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<SEC-DOCUMENT>0000891554-01-507000.txt : 20020413
<SEC-HEADER>0000891554-01-507000.hdr.sgml : 20020413
ACCESSION NUMBER:		0000891554-01-507000
CONFORMED SUBMISSION TYPE:	S-8
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20011227
EFFECTIVENESS DATE:		20011227

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CTI INDUSTRIES CORP
		CENTRAL INDEX KEY:			0001042187
		STANDARD INDUSTRIAL CLASSIFICATION:	FABRICATED RUBBER PRODUCTS, NEC [3060]
		IRS NUMBER:				362848943
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-8
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-76008
		FILM NUMBER:		1823969

	BUSINESS ADDRESS:	
		STREET 1:		22160 N PEPPER RD
		CITY:			BARRINGTON
		STATE:			IL
		ZIP:			60010

	MAIL ADDRESS:	
		STREET 1:		22160 N PEPPER RD
		CITY:			BARRINGTON
		STATE:			IL
		ZIP:			60010
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>d27590_s-8.txt
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>

As filed with the Securities and Exchange Commission on December 27, 2001.
                                                       File No. ________________
- --------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      Under
                           The Securities Act of 1933

                           CTI INDUSTRIES CORPORATION
             (Exact name of registrant as specified in its charter)

         Illinois                                        36-2848943
(State or other jurisdiction                (IRS Employer Identification Number)
     of incorporation)
                             22160 North Pepper Road
                           Barrington, Illinois 60010
                                 (847) 382-1000
               (Address, including zip code, and telephone number,
        including area code of registrant's principal executive offices)

                CTI INDUSTRIES CORPORATION 1999 STOCK OPTION PLAN
                            (Full title of the Plan)

Howard W. Schwan                            Copies of Communications to:
President
CTI Industries Corporation                  Stephen M. Merrick, Esq.
22160 North Pepper Road                     Scott P. Slykas, Esq.
Barrington, Illinois 60010                  Merrick & Klimek, P.C.
Phone: (847) 382-1000                       401 South LaSalle Street, Suite 1302
Fax: (847) 382-1219                         Chicago, IL 60605
(Name, address, including zip code,         Phone: (312) 294-6044
and telephone number, including             Fax: (312) 294-6045
area code, of agent for service)

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                                         Proposed             Proposed
       Title of          Amount           Maximum              Maximum             Amount of
   Securities to be       to be       Offering Price          Aggregate           Registration
      Registered      Registered(1)  Per Share(1) (2)   Offering Price(1) (3)      Fee(1) (3)
- ----------------------------------------------------------------------------------------------
<S>                      <C>              <C>                <C>                  <C>
Common Stock
no par value             133,333          $2.475             $302,133             $75.53
- ----------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents the maximum number of shares of Common Stock to be issued by the
     Company upon the exercise of options granted under the CTI Industries
     Corporation 1999 Stock Option Plan. In addition, pursuant to Rule 416(c)
     under the Securities Act of 1933, this Registration Statement also covers
     an indeterminate amount of interests to be offered or sold pursuant to the
     CTI Industries Corporation 1999 Stock Option Plan described herein.

                       (Footnotes continued on next page)


<PAGE>



(2)  Represents the range of prices at which options issued under the 1999 Stock
     Option Plan may be exercised to acquire shares of the Company's Common
     Stock, $2.25 being the Minimum exercise price for options currently issued
     under the 1999 Stock Option Plan, and $2.475 being the Maximum exercise
     price for options currently issued under the 1999 Stock Option Plan. A
     total of 8,833 shares being registered under this Registration Statement
     are subject to issuance at prices that are currently undeterminable;
     consequently, $3.53 of the total registration fee being paid hereunder has
     been estimated/determined pursuant to Rule 457(h), and is based on the
     closing price of the Company's Common Stock on the NASDAQ SmallCap Market
     on December 24, 2001.

(3)  Represents the Maximum aggregate offering price for shares of Common Stock
     subject to issuance under the Plan, calculated as follows: 84,500 options
     to purchase 1 share of Common Stock at an exercise price of $2.25 per
     share; 40,000 options to purchase 1 share of Common Stock at an exercise
     price of $2.475, and 8,833 options to purchase 1 share of Common Stock at
     an exercise price (or prices) to be determined at a future date, $3.53
     of the total registration fee for the shares underlying said options being
     calculated (estimated) hereunder pursuant to Rule 457(h), and which figure
     is based upon the closing price of the Company's Common Stock on the NASDAQ
     SmallCap Market on December 24, 2001.


