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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001169232-05-002846.txt : 20050520
<SEC-HEADER>0001169232-05-002846.hdr.sgml : 20050520
<ACCEPTANCE-DATETIME>20050520170931
ACCESSION NUMBER:		0001169232-05-002846
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20050331
FILED AS OF DATE:		20050520
DATE AS OF CHANGE:		20050520

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:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23115
		FILM NUMBER:		05848970

	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>10-Q
<SEQUENCE>1
<FILENAME>d63992_10-q.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
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<P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>FORM 10-Q</B> &nbsp;</FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>SECURITIES AND EXCHANGE COMMISSION <br>
</B></FONT><FONT face="Times New Roman, Times, Serif" size=2>WASHINGTON, D.C. 20549 </FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF <br>
</B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2>For the quarterly period ended March 31, 2005 </FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2><I>Commission File No. 000-23115 </I></FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>CTI INDUSTRIES CORPORATION </B></FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2>(Exact name of registrant as specified in its charter) </FONT></P></TD></TR>
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<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR></TABLE>
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    <td width="50%"><font size="2" face="Times New Roman, Times, serif">Illinois</font></td>
    <td width="50%"><font size="2" face="Times New Roman, Times, serif">36-2848943</font></td>
  </tr>
  <tr align="center" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">(State or other jurisdiction of</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;(I.R.S. Employer</font></td>
  </tr>
  <tr align="center" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;incorporation or organization)</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">Identification Number)</font></td>
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<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
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<P align=center><FONT face="Times New Roman, Times, Serif" size=2>22160 North Pepper Road, Barrington, Illinois 60010 <br>
</FONT><FONT face="Times New Roman, Times, Serif" size=2>(Address of principal executive offices) (Zip Code) </FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2>(847) 382-1000 <br>
</FONT><FONT face="Times New Roman, Times, Serif" size=2>(Registrant&#146;s telephone number, including area code) </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the
past 90 days. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes <font face="Wingdings">o</font> No <font face="Wingdings">x</font></FONT></P>
<P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>APPLICABLE ONLY TO CORPORATE ISSUERS: </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>COMMON STOCK, no par value, 1,954,100 outstanding Shares, as of May 17, 2005. </FONT></P></TD></TR></TABLE>
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<P><FONT face="Times New Roman, Times, Serif" size=2><B>PART I. FINANCIAL INFORMATION </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B><U>Item 1. Financial Statements </U></B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The following consolidated financial statements of the Registrant are attached to this Form 10-Q: </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>1. Interim Balance Sheet as at March 31, 2005 (unaudited) and December 31, 2004; </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>2. Interim Statements of Operations (unaudited) for the three months ended March 31, 2005 and March
31, 2004; </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>3. Interim Statements of Cash Flows (unaudited) for the three months ended March 31, 2005 and March
31, 2004; </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>4. Notes to Consolidated Financial Statements. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Financial Statements reflect all adjustments which are, in the opinion of management, necessary
for a fair statement of results for the periods presented. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 2. <U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operation </U></B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><U>Results of Operations </U></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Net Sales</I>. For the quarter ended March 31, 2005, net sales were $9,103,000 compared to net sales of $10,894,000
for the three months ended March 31, 2004, a decrease of 16.4%. For the quarters ended March 31,
2005 and 2004, net revenues by product category were as follows: </FONT></P></TD></TR>
<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR></TABLE>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
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    <TH COLSPAN=4></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=4></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">For the Three Months Period Ended<br>
    </font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">March 31, 2005</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">March 31, 2004</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD WIDTH=7% ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>Laminated and Printed Films</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=15% ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2> 3,675,000</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=15% ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2> 3,674,000</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=7% ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Metalized Balloons</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,739,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>4,931,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>Latex Balloons</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,333,000</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,685,000</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Other</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>356,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>604,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
