVESTMENT FIRM. LAINHART AGREED THAT E. K. FOSTER WOULD RECEIVE 50% OF ALL PROFITS MADE BY THE INVESTMENT FIRM. E.K. FOSTER REQUESTED THAT LAINHART PUT THE AGREEMENT IN WRITING; LAINHART STATED THAT THE AGREEMENT COULD NOT BE REDUCED TO WRITING BECAUSE FEDERAL LAW, ERISA, WAS VIOLATED BY THE TRANSFER OF MONEY FROM EDWARD FOSTER'S PENSION AND PROFIT SHARING PLAN. IN 1986, THE DEBT TO EDWARD FOSTER HAD GROWN, WITH INTEREST, TO $524,000. LAINHART OFFERED TO SATISFY THE DEBT BY GIVING EDWARD FOSTER STOCK IN THE INVESTMENT FIRM. LAINHART REPRESENTED THAT THE STOCK WAS WORTH ONE DOLLAR A SHARE. BASED UPON THAT REPRESENTATION, EDWARD FOSTER ACCEPTED 500,000 SHARES OF STOCK IN THE INVESTMENT FIRM AND $24,000 IN CASH AS SATISFACTION OF THE DEBT. AT APPROXIMATELY THE SAME TIME AS EDWARD FOSTER ACCEPTED THIS STOCK. LAINHART PURCHASED 900,000 SHARES OF STOCK IN THE INVESTMENT FIRM FOR FIVE CENTS A SHARE. (DOES THIS IN ANY WAY SOUND FAMILIAR) WHEN E.K. FORSTER FURNISHED LAINHART WITH THE MONEY TO ESTABLISH THE INVESTMENT FIRM, LAINHART SOLD E. K. FOSTER STOCK IN THE INVESTMENT FIRM AS AN INDUCEMENT TO MAKE THE INVESTMENT. E.K. FOSTER WAS ISSUED 10,000 SHARES OF PREFERRED STOCK WHICH WERE LATER CONVERTED TO 2,000,000 SHARES OF COMMON STOCK. AS A FURTHER INDUCEMENT, LAINHART STATED TO E.K. FOSTER THAT THE COMPANY WOULD BE TAKEN "PUBLIC" IN THE NEAR FUTURE AND THE VALUE OF HIS STOCKS WOULD INCREASE DRAMATICALLY. LAINHART MAKE THE SAME REPRESENTATION TO EDWARD FOSTER TO INDUCE HIM TO ACCEPT THE 500,000 SHARES IN SATISFACTION OF LAINHART'S DEBT. LAINHART BREACHED HIS CONTRACT WITH E.K. FOSTER BY FAILING AND REFUSING TO PAY E.K. FOSTER ½ OF THE PROFITS OF THE INVESTMENT FIRM. LAINHART HAS WITHDRAWN AT LEAST $5,000,000 FROM THE FIRM IN THE FORM OF SALARY AND BONUSES. E.K. FOSTER HAS RECEIVED ONLY $5,000 A MONTH FROM THE FIRM AS A SALARY PAYMENT AND OTHER COMPARATIVELY SMALL AMOUNTS AS BONUSES AND ADVANCES. E.K. FOSTER HAS RECEIVED NO PROFITS FROM THE FIRM. HE HAS BEEN DAMAGED IN THE AMOUNT OF $7,000,000 AS A PROXIMATE RESULT OF LAINHART'S BREACH OF CONTRACT. THE STATEMENTS WHICH LAINHART MADE TO THE FOSTERS TO INDUCE THEM TO INVEST IN THE FIRM OR TO LOAN MONEY TO LAINHART WAS NOT FOR THE PURPOSE FOR WHICH IT WAS INTENDED. HE INTENDED THE FOSTERS TO RELY UPON THE STATEMENTS, AND THE FOSTERS JUSTIFIABLY RELIED UPON THE FALSE STATEMENTS. EDWARD FOSTER HAS SUSTAINED DAMAGES OF $750,000 AS A PROXIMATE RESULT OF LAINHART'S FRAUD. THE FRAUD, DECEIT, AND MISREPRESENTATIONS CONSTITUTE VIOLATIONS OF FEDERAL SECURITIES LAW (SECTION 10 OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10b-5 OF THE SEC) AND ARKANSAS STATUTES (SECTION 67-1235). EDWARD DEVIN FOSTER SEEKS JUDGEMENT FOR $7,000,000 IN COMPENSATORY DAMAGES AND FOR $5,000,000 IN PUNITIVE DAMAGES; AND EDWARD FOSTER SEEKS JUDGEMENT FOR $750,000 IN COMPENSATORY DAMAGES AND FOR $5,000,000 IN PUNITIVE DAMAGES; AND THEY BOTH SEEK COSTS AND ALL OTHER PROPER RELIEF.