                                       2
<PAGE>


                                     PART I

     Pursuant to Part I of Form S-8, information required under Items 1 and 2 of
Form S-8 is omitted as part of this Registration Statement,

                                     PART II

Item 3. Incorporation of Documents by Reference.

     The following documents filed with the Securities and Exchange Commission
are hereby incorporated by reference:

     (a)  The Annual Report of the Company on Form 10-KSB for the fiscal year
          ended December 31, 2000;

     (b)  The Quarterly Report of the Company on Form 10-QSB for the fiscal
          quarter ended March 31, 2001;

     (c)  The Definitive Proxy Statement of the Company dated May 14, 2001 for
          the Annual Meeting of Shareholders to be held on June 29, 2001;

     (d)  The Quarterly Report of the Company on Form 10-QSB for the fiscal
          quarter ended June 30, 2001;

     (e)  The Quarterly Report of the Company on Form 10-QSB for the fiscal
          quarter ended September 30, 2001;

     (f)  The description of the Company's capital stock as set forth in the
          Company's Form SB-2 Registration Statement (File No. 333-31969),
          declared effective November 5, 1997, including any amendment or report
          filed for the purpose of updating such description.

     All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing such documents.

Item 4. Description of Securities.

     Not applicable.


                                       3
<PAGE>


Item 5. Interests of Named Experts and Counsel.

     The validity of the shares of Common Stock offered hereby will be passed
upon for the Registrant by Merrick & Klimek, P.C., Chicago, Illinois. Stephen M.
Merrick, a shareholder of that firm is a shareholder, Executive Vice-President
and Secretary of the Registrant.

Item 6. Indemnification of Directors and Officers.

     Section 8.75 of the Illinois Business Corporation Act confers broad powers
upon corporations incorporated in that State with respect to indemnification of
any person against liabilities incurred by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or other business entity. The provisions of Section 8.75 are
not exclusive of any other rights to which those seeking indemnification may be
entitled under bylaw, agreement or otherwise.

     Article IX of the registrant's By-Laws provides that the registrant shall
have the power to indemnify any person who was or is party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the registrant) by reason of the fact that he or
she is or was a director, officer, employee or agent of the registrant, or who
is or was serving at the request of the registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the registrant, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.

     Article IX also provides that the registrant shall have power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the registrant, or is
or was serving at the request of the registrant as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to the best interests of the
registrant, provided that no indemnification shall be made in respect of any
claim, issue or matter as to which such persons shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
registrant, unless, and only to the extent that the court in which such action
or suit was brought shall determine upon application that,


                                       4
<PAGE>


despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnify for such
expenses as the court shall deem proper.

     To the extent that a director, officer, employee, or agent of the
registrant has been successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.

     Any indemnification under Article IX (unless ordered by court) shall be
made by the registrant only as authorized in the specific case, upon
determination that indemnification of a director, officer, employee or agent is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth above. Such determination shall be made:

     (a)  by the board of directors by a majority of a quorum consisting of
          directors who were not parties to such action, suit or proceeding, or

     (b)  if such a quorum is not obtainable, or, even if obtainable, a quorum
          of disinterested directors so directs, by independent legal counsel in
          a written opinion, or

     (c)  by the shareholders.

     Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the registrant in advance of the final disposition of
such action, suit or proceeding, as authorized by the board of directors in the
specific case, upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount, unless it shall ultimately be
determined that he or she is entitled to be indemnified by the registrant as
authorized in Article IX.

     The indemnification provided by Article IX is not exclusive of any other
rights to which those indemnified may be entitled under any contract, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.

     Article IX provides that the registrant shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the registrant, or is or was serving at the request of the
registrant, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of his status as such, whether or not the registrant


                                       5
<PAGE>


would have the power to indemnify him or her against such liability under the
provisions of this Article. The registrant has not obtained such insurance to
date.

     If a registrant has paid indemnity or has advanced expenses to a director,
officer, employee or agent, the registrant shall report the indemnification or
advance in writing to the shareholders with or before the notice of the next
shareholders meeting.

     Section 2.10(b)(3) of the Illinois Business Corporation Act enables a
corporation to eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision does not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 8.65 of the Illinois Business Act (regarding unlawful
dividends, stock purchases or stock redemptions) or (iv) for any other
transaction for which a director derived an improper personal benefit. The
Articles of Incorporation of the Company contain such a provision.