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    <TD COLSPAN=4></TD>
    <TD COLSPAN=3></TD>
    <TD COLSPAN=4></TD>
  </TR>
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<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
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<TD vAlign=top>
<P><FONT face="Times New Roman, Times, Serif" size=2>During the quarter ended March 31, 2005, sales of laminated and printed films represented 40.4% of
net sales, metalized balloons 41.1% of net sales and latex balloons 14.6% of net sales. Other sales,
consisting primarily of helium products and accessories, represented 3.9% of net sales. For the same
period of the prior year, laminated and printed films represented 33.7% of net sales, metalized balloons
45.3%, latex balloons 15.5% and other sales 5.5%.</FONT></P></TD></TR></TABLE>
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<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>2</FONT></P>
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<P><FONT face="Times New Roman, Times, Serif" size=2>The decrease in sales of metalized balloons in the first quarter is attributable in part to a reduction
in sales to Hallmark Cards in the first quarter of 2005 compared to the first quarter of 2004 and
also to a decline in sales to the Eckerd Drug Store Chain. In the latter part of 2004, the Eckerd
Drug Store Chain was sold to two different companies each of which is taking over management of approximately
half of the stores. One of the new owners discontinued the balloon program. The supply, distribution
and license arrangement among CTI and Hallmark expired and terminated on March 31, 2005. The Company
does not anticipate substantial sales of metalized balloons to Hallmark after March 31, 2005. The
Company has an eighteen month sell-off period and believes it can sell the remaining inventory in
its entirety.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>During the first quarter of 2005, there were three customers whose purchases represented more than
10% of the Company&#146;s net sales: (i) one customer of packaging film products whose purchases
totaled $2,396,000 or 26.3% of net sales for the quarter,&nbsp;(ii) a customer of metalized balloons
whose purchases totaled $1,150,000 or 12.6% of net sales, for the quarter and (iii) a customer of
other laminated products whose purchases totaled $938,000 or 10.3% of net sales. In 2004, net sales
to the same customers were $1,978,000 or 18.2% of net sales, $1,142,000 or 10.5% of net sales and
$1,245,000 or 11.4% of net sales, respectively.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Cost of Sales</I>. For the quarter ended March 31, 2005, cost of sales decreased to 79.4% of net sales as compared to
80.3% of net sales in the three month period ended March 31, 2004. This decrease was primarily the
result of a decrease in production costs in the United States operation. Direct labor in the U.S.
operations for the first quarter of 2005 was $525,000 compared to direct labor in the first quarter
of 2005 of $1,024,000. Production overhead in the U.S. operations for the first quarter of 2005 was
$1,205,000 compared to $1,716,000 for the first quarter of 2004. The cost of sales for the foreign
subsidiaries was consistent period to period. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>General and Administrative</I>. For the quarter ended March 31, 2005, administrative expenses were $1,019,000, or 11.2% of net sales
as compared to $989,000, or 9.1% of net sales for the three month period ended March 31, 2004. This
increase was related to increases in legal and consulting expenses. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Selling</I>. For the fiscal quarter ended March 31, 2005, selling expenses were $304,000, or 3.3% of net sales,
as compared to $390,000, or 3.6% of net sales for the three month period ended March 31, 2004. The
decline in selling costs is due to reductions in royalty expense, personnel expense and travel expense.
</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Advertising and Marketing</I>. For the fiscal quarter ended March 31, 2005, advertising and marketing expenses were $224,000, or
2.5% of net sales as compared to $393,000, or 3.6% of net sales in the three month period ended March
31, 2004. The decreases in expenses in this category for the first quarter were, principally, a reduction
in service fees, personnel costs, trade show expenses and artwork and plates. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Other Income</I> &nbsp;<I>(Expense).</I> &nbsp;Interest expense for the first quarter of 2005 was $305,000 compared to interest expense of
$331,000 for the first quarter of 2004. In the first quarter of 2004, the Company had &#147;other&#148;
items of income totaling $487,000,&nbsp;primarily relating to a review and </FONT></P></TD></TR></TABLE>
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<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>3</FONT></P>
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<P><FONT face="Times New Roman, Times, Serif" size=2>determination that various accrued items on the books of the Mexican subsidiaries of the Company,
CTI Mexico, S.A. de C.V. and Flexo Universal, S.A. de C.V., were not due or payable, substantially
all of which were non-reoccurring items. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Income Taxes. &nbsp;</I> For the quarter ending March 31, 2005, the Company has an income tax benefit of $4,000 compared to
an income tax expense of $233,000 in the first quarter of 2004. The benefit arises from taxable losses incurred
in certain subsidiaries. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Net Income or Loss</I>. For the fiscal quarter ended March 31, 2005, the Company had net income of $84,000, compared to net
income of $372,000 for the first quarter of 2004. Income from operations in the first quarter of