COMPLAINT NO. NEW-556 FILED BY DISTRICT NO. 5 AR AGAINST RESPONDENTS DELTA FINANCIAL INVESTMENT CORPORATION AND GANDY L. BAUGH ALLEGING VIOLATIONS OF ARTICLE III, SECTION 1 AND 21 OF THE RULES OF FAIR PRACTICE…AT VARIOUS TIMES FAILED TO COMPUTE ACCURATELY THE AMOUNT REQUIRED TO BE DEPOSITED IN THE SPECIAL RESERVE BANK ACCOUNT FOR THE EXCLUSIVE BENEFIT OF THE CUSTOMERS; THEREAFTER FAILED TO DEPOSIT THE REQUIRED AMOUNT WITHIN THE REQUISITE TIME PERIODS; FAILED TO GIVE IMMEDIATE TELEGRAPHIC NOTICE OF SUCH FAILURES; AND INACCURATELY REPORTED ITS RESERVE ACCOUNT REQUIREMENT.

COMPLAINT AMENDED TO ADD RESPONDENT WILLIAM D. LAINHART WITH THE FOLLOWING ADDITIONAL CHARGES; IN THAT ON SEVERAL OCCASIONS, THE FIRM, ACTING THROUGH LAINHART AND BAUGH, FILED INACCURATE FOCUS I FOCUS II REPORTS, FAILED TO MAINTAIN ACCURATE BOOKS AND RECORDS, NEGLECTED TO MAKE ACCURATE COMPUTATIONS OF NET CAPITAL, AND ENGAGED IN A SECURITIES BUSINESS WHEN IT FAILED TO MAINTAIN THE REQUIRED MINIMUM NET CAPITAL. ALSO, THE FIRM, ACTIN THROUGH LAINHART AND BAUGH CONDUCTED SAFEKEEPING ACTIVITIES IN CONTRAVENTION OF ITS VOLUNTARY RESTRICTION AGREEMENT. THE FIRM, …ENGAGED IN A SERIES OF REPURCHASE/REVERSE REPURCHASE TRANSACTIONS OF U.S. TREASURY BONDS TO ASSIST AN INSTITUTIONAL CUSTOMER IN CONCEALING TRADING LOSSES. THESE TRANSACTIONS WERE NOT RECORDED ON THE FIRM'S BOOKS AND RECORDS BECAUSE THEY WOULD HAVE REQUIRED ADJUSTMENTS IN THE FIRM'S NET WORTH THAT WOULD HAVE PLACED THE FIRM UNDER CAPITALIZED.

DECISION DELIVERED,-WHEREIN THE OFFER OF SETTLEMENT SUBMITTED BY RESPONDENTS WAS ACCEPTED;-THEREFORE, RESPONDENT MEMBER (DELTA FINANCIAL) IS SENSORED, FINED $50,000, AND EXPELLED FROM THE MEMBERSHIP IN THE (NASD) ASSOCIATION; RESPONDENT LAINHART IS CENSURED; FINED $7,500, AND SUSPENDED FOR A PERIOD OF FOUR MONTHS FROM ASSOCIATION WITH ANY MEMBER OF THE ASSOCIATION IN ANY CAPACITY.

CONFESSION OF JUDGEMENT ENTERED IN THE MATTER OF COSMOPOLITAN STATE BANK vs DELTA FININCAL CORPORTAION ("DELTA"). DELTA CONFESSED JUDGEMENT FOR THE SUM OF $160,449.08 WITHOUT ADMISSION OF FAULT BY ANY OF THE DEFENDANTS. JUDGEMENT IS ENTERED IN LIEU OF THE CONTINUING COST OF LITIGATION. DELTA DOES NOT AGREE THE INDEBTEDNESS IS THE RESULT OF ANY VIOLATION OF SECURITIES LAWS OR RULES OF ANY REGULATORY AUTHORITY. JUDGEMENT WAS SIGNED BY WILLIAM LAINHART AS CEO OF DELTA. CASE NO. 5-85-4401, STATE OF MINNESOTA, DISTRICT COURT, TENTH JUDICIAL DISTRICT.