Item 7. Exemption from Registration Claimed.

     Not applicable.

Item 8. Exhibits.

     Exhibit

     4        CTI Industries Corporation 1999 Stock Option Plan.

     5.       Opinion of Merrick & Klimek, P.C. re: legality.

     23.1     Consent of Grant Thornton, L.L.P., independent auditors of CTI
              Industries Corporation.

     23.2     Consent of Merrick & Klimek, P.C. (included in Exhibit 5 Opinion
              Letter).

     24       Power of Attorney (included on signature page).

Item 9. Undertakings.

     (a)  The undersigned registrant hereby undertakes:

          (1)  To file, during any period in which offers or sales are being
               made, a post-effective amendment to this registration



                                       6
<PAGE>


               statement to include any material information with respect to the
               plan of distribution not previously disclosed in the registration
               statement or any material change to such information in the
               registration statement;

          (2)  That, for the purpose of determining any liability under the
               Securities Act of 1933, each such post-effective amendment shall
               be deemed to be a new registration statement relating to the
               securities offered therein, and the offering of such securities
               at that time shall be deemed to be the initial bona fide offering
               thereof.

          (3)  To remove from registration by means of a post-effective
               amendment any of the securities being registered which remain
               unsold at the termination of the offering.

     (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and if, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person connected with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.


                                       7
<PAGE>


                                   SIGNATURES

         The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Barrington, State of Illinois, on December 27,
2001.

                                       CTI INDUSTRIES CORPORATION



                                       By: /s/ Howard W. Schwan
                                           --------------------
                                           Howard W. Schwan, President

                                    THE PLAN

     Pursuant to the requirements of the Securities Act of 1933, the Committee
which administers the CTI Industries Corporation 1999 Stock Option Plan has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Barrington, State of
Illinois on December 27, 2001.

                                           PLAN:

                                           CTI INDUSTRIES CORPORATION
                                           1999 STOCK OPTION PLAN


                                       By: /s/ Howard W. Schwan,
                                           ---------------------
                                           Howard W. Schwan, Member of the
                                           Compensation Committee


                                       8
<PAGE>


                                POWER OF ATTORNEY

     The undersigned officers and directors of CTI Industries Corporation hereby
constitute and appoint Howard W. Schwan and Stephen M. Merrick, or either of
them, with power to act one without the other, our true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for us and in our stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitutes,
may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.


Signatures                          Title                             Date
- ----------                          -----                             ----

/s/ Howard W. Schwan                President and Director            12/27/01
- -------------------------------
Howard W. Schwan

/s/ John H. Schwan                  Chairman and Director             12/27/01
- -------------------------------
John H. Schwan

/s/ Stephen M. Merrick              Senior Vice President             12/27/01
- -------------------------------     Secretary, Chief Financial
Stephen M. Merrick                  Officer and Director


 /s/ Stanley M. Brown               Director                          12/27/01
- -------------------------------
Stanley M. Brown

/s/ Bret Tayne                      Director                          12/27/01
- -------------------------------
Bret Tayne


                                       9


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>3
<FILENAME>d27590_ex4.txt
<DESCRIPTION>1999 STOCK OPTION PLAN
<TEXT>
                                                                       Exhibit 4

                           CTI INDUSTRIES CORPORATION

                             1999 STOCK OPTION PLAN


1.   PURPOSE OF THE PLAN

     The purposes of the CTI Industries Corporation 1999 Stock Option Plan (the
"Plan") are to enable the Company to attract and retain the services of officers
and other key employees with managerial, professional or supervisory
responsibilities, to retain able consultants and advisors and to motivate such
persons to use their best efforts on behalf of the Company.

2.   GENERAL PROVISIONS

     2.1  Definitions

     As used in the Plan:

     (a)  "Board of Directors" means the Board of Directors of the Company.

     (b)  "Code" means the Internal Revenue Code of 1986, including any and all
          amendments thereto.

     (c)  "Committee" means the committee appointed by the Board of Directors
          from time to time to administer the Plan pursuant to Section 2.2.

     (d)  "Common Stock" means the Company's Common Stock, $.065 par value.

     (e)  "Fair Market Value" means, with respect to a specific date, the value
          of the Common Stock as determined in good faith by the Committee on
          the basis of such quotations and other considerations as the Committee
          deems appropriate.