2005 was $360,000 compared to income from operations of $375,000 for the first quarter of 2005. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><U>Liquidity and Capital Resources </U></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Cash Flow Items</I>. The Company generated cash flow from operations during the three months ended March 31, 2005 of $1,668,000,
compared to cash used in operations during the first quarter of 2004 of $1,240,000.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Significant changes in working capital items during the first quarter of 2005 consisted of (i) a decrease
in inventory of $974,000, due to an effort to decrease its investment in inventory and to minimize
its distribution cost (ii) a decrease in receivables of $448,000, due primarily to the reduction
in sales and (iii) a decrease in accounts payable and accrued expenses of $534,000.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Investment Activities</I>. During the three months ended March 31, 2005, cash used in investing activities was $129,000,&nbsp;compared
to $262,000 in the first quarter of 2004. The cash used in investing activities in the first quarter
of 2004 was used for the purchase or improvement of machinery and equipment.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><I>Financing Activities</I>. For the three months ended March 31, 2005, cash used in financing activities was $1,695,000. The
use of cash was for payments on the revolving line of credit of the Company of $1,160,000 and for
repayment of long-term debt of $521,000. Cash flow provided by financing activities during the first
quarter of 2004 was $1,421,000. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>At March 31, 2005, the Company had a cash balance of $374,000. The Company&#146;s current cash management
strategy includes maintaining minimal cash balances and utilizing the Company&#146;s revolving line
of credit for liquidity. At March 31, 2005, the Company had a working capital deficit of $2,271,000
compared to a working capital deficit of $2,790,000 at December 31, 2004. The decrease in the working
capital deficit is attributable principally to the fact that it paid down its line of credit and
trade payables; this was partially offset by a reduction in its inventory and accounts receivable.
The Company believes that existing capital resources and cash generated from operations will be sufficient
to meet the Company&#146;s requirements for at least the next 12 months. </FONT></P></TD></TR></TABLE>
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<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>4</FONT></P>
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<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2><U>Seasonality</U></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>In the metalized balloon product line, sales have historically been seasonal, with approximately 22%
to 25% of annual sales of metalized balloons being generated in December and January and 11% to 13%
of annual metalized sales being generated in September and July in recent years. The sale of latex
balloons and laminated film products have not historically been seasonal. As sales of latex balloons
and laminated film products have increased in relation to sales of metalized balloons, the effect
of this seasonality has been reduced.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><U>Critical Accounting Policies </U></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>A summary of our critical accounting policies and estimates is presented on pages 25 and 26 of our
2004 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><U>Safe Harbor Provision of the Private Securities Litigation Act of 1995 and Forward Looking Statements</U>. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company operates in a dynamic and rapidly changing environment that involves numerous risks and
uncertainties. The market for metalized and latex balloon products is generally characterized by
intense competition, frequent new product introductions and changes in customer tastes which can
render existing products unmarketable. The statements contained in Item 2 (Management&#146;s Discussion
and Analysis of Financial Condition and Results of Operation) that are not historical facts may be
forward-looking statements (as such term is defined in the rules promulgated pursuant to the Securities
Exchange Act of 1934) that are subject to a variety of risks and uncertainties more fully described
in the Company&#146;s filings with the Securities and Exchange Commission. The forward-looking statements
are based on the beliefs of the Company&#146;s management, as well as assumptions made by, and information
currently available to the Company&#146;s management. Accordingly, these statements are subject to
significant risks, uncertainties and contingencies which could cause the Company&#146;s actual growth,
results, performance and business prospects and opportunities in 2005 and beyond to differ materially
from those expressed in, or implied by, any such forward-looking statements. Wherever possible, words
such as &#147;anticipate,&#148; &#147;plan,&#148; &#147;expect,&#148; &#147;believe,&#148; &#147;estimate,&#148;
and similar expressions have been used to identify these forward-looking statements, but are not
the exclusive means of identifying such statements. These risks, uncertainties and contingencies
include, but are not limited to, competition from, among others, national and regional balloon, packaging
and custom film product manufacturers and sellers that have greater financial, technical and marketing
resources and distribution capabilities than the Company, the availability of sufficient capital,
the maturation and success of the Company&#146;s strategy to develop, market and sell its products,
risks inherent in conducting international business, risks associated with securing licenses, changes
in the Company&#146;s product mix and pricing, the effectiveness of the Company&#146;s efforts to
control operating expenses, general economic and business conditions affecting the Company and its
customers in the United States and other countries in which the Company sells and anticipates selling
its products and services and the Company&#146;s ability to (i) adjust to changes in technology,