This pretty much catches everyone up-to-date as to Darrell Lainhart's activities prior to his becoming involved with CTIC. The follow on activities have either been covered or will be covered at a later date.

Many of you have been asking as to what is presently being done to try and rectify the current problems with CTIC and get it back on tract. Rest assured that we are doing everything possible in trying to make that happen. For obvious reasons I cannot disclose that in this forum. There are many avenues that are being explored in this on going process. If you think that you have information that might be beneficial in the ongoing investigation and legal actions or just want to be involved, please address it on this web site, or if you feel more comfortable by doing so just write me at:

Please keep in mind that I am only one person and will try and answer your letters and take your telephone calls, however, it appears that there are as many as 500 shareholders out there.

Sincerely

Charles D. Cross, Stockholder

Recently another Director resigned from the Board of CTIC. As I mentioned in my first letter to the Arkansas Securities Department and to the shareholders, Jim Carroll resigned from the Board of Directors of CTIC after holding that position for approximately 7 years. In my conversations with Jim, he indicated that to the best of his memory, Mattie and Darrell Lainhart (sole owners of Diamond Capital Corporation and majority owner of CTIC) had only called three Board of Director meetings in his 7 years on the Board.

When I gave Jim the information I had regarding what had been happening with company funds as well as the transfer of large blocks CTIC stock to Diamond Capital, he immediately had his attorney send Darrell and Mattie Lainhart a letter, demanding the right to review the financial records of CTIC. Darrell responded in writing, refusing him that right. Aware of his great fiduciary responsibility to the CTIC stockholders, and knowing that he could not provide oversight of the activities of the company without having access to its financial records, Jim immediately resigned. This was sometime in May or June of 2008.

On June 25, 2008, three days before the shareholders meeting in Las Vegas, I called another Director and disclosed some of the information that I presented in the above mentioned letter. Needless to say, he was quite skeptical and non-committal as to whether he believed what I had told him.

At the shareholders meeting I did not have an opportunity to address the matter further with him personally, but upon my departing to the airport for a return trip to Florida, I received a telephone call from him. He certainly had not liked the tenor of the shareholders meeting that had been conducted by Darrell Lainhart. He could not understand why Darrell had and was continuing to refuse to give shareholders access to the financial records and to the Stockholders List, the Articles of Incorporation and By-laws of the company. His position was, if there was nothing to hide, why refuse the investors the right to see how the money was being spent or to have access to communicating with other shareholders.

Darrell always used the excuse that "he did not have to give this information to any shareholder unless they were in possession of at least 15% of the total stocks of the company". However the question was still there; so what! If you have nothing to hide you can defuse this situation rather easily by just making the records available. Darrell's rebuttal to this was that, "this is a privately held company and that he (Diamond Capital Corp.) was the vast majority stockholder and therefore he did not have to nor would he comply."

This individual Director requested that he, in his official capacity as an active member of the Board of Directors, be given the authority to review the financial records of CTIC. Darrell also refused him that request. By now this Director was fully aware of his fiduciary responsibility to all of the stockholders, and was becoming aware that he could not properly conduct his official responsibilities as a member of the Board, so he also promptly resigned.

This resignation now leaves only Darrell Lainhart and family as the primary members of the Board. I'm not sure how much Tony Wagner (Chief Technical Officer) is involved with the activities and conduct of CTIC. Since he is the only non-family member still sitting on this board, you as stockholders may want to ask him what he is doing to protect your interests in respect to the activities of CTIC. I truly doubt that Tony knows what kind of situation that he is in.

Those of you who want to know what Tony is doing about protecting your interests, may want to call or write him at:

Tony Wagner
614 North Rockwood,
Buchanan Dam, Texas 78609
Tel: 512-793-2896

It is still amazing to me that Darrell and Mattie Lainhart would appoint all of the members of the Board of Directors, call very few board meetings, and yet expect those Directors to take on the fiduciary responsibility the position demands-especially when coupled with the fact that board members are denied access to company records that are paramount in their making any kind of decision regarding the conduct and operation of CTIC. This cavalier attitude is why we are where are at this time. In an effort to try to keep you informed, I will be following up with additional information in the next few days.