     (f)  "Incentive Stock Option" means an option granted under the Plan which
          is intended to qualify as an incentive stock option under Section 422
          of the Code.

     (g)  "NASDAQ" means the NASDAQ SmallCap Market

     (h)  "Non-Qualified Stock Option" means an option granted under the Plan
          which is not an Incentive Stock Option.

     (i)  "Participant" means a person to whom a Stock Option has been granted
          under the Plan.

     (j)  "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
          Exchange Act of 1934, as amended from time to time, or any successor
          rule.


<PAGE>


     (k)  "Stock Option" means an Incentive Stock Option or a Non-Qualified
          Stock Option granted under the Plan.

     (l)  "Subsidiary" means any corporation (other than the Company) in an
          unbroken chain of corporations beginning with the Company if, at the
          time of the granting of the Stock Option, each of the corporations
          other than the last corporation in the unbroken chain owns 50% or more
          of the total voting power of all classes of stock in one of the other
          corporations in such chain.

     2.2  Administration of the Plan

     (a)  The Plan shall be administered by the Committee which shall at all
          times consist of two (2) or more persons, each of whom shall be a
          member of the Board of Directors. Each member of the Committee shall
          be a disinterested person (as such term is defined in Rule 16b-3). The
          Board of Directors may from time to time remove members from, or add
          members to, the Committee. Vacancies on the Committee, howsoever
          caused, shall be filled by the Board of Directors. The Committee shall
          select one of its members as Chairman, and shall hold meetings at such
          times and places as it may determine.

     (b)  The Committee shall have the full power, subject to and within the
          limits of the Plan, to: (i) interpret and administer the Plan and
          Stock Options granted under it; (ii) make and interpret rules and
          regulations for the administration of the Plan and to make changes in
          and revoke such rules and regulations (and in the exercise of this
          power, shall generally determine all questions of policy and
          expediency that may arise and may correct any defect, omission, or
          inconsistency in the Plan or any agreement evidencing the grant of any
          Stock Option in a manner and to the extent it shall deem necessary to
          make the Plan fully effective); (iii) determine those persons to whom
          Stock Options shall be granted and the number of Stock Options to be
          granted to any person; (iv) determine the terms of Stock Options
          granted under the Plan, consistent with the provision of the Plan; and
          (v) generally, exercise such powers and perform such acts in
          connection with the Plan as are deemed necessary or expedient to
          promote the best interests of the Company. The interpretation and
          construction by the Committee of any provision of the Plan or of any
          Stock Option shall be final, binding and conclusive.

     (c)  The Committee may act only by a majority of its members then in
          office; however, the Committee may authorize any one (1) or more of
          its members or any officer of the Company to execute and deliver
          documents on behalf of the Committee.

     (d)  No member of the Committee shall be liable for any action taken or
          omitted to be taken or for any determination made by him or her in
          good faith with respect to


                                       2
<PAGE>


          the Plan, and the Company shall indemnify and hold harmless each
          member of the Committee against any cost or expense (including counsel
          fees) or liability (including any sum paid in settlement of a claim
          with the approval of the Committee) arising out of any act or omission
          in connection with the administration or interpretation of the Plan,
          unless arising out of such person's own fraud or bad faith.

     2.3  Effective Date

     The Plan shall become effective on May 6, 1999, upon its adoption by the
Board of Directors, and Stock Options may be granted upon such adoption and from
time to time thereafter, subject, however, to approval of the Plan by
affirmative vote of the holders of a majority of the shares of the Common Stock,
within 12 months after the adoption of the Plan by the Board of Directors. If
the Plan is not approved at such annual or special meeting or at any
adjournments thereof, this Plan and all Stock Options previously granted
thereunder shall become null and void.

     2.4  Duration

     If approved by the shareholders of the Company, as provided in Section 2.3,
unless sooner terminated by the Board of Directors, the Plan shall remain in
effect for a period of ten (10) years following its adoption by the Board of
Directors.

     2.5  Shares Subject to the Plan

     The maximum number of shares of Common Stock which may be subject to Stock
Options granted under the Plan shall be 400,000. The Stock Options shall be
subject to adjustment in accordance with Section 4.1, as appropriate, and shares
to be issued upon exercise of Stock Options may be either authorized and
unissued shares of Common Stock or authorized and issued shares of Common Stock
purchased or acquired by the Company for any purpose. If a Stock Option or
portion thereof shall expire or is terminated, cancelled or surrendered for any
reason without being exercised in full, the unpurchased shares of Common Stock
which were subject to such Stock Option or portion thereof shall be available
for future grants of Stock Options under the Plan.