customer preferences, enhanced competition and new competitors; (ii) protect its intellectual property
rights from infringement or misappropriation; (iii) maintain or enhance its relationships with other
businesses and vendors; and (iv) attract and retain key employees. There can be no </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>5</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2>assurance that the Company will be able to identify, develop, market, sell or support new products
successfully, that any such new products will gain market acceptance, or that the Company will be
able to respond effectively to changes in customer preferences. There can be no assurance that the
Company will not encounter technical or other difficulties that could delay introduction of new or
updated products in the future. If the Company is unable to introduce new products and respond to
industry changes or customer preferences on a timely basis, its business could be materially adversely
affected. The Company is not obligated to update or revise these forward-looking statements to reflect
new events or circumstances. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 3. <U>Quantitative and Qualitative Disclosures Regarding Market Risk</U> </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company is exposed to various market risks, primarily foreign currency risks and interest rate
risks.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company&#146;s earnings are affected by changes in interest rates as a result of variable rate
indebtedness. If market interest rates for our variable rate indebtedness average 1% more than the
interest rate actually paid for the first quarter ending March 31, 2005 and 2004, our interest rate
expense would have increased, and income after income taxes would have decreased by $12,268 and $14,055
for these quarters, respectively. These amounts are determined by considering the impact of the hypothetical
interest rates on our borrowings. This analysis does not consider the effects of the reduced level
of overall economic activity that could exist in such an environment. Further, in the event of a
change of such magnitude, management would likely take actions to reduce our exposure to such change.
However, due to the uncertainty of the specific actions we would take and their possible effects,
the sensitivity analysis assumes no change in our financial structure.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company&#146;s earnings and cash flows are subject to fluctuations due to changes in foreign currency
rates, particularly the Mexican peso and the British pound, as the Company produces and sells products
in Mexico for sale in the United States and other countries and the Company&#146;s UK subsidiary
purchases balloon products from the Company in dollars. Also, the Mexican subsidiary purchases goods
from external sources in U.S. dollars and is affected by currency fluctuations in those transactions.
Substantially all of the Company&#146;s purchases and sales of goods for its operations in the United
States are done in U.S. dollars. However, the Company&#146;s level of sales in other countries may
be affected by currency fluctuations. As a result, exchange rate fluctuations may have an effect
on sales and gross margins. Accounting practices require that the Company&#146;s results from operations
be converted to U.S. dollars for reporting purposes. Consequently, the reported earnings of the Company
in future periods may be affected by fluctuations in currency exchange rates, generally increasing
with a weaker U.S. dollar and decreasing with a strengthening U.S. dollar. To date, we have not entered
into any transactions to hedge against currency fluctuation results.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>We have performed a sensitivity analysis as of March 31, 2005 that measures the change in the results
of our foreign operations arising from a hypothetical 10% adverse movement in the exchange rate of
all of the currencies the Company presently has operations in. Using the results of operations for
the first quarter of 2005 and 2004 for the Company&#146;s foreign operations as a basis for comparison,
an adverse movement of 10% would create a potential reduction in the </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>6</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2>Company&#146;s net income, or increase its net loss, before taxes, in the amount of, for each of those
quarters $19,330 and $57,733 respectively.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company is also exposed to market risk in changes in commodity prices in some of the raw materials
it purchases for its manufacturing needs. However, this presents a risk that would not have a material
effect on the Company&#146;s results of operations or financial condition. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 4. <U>Controls and Procedures</U> </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>(a) Evaluation of disclosure controls and procedures. Our principal executive officer and principal
financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of the end of the period covered by this
report, have concluded that, as of such date our disclosure controls and procedures were adequate
and effective to ensure that material information relating to the Company would be made known to
them by others within the Company. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>(b) Changes in internal controls. There were no significant changes in our internal controls or in
other factors that could significantly affect the Company&#146;s disclosure controls and procedures
subsequent to the date of their evaluation, nor were there any significant deficiencies or material
weaknesses in the Company&#146;s internal controls. As a result, no corrective actions were required
or undertaken. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Part II. OTHER INFORMATION </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><U><B>Item 1. Legal Proceedings </B></U></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>On September 5, 2003, Airgas, Inc., Airgas-Southwest, Inc., Airgas-South, Inc. and Airgas-East, Inc.