Letter written by Danny Cross

This correspondence is in response to the most recent letter sent by "Management" of CTIC (signed by Darrell Lainhart's daughter, Julia Butler) to a select number of shareholders.

First, I would like to point out that Darrell indicated in his letter that he was aware of this website, yet he made absolutely no attempt to refute or address any of the issues raised in my comments as to what has been happening with CTIC for the past 10 years. Since he was silent on those issues, one could assume he has no rebuttal. As I have always believed, the truth stands on its own, and presents a tremendous hurdle to overcome, particularly if you try to refute it in writing. With that in mind, I would like to point out and address the issues that Darrell raised in his memorandum dated July 31, 2008.

The letter indicated that there were to be two directors elected to the Board of Directors. It would appear that some of the directors have become aware of the liability they may be under by serving on this board. As I pointed out in earlier correspondence, the board of directors has a very strong fiduciary responsibility to protect the interest of all the shareholders, not just the Lainharts/Diamond Capital.

Board members will have a difficult time explaining how they allowed the Lainharts on Dec. 9,, 2003, to transfer 225 million shares of CTIC stock to Diamond Capitol Corporation (a company 100% owned by Mattie and Darrell Lainhart) in 5 and 10 million share increments. If Darrell sold stocks to you and I for $1 to $5 per share, with $1.67 being the primary offering price, according to many shareholders, just think of the asset value the Lainharts transferred to themselves. At $1.67 per share, the value of CTIC stock transferred to Diamond Capital on that day would equal $375.7 million. I think we would all question whether Darrell's management services would be worth the value that he has taken from the company in the form of the above mentioned shares of stock.

The above transfer was only for the year 2003. Between the years 2003 and 2005, Darrell and Mattie Lainhart transferred 252,278,950 shares of stock from the CTIC treasury to Diamond Capital Corporation, a company from which many of us unknowingly purchased our CTIC stocks. (These transfers do not include the approximately 5 million shares the Lainharts have issued to their family members). Not only have they been selling us back our own CTIC stock through Diamond Capital, but they have continued to dilute the value of the stocks we already owned.

As of this publication, Darrell and Mattie Lainhart have issued (one must assume with the approval of the board of directors) a total of 303,459,249 shares of common stock from the CTIC treasury. Of that total, approximately 258 million shares have been issued to Diamond Capital, Mattie Lainhart, and family members. Tony Wagner, a director and "Chief Technical Officer" holds 6,093,443 shares of common stock along with some stocks in his son's name. Of the remaining approximately 39 million shares of common stock, around 4 million shares have been given to various individuals for services rendered; etc. That leaves approximately 35 million shares that actually have been sold to the rest of us. If these stock sales averaged $1.67 per share, the Lainharts could have raised as much as 58 million dollars. If that figure is even close, why did Darrell indicate we were always struggling to raise more money to keep CTIC going forward? You can draw your own conclusions on that! How much research could have been done, how many machines could we have built, and how much farther along toward getting into the market place would we be if that amount of money actually had been used for what we were led to believe it would be used for? Also, do the calculations as to how much your shares have been diluted. Compared to the overall distribution of CTIC stocks that has occurred over the past few years, just how much do you think your stocks are now worth, no matter what success CTIC may have in the future? This could clarify why Darrell has refused to allow anyone to review the financial records of the company. Question? Is there "any" shareholder out there that has ever been given an opportunity to review CTIC's financial records.

There are presently 337 listed shareholders who have common stock of CTIC; however, there appear to be many more out there who are "in the shadows". (This will be explained at a later time.) Darrell is presently soliciting applications for the board of directors. Under the present circumstances, how many of you would want to sit on that board? Such a position comes with tremendous responsibility that apparently hasn't been exercised by the past board of directors.

Now back to Darrell's memorandum: Darrell reports that he has a signed contract with EADS. (Darrell constantly uses what I call "the snake charmers trick" whereas the snake charmer is constantly moving his right hand to keep the snakes eyes on that movement while he slowly moves his left hand around and grabs the snake by the back of his head.) That is what Darrell appears to be doing when he refers to this EADS "contract."

As I had mentioned in my previous letter, Tom Strickland and I had set up the meeting with EADS at the University of Cincinnati. After our discussions with them, EADS requested that we sign a non-compete, non-disclosure, confidentiality agreement. This was to insure that, if they were to do hundreds of thousands of dollars of research utilizing our nano material, that any scientific information they gained from these experiments would be freely shared with us, but to no one else. With this agreement they would openly communicate to us their findings. In other words, they did not want to spend all of this money and then, possibly have us take their research and give it to someone else like Boeing.