     2.6  Amendments

     The Plan may be suspended, terminated or reinstated, in whole or in part,
at any time by the Board of Directors. The Board of Directors may from time to
time make such amendments to the Plan as it may deem advisable, including, with
respect to Incentive Stock Options, amendments deemed necessary or desirable to
comply with Section 422 of the Code and any regulations issued thereunder;
provided, however, that without the approval of the Company's shareholders no
amendment shall be made which:


                                       3
<PAGE>


     (a)  Increases the maximum number of shares of Common Stock which may be
          subject to Stock Options granted under the Plan (other than as
          provided in Section 4.1, as appropriate); or

     (b)  Extends the term of the Plan; or

     (c)  Increases the period during which a Stock Option may be exercised
          beyond ten (10) years from the date of grant; or

     (d)  Otherwise materially increases the benefits accruing to Participants
          under the Plan;

     (e)  Materially modifies the requirements as to eligibility for
          participation in the Plan; or

     (f)  Will cause Stock options granted under the Plan to fail to meet the
          requirements of Rule 16b-3.

Except as otherwise provided herein, termination or amendment of the Plan shall
not, without the consent of a Participant, affect such Participant's rights
under any Stock Options previously granted to such Participant.

     2.7  Participants and Grants

     Stock Options may be granted by the Committee to (i) officers and other
salaried employees of the Company and its Subsidiaries with managerial,
professional or supervisory responsibilities and (ii) consultants and advisors
who render bona fide services to the Company and its Subsidiaries, in each case,
where the Committee determines that such officer, employee, consultant or
advisor has the capacity to make a substantial contribution to the success of
the Company. The Committee may grant Stock Options to purchase such number of
shares of Common Stock (subject to the limitations of Sections 2.5, 3.6 and 3.9)
as the Committee may, in its sole discretion, determine. In granting Stock
Options under the Plan, the Committee, on an individual basis, may vary the
number of Incentive Stock Options or Non-Qualified Stock Options as between
Participants and may grant Incentive Stock Options and/or Non-Qualified Stock
Options to a Participant in such amounts as the Committee may determine in its
sole discretion.

3.   STOCK OPTIONS

     3.1  General

     All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted, which
agreement shall state the


                                       4
<PAGE>


number of shares of Common Stock which may be purchased upon the exercise
thereof and shall contain such investment representations and other terms and
conditions as the Committee may from time to time determine, or, in the case of
Incentive Stock Options, as may be required by Section 422 of the Code, or any
other applicable law.

     3.2  Price

     Subject to the provisions of Section 3.6(d) and 4.1, the purchase price per
share of Common Stock subject to a Stock Option shall, in no case, be less than
one hundred percent (100%) of the Fair Market Value of a share of Common Stock
on the date the Stock Option is granted; provided, however, that the Board of
Directors may authorize the grant of a Non- Qualified Stock Option with a
purchase price per share less than the Fair Market Value if the amount of the
difference between the option purchase price and the Fair Market Value is
designated in the resolution authorizing the option.

     3.3  Period

     The duration or term of each Stock Option granted under the Plan shall be
for such period as the Committee shall determine but in no event more than ten
(10) years from the date of grant thereof.

     3.4  Exercise

     Subject to Section 4.4, Stock Options may be exercisable immediately upon
granting of the Stock Option or at such other time or times as the Committee
shall specify when granting the Stock Option. Once exercisable, a Stock Option
shall be exercisable, in whole or in part, by delivery of a written notice of
exercise to the Secretary of the Company at the principal office of the Company
specifying the number of shares of Common Stock as to which the Stock Option is
then being exercised together with payment of the full purchase price for the
shares being purchased upon such exercise. Until the shares of Common Stock as
to which a Stock Option is exercised are issued, the Participant shall have none
of the rights of a shareholder of the Company with respect to such shares.

     3.5  Payment

     The purchase price for shares of Common Stock as to which a Stock Option
has been exercised and any amount required to be withheld, as contemplated by
Section 4.3, may be paid:

     (a)  In United States dollars in cash, or by check, bank draft or money
          order payable in United States dollars to the order of the Company; or


                                       5
<PAGE>


     (b)  By the delivery by the Participant to the Company of whole shares of
          Common Stock having an aggregate Fair Market Value on the date of
          payment equal to the aggregate of the purchase price of Common Stock
          as to which the Stock Option is then being exercised or by the
          withholding of whole shares of Common Stock having such Fair Market
          Value upon the exercise of such Stock Option; or

     (c)  By a combination of both (a) and (b) above.

The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.

     3.6  Special Rules for Incentive Stock Options

     Notwithstanding any other provision of the Plan, the following provisions
shall apply to Incentive Stock Options granted under the Plan:

     (a)  Incentive Stock Options shall only be granted to Participants who are
          employees of the Company or its Subsidiaries.

     (b)  To the extent that the aggregate Fair Market Value of Common Stock,
          with respect to which Incentive Stock Options are exercisable for the
          first time by a Participant during any calendar year under this Plan
          and any other Plan of the Company or a Subsidiary exceeds $100,000,
          such Stock Options shall be treated as Non-Qualified Stock Options.

     (c)  Any Participant who disposes of shares of Common Stock acquired upon
          the exercise of an Incentive Stock Option by sale or exchange either
          within two (2) years after the date of the grant of the Incentive
          Stock Option under which the shares were acquired or within one (1)
          year of the acquisition of such shares, shall promptly notify the
          Secretary of the Company at the principal office of the Company of
          such disposition, the amount realized, the purchase price per share
          paid upon the exercise and the date of disposition.

     (d)  No Incentive Stock Option shall be granted to a Participant who, at
          the time of the grant, owns stock representing more than ten percent
          (10%) of the total combined voting power of all classes of stock
          either of the Company or any parent or Subsidiary of the Company,
          unless the purchase price of the shares of Common Stock purchasable
          upon exercise of such Incentive Stock Option is at least one hundred
          ten percent (110%) of the Fair Market Value (at the time the Incentive
          Stock Option is granted) of the Common Stock and the Incentive Stock
          Option is not exercisable more than five (5) years from the date it is
          granted.


                                       6
<PAGE>


     3.7  Termination of Employment

     (a)  In the event a Participant's employment by, or relationship with, the
          Company shall terminate for any reason other than those reasons
          specified in Sections 3.7(b), (c), (d) or (e) hereof while such
          Participant holds Stock Options granted under the Plan, then all
          rights of any kind under any outstanding Option held by such
          Participant which shall not have previously lapsed or terminated shall
          expire immediately.

     (b)  If a Participant's employment by, or relationship with, the Company or
          its Subsidiaries shall terminate as a result of such Participant's
          total disability, each Stock Option held by such Participant (which
          has not previously lapsed or terminated) shall be exercisable by such
          Participant for a period of six months after termination but only to
          the extent the Option is otherwise exercisable during that period.
          Notwithstanding the foregoing, the Committee may in the event of such
          disability accelerate the date after which a Stock Option is
          exercisable, in whole or in part, which change shall be in the
          Committee's sole discretion and be final, binding and conclusive. For
          purposes of this paragraph, "total disability" shall mean permanent
          mental or physical disability as determined by the Committee.

     (c)  In the event of the death of a Participant, each Stock Option held by
          such Participant (which has not previously lapsed or terminated) shall
          be exercisable by the executor or administrator of the Participant's
          estate or by the person or persons to whom the deceased Participant's
          rights thereunder shall have passed by will or by the laws of descent
          or distribution, for a period of six (6) months after such
          Participant's death but only to the extent the Option is otherwise
          exercisable during that period. Notwithstanding the foregoing, the
          Committee may in the event of such death accelerate the date after
          which a Stock Option is exercisable, in whole or in part, which change
          shall be in the Committee's sole discretion and be final, binding and
          conclusive.

     (d)  If a Participant's employment by the Company shall terminate by reason
          of such Participant's retirement in accordance with Company policies,
          each Stock Option held by such Participant at the date of termination
          (which has not previously lapsed or terminated) shall be exercisable
          for a period of three (3) months after termination, but only to the
          extent the Option is otherwise exercisable during that period.