Since I had been the one who was dealing directly with EADS, Darrell instructed me to put something together to send to them to cover their request. I went over every aspect of that research and analysis agreement with Darrell prior to my sending it to EADS for their signature. Upon receiving the agreement, and after approximately three weeks of wrangling with their legal department requesting changes, which I refused, they ultimately signed.

Again, Darrell and I were in daily contact and I made him aware of all of the effort that was being put into getting the agreement signed. He was ecstatic when we did manage to get their signature.

As soon as I received the agreement, I signed the original and sent one signed copy back to EADS. Darrell then instructed me to send him the original and to keep a copy. This I did. This also is exactly how I handled all of the other eight research and analysis agreements that I managed to get companies to sign. When these agreements were returned signed, Darrell saw the opportunity to use the agreements to promote CTIC, both on the website and in written correspondence. This of course gave him, as he told me, an opportunity to raise more money for our overall operations. These were agreements that companies had signed obligating them, at the very least, to let us know the results of their testing.

For over a year we had been attending various nano conferences around the country displaying our nano material. We gave away many free samples of our nano material to various companies; however, we were not getting any information back as to whether they had ever done any experiments with the material. This was because we had no contract, or any kind of legal obligation that they had to sign requiring them to actually test our material. To address this problem, I and Tom Strickland (with Tom's attorney's help) drafted a three page non-compete/non-disclosure confidentiality agreement that we required each company to sign if we were to supply them with samples of our nano material. This was for the purpose of insuring that they ran tests with our material within a three month time frame, and obligating them to share the results with us. We were trying to give some legitimacy to the value of our material by requiring them actually to test our material as well as share with us the results.

Keep in mind that this was nothing more than a research and analysis agreement for the testing of our nano product. The hype that you may have heard in the past was that there are companies out there that just begging for our material. That is not necessarily the case. There are companies that have an interest; however, since this is a one of a kind type of material, companies must do a great deal of expensive research and analysis within their labs to see if they can utilize our material for the purpose of enhancing their products. This research and analysis agreement has absolutely nothing to do with how we make our material, the type of equipment that we may be using, or in any way have anything to do with the processing.

So much for the accusation that Darrell presents about these agreements not protecting our product.

The "contract" with EADS that Darrell mentioned in his letter is nothing more than a non-compete/non-disclosure confidentiality agreement for EADS to test our material. It is not a contract for the purchase of large volumes of our material. In other words, it has no short term benefits to CTIC or to us as shareholders.

Darrell also addressed how one goes about establishing a value for all of our patents. This is very interesting, as it would appear that from Darrell's perspective, all anyone has to do is to file a patent and it immediately has value. The filing of a patent is no more than registering a claim as to how one may be creating or manufacturing something. The patent does not give legitimacy to the actual process or method claimed in the patent. What all patents do is determine if someone else may have filed the same or very similar claim earlier than the one that is being filed. If you wanted to file a patent on developing a pet rock, and if no one else has already done so, then you would receive your patent on the pet rock. That in no way determines whether the patent has any value.

I find it interesting that, no matter how much might be spent for an evaluation, how would you establish a true value on the more than 40 patents (according to Darrell) that CTIC holds. I'm not aware of any purchase contracts that CTIC might have signed with anyone. Darrell certainly did not mention it at the shareholders meeting nor in his most recent letter. So how is there any value at this time to our patents, if we have sold nothing, either in the environmental waste arena or in the nano world? Just remember what I said earlier about the "snake charmer."

Concerning the statement about the company losing a "large amount of nano product and an accompanying effort to duplicate those products while trying to conceal those efforts," the person Darrell is referring to in that statement would have to be me, as I am the only one from CTIC who has ever made any nano material at the Houston facility. Since I am the only one from CTIC that truly knows how to make the material and am the person who weighs all of the material, why would it be necessary for me to try and duplicate something that I already know how to make?