     (e)  In the event the Company terminates the employment of a Participant
          who at the time of such termination was an officer of the Company and
          had been continuously employed by the Company during the two (2) year
          period immediately preceding such termination, for any reason except
          "good cause"


                                       7
<PAGE>


          (hereafter defined) and except upon such Participant's death, total
          disability or retirement in accordance with Company policies, each
          Stock Option held by such Participant (which has not previously lapsed
          or terminated and which has been held by such Participant for more
          than six (6) months prior to such termination) shall be exercisable
          for a period of three (3) months after such termination, but only to
          the extent the Option is otherwise exercisable during that period. A
          termination for "good cause" shall be deemed to have occurred only if
          the Participant in question (i) is terminated by written notice for
          dishonesty, because of his conviction of a felony, or because of his
          violation of any material provision of any employment or other
          agreement with the Company or any of its Subsidiaries, or (ii) shall
          voluntarily resign or terminate his employment with the Company or any
          of its Subsidiaries under or followed by such circumstances as would
          constitute a breach of any material provision of any employment or
          other agreement between him and the Company or any of its
          Subsidiaries, or (iii) shall have committed an act of dishonesty not
          discovered by the Company or any of its Subsidiaries prior to the
          cessation of his employment with the Company or any of its
          Subsidiaries, but which would have resulted in his discharge if
          discovered prior to such date, or (iv) shall, either before or after
          cessation of his employment with the Company or any of its
          Subsidiaries, without the written consent of the company or any of its
          Subsidiaries, use (except for the benefit of the Company or any of its
          Subsidiaries) or disclose to any other person any confidential
          information relating to the business or any trade secrets of the
          Company or any of its Subsidiaries obtained as a result of or in
          connection with such employment.

     3.8  Effect of Leaves of Absence

     It shall not be considered a termination of employment when a Participant
is on military or sick leave or such other type leave of absence which is
considered as continuing intact the employment relationship of the Participant
with the Company or any of its Subsidiaries. In case of such leave of absence,
the employment relationship shall be deemed to have continued until the later of
(i) the date when such leave shall have lasted ninety (90) days in duration, or
(ii) the date as of which the Participant's right to employment shall have no
longer been guaranteed either by statute or contract.

     3.9  Limitation on Number of Options Granted to Employees

     The maximum number of shares for which options may be granted to an
employee of the Company during any calender year shall not exceed 100,000.

4.   MISCELLANEOUS PROVISIONS

     4.1  Adjustments Upon Changes in Capitalization


                                       8
<PAGE>


     (a)  In the event of changes to the outstanding shares of Common Stock of
          the Company through reorganization, merger, consolidation,
          recapitalization, reclassification, stock split-up, stock dividend,
          stock consolidation or otherwise, or in the event of a sale of all or
          substantially all of the assets of the Company, an appropriate and
          proportionate adjustment shall be made in the number and kind of
          shares as to which Stock Options may be granted. A corresponding
          adjustment changing the number or kind of shares and/or the purchase
          price per share of unexercised Stock Options or portions thereof which
          shall have been granted prior to any such change shall likewise be
          made.

     (b)  Notwithstanding the foregoing, in the case of a reorganization, merger
          or consolidation, or sale of all or substantially all of the assets of
          the Company, in lieu of adjustments as aforesaid, the Committee may in
          its discretion accelerate the date after which a Stock Option may or
          may not be exercised or the stated expiration date thereof.
          Adjustments or changes under this Section shall be made by the
          Committee, whose determination as to what adjustments or changes shall
          be made, and the extent thereof, shall be final, binding and
          conclusive.

     4.2  Non-Transferability

     No Stock Option shall be transferable except by will or the laws of descent
and distribution, nor shall any Stock Option be exercisable during the
Participant's lifetime by any person other than the Participant or his guardian
or legal representative.

     4.3  Withholding

     The Company's obligations under this Plan shall be subject to applicable
federal, state and local tax withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the exercise of any Stock
Option may, in the discretion of the Committee, be paid in shares of Common
Stock already owned by the Participant or through the withholding of shares
otherwise issuable to such Participant, upon such terms and conditions as the
Committee shall determine. If the Participant shall fail to pay, or make
arrangements satisfactory to the Committee for the payment, to the Company of
all such federal, state and local taxes required to be withheld by the Company,
then the Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to such Participant an amount equal
to any federal, state or local taxes of any kind required to be withheld by the
Company.