The second question would be, since I am the only one who knows how much material was made, as Darrell nor Tony Wagner ( Chief Technological Officer) was seldom in Houston, how would Darrell have a clue as to whether I might have taken material or not? Of what benefit would it have been to me? There are no lines of people begging for our material. Not only that, this material has, I guess you could call it a DNA footprint that would allow it to be identified as material made with our patents. Although I am confident that in a few years there could be market for our material if CTIC is properly managed, there is no market at this time for our material. We are still in the research phase of development to find commercially viable applications for our material.

Again, as Darrell is so apt to do, his statement that "consultants employed by CTIC in the manufacturing process were threatened when they discovered that an effort was underway to try and take over CTIC by removing valuable and necessary data equipment used in monitoring the manufacturing process," I can only presume that Darrell is again talking about me regarding this endeavor.

Since I was the only person that had been on the premises at the Houston plant on behalf of CTIC during the last two and one half years (with the exception of the rare visits from Darrell and Tony), although you would think that Darrell is referring to some recent occurrence, I can only assume that Darrell is referring to the activities that occurred when I first went to Houston about three years ago.

As I indicated in my earlier letter, the management and operations at the site were abysmal at best. The person who was in charge on CTIC's behalf was an individual by the name of Stu Dimwitte who purported to have a PhD in Physics. After observing him for a short period of time, I recommended to Darrell that he should be dismissed from his consulting position with the company. After a considerable amount of time Darrell agreed and on March 2, 2006, Darrell ordered him by telephone to leave the premises. Darrell further called me and instructed me to search the trailer that Dimwitte had on the premises to insure that he was not taking any of CTICs equipment or software. Dimwitte was gracious about it and after I did a casual look through, he departed for his home in New Mexico. I have not seen the man since. However, I have been told that he is now back in the employ of Darrell and they have concocted the above to try in some way to discredit me. Again, "The snake charmer routine"!

The next item that Darrell addressed in his letter was the actions at the CTIC shareholders meeting held in Las Vegas on June 28, 2008. I will defer to Tom Strickland to respond to that issue. I presume from Darrell's comments about the stockholders meeting that he was not aware that it was being tape recorded by at least two different people who were present.

The last issue that I think needs to be addressed as far as the letter Darrell sent to some stockholders, deals with the Board of Directors meeting on the topic of the machine having been sabotaged and alleged dangerous events where the Chief Operations Officer (that would be me of course) had violated known safety standards and endangered some other people working around the machine. The drafter of the minutes stated that "Stu Dimwitte, a consultant for CTIC reported that the machine had been sabotaged and that all of the data connections had been removed thereby causing a loss of quality control and verification processes". I highlight this only for one purpose and that is to show to what extent Darrell will go to discredit someone he is fearful of or in some way might be a threat to his promotional agenda. As I mentioned earlier, Dimwitte was summarily removed from the Houston plant property over two and one half years ago. He never returned to that property during the entire time I was there.

During a conversation with Jim Carroll, who is the shareholder who paid for and built the aluminum reactor we used to manufacture the nano material, and who also owns the property where the processing plant and all of CTIC's processing equipment is located, assured me that Dimwitte had not been back on that property since March of 2006. Consequently, one would wonder how Dimwitte would make the above statements without having had the ability to visit the premises where all of this sabotage was to have taken place. To further emphasize this point, the nano material we were producing just prior to shutdown of the plant had not been discovered while Dimwitte was working in Houston. How would he know what instrumentation that would be needed to effectively monitor the quality control and verification of the present reactor or its process? It would appear that Darrell Lainhart has a paid consultant on his staff who will fabricate anything that might fit Darrell's agenda.

In closing, I would like to state that my motivation in pursuing the activities of CTIC is for three purposes: One is to try and protect as best I can the interest of all of those shareholders that I got involved in this endeavor. In doing that, I feel that it is important to present as much accurate information as I have available, so each and everyone of you can, at the very least, make informed decisions as to what actions you may want to initiate in protecting your own interests in this company. (A common phrase used by Fox News is "I report, you decide".) Second- frankly I can afford to absorb the loss I would take on this investment, however there are many other stockholders that cannot. It is just not in my nature to walk away from a situation whereas I and my friends have been wronged. Not only that, after listening too many of the stories from stockholders as to what had been ingrained into their minds from Darrell Lainhart and seeing their hopes and dreams evaporating, I wanted to, in some way, try and help reverse the course this company seems to be heading. Particularly after the major sacrifices that many of them had made in acquiring the money necessary to make their stock purchases. Third- under the right circumstances, I think that CTIC has a great technology that could be developed and brought to market.