     4.4  Compliance with Law and Approval of Regulatory Bodies

     No Stock Option shall be exercisable and no shares will be delivered under
the Plan except in compliance with all applicable federal and state laws and
regulations including, without limitation, compliance with all federal and state
securities laws and withholding tax requirements and with the rules of NASDAQ
and of all other domestic stock exchanges on which the Common


                                       9
<PAGE>


Stock may be listed. Any share certificate issued to evidence shares for which a
Stock Option is exercised may bear legends and statements the Committee shall
deem advisable to assure compliance with federal and state laws and regulations.
No Stock Option shall be exercisable and no shares will be delivered under the
Plan, until the Company has obtained consent or approval from regulatory bodies,
federal or state, having jurisdiction over such matters as the Committee may
deem advisable. In the case of the exercise of a Stock Option by a person or
estate acquiring the right to exercise the Stock Option as a result of the death
of the Participant, the Committee may require reasonable evidence as to the
ownership of the Stock Option and may require consents and releases of taxing
authorities that it may deem advisable.

     4.5  No Right to Employment

     Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the granting of
any Stock Options hereunder, shall confer upon any Participant under the Plan
any right to continue in the employ of the Company or any Subsidiary, or shall
in any way affect the right and power of the Company or any Subsidiary to
terminate the employment of any Participant at any time with or without
assigning a reason therefore, to the same extent as might have been done if the
Plan had not been adopted.

     4.6  Exclusion from Pension Computations

     By acceptance of a grant of a Stock Option under the Plan, the recipient
shall be deemed to agree that any income realized upon the receipt or exercise
thereof or upon the disposition of the shares received upon exercise will not be
taken into account as "base remuneration", "wages", "salary" or "compensation"
in determining the amount of any contribution to or payment or any other benefit
under any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.

     4.7  Abandonment of Options

     A Participant may at any time abandon a Stock Option prior to its
expiration date. The abandonment shall be evidenced in writing, in such form as
the Committee may from time to time prescribe. A Participant shall have no
further rights with respect to any Stock Option so abandoned.

     4.8  Severability

     If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3.

     4.9  Interpretation of the Plan


                                       10
<PAGE>


     Headings are given to the Sections of the Plan solely as a convenience to
facilitate reference, such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of the Plan
or any provision hereof. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall also include
within its meaning the plural and vice versa.

     4.10 Use of Proceeds

     Funds received by the Company upon the exercise of Stock Options shall be
used for the general corporate purposes of the Company.

     4.11 Construction of Plan

     The place of administration of the Plan shall be in the State of Illinois,
and the validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Illinois.


     BOARD OF DIRECTORS APPROVAL                         March 19, 1999


     SHAREHOLDER APPROVAL                                May 14, 1999


                                       11


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>4
<FILENAME>d27590_ex5.txt
<DESCRIPTION>OPINION OF MERRICK & KLIMEK, P.C.
<TEXT>
                                                                       Exhibit 5

                                        December 27, 2001


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

     Re:  Registration Statement on Form S-8 Relating to the
          CTI Industries Corporation 1999 Stock Option Plan (the "Plan")

Ladies and Gentlemen:

     As legal counsel for CTI Industries Corporation, an Illinois corporation
(the "Company"), we are rendering this opinion in connection with the
preparation and filing of a registration statement on Form S-8 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended, of 133,333 shares of Common Stock, no par value (the
"Common Stock") subject to issuance upon exercise of options granted under the
CTI Industries Corporation 1999 Stock Option Plan.

     We have examined such instruments, documents and records as we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.

     Based on such examination, we are of the opinion that the shares of Common
Stock of the Company being registered pursuant to the Registration Statement are
duly authorized shares of Common Stock which, when sold, will be validly issued,
fully paid and nonassessable.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.

     This opinion is to be used only in connection with the Plan and the
issuance of the Common Stock while the Registration Statement is in effect.

                                        Respectfully submitted,

                                        /s/ Merrick & Klimek, P.C.
                                        MERRICK & KLIMEK, P.C.

MK/cs


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>d27590_ex23-1.txt
<DESCRIPTION>CONSENT OF GRANT THORNTON, L.L.P.
<TEXT>
                                                                    Exhibit 23.1

                         CONSENT OF INDEPENDENT AUDITORS


We have issued our report dated March 2, 2001, accompanying the consolidated
financial statements, as of and for the year ended December 31, 2000, included
in the Annual Report of CTI Industries Corporation on Form 10-KSB for the year
ended December 31, 2000. We hereby consent to the incorporation by reference of
said report in the Registration Statements of CTI Industries Corporation on Form
S-8 dated December 27, 2001.

                                   /s/  GRANT THORNTON LLP

Chicago, Illinois
December 27, 2001

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