filed a joint action against CTI Industries Corporation for claimed breach of contract in the Circuit

Court of Lake County, Illinois claiming as damages the aggregate amount of $162,242. The Company

filed an answer denying the material claims of the complaint, affirmative defenses and a counterclaim.

In the action, the plaintiffs claimed that CTI Industries Corporation owed them certain sums for

(i) helium sold and delivered, (ii) rental charges with respect to helium tanks and (iii) replacement

charges for tanks claimed to have been lost. On November 2, 2004, this matter was settled. The
amount
agreed to be paid by the Company in settlement totaled $100,000. The first payment of $50,000
was
paid on November 15, 2004. The balance of $50,000 is payable in five consecutive $10,000 monthly

installments, commencing December 30, 2004. This amount was fully accrued as of the settlement date.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>On June 4, 2004, Spar Group, Inc. initiated an arbitration proceeding in New York City against the
Company. In the proceeding, Spar Group claimed that there was due from the Company to Spar Group
a sum for services rendered in the amount of $180,043, plus interest. Spar Group claimed to have
rendered services to the Company in various Eckerd stores with respect to the display and ordering
of metalized and latex balloons for sale in those stores. The Company filed an answer denying liability
with respect to the claim and asserted a counterclaim for damages against Spar Group for breach of
its agreement to provide such services. On January 13, 2005, this matter was settled. The amount
agreed to be paid by the Company in settlement totaled $100,000. The first payment of $30,000 was
paid on February 1, 2005. The balance of $70,000 </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>7</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2>is payable in seven consecutive $10,000 monthly installments, commencing March 1, 2005. This amount
was fully accrued as of December 31, 2004.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>In addition, the Company is also party to certain lawsuits arising in the normal course of business.
The ultimate outcome of these matters is unknown, but in the opinion of management, we do not believe
any of these proceedings will have, individually or in the aggregate, a material adverse effect upon
our financial condition or future results of operation. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 2. <U>Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities </U></B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Not applicable. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 3. <U>Defaults Upon Senior Securities</U> </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Not applicable. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 4. <U>Submission of Matters to a Vote of Security Holders</U> </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Not applicable. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 5. <U>Other Information </U></B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Certifications of the Chief Executive Officer and the Chief Financial Officer of Registrant Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 are attached as Exhibits to this Report on Form
10-Q. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Item 6. <U>Exhibits </U></B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Exhibits* </FONT></P></TD></TR>
<TR>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<table width="600" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"> Exhibit No. </font></b></td>
    <td align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"> Description </font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td colspan="2"><hr align="left" width="50" size="1" noshade></td>
    <td><hr align="center" width="55" size="1" noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="5"><font size="1">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="top">
    <td width="10%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="10%"><font size="2" face="Times New Roman, Times, serif"> 3.1 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Third Restated Certificate of Incorporation of CTI Industries Corporation (incorporated by reference to Exhibit A contained in Registrant&#146;s Schedule 14A Definitive Proxy Statement for solicitation of written consent of shareholders, as filed with Commission on October 25, 1999) </font></td>
    <td width="10%">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"> 3.2 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> By-laws of CTI Industries Corporation (incorporated by reference to Exhibits, contained in Registrant&#146;s Form SB-2 Registration Statement (File No. 333-31969) effective November 5, 1997) </font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>8</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<table width="600" border="0" cellpadding="0" cellspacing="0">
  <tr align="left" valign="top">
    <td width="10%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="10%"><font size="2" face="Times New Roman, Times, serif"> 11 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Statement: Computation of Per Share Earnings (incorporated by reference to Note 16 of consolidated financial statements). </font></td>
    <td width="10%">&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"> 31.1 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Sarbanes-Oxley Act Section 302 Certifications for Howard W. Schwan </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"> 31.2 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Sarbanes-Oxley Act Section 302 Certification for Stephen M. Merrick </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"> 32.1 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Sarbanes-Oxley Act Section 906 Certification for Howard W. Schwan, Chief Executive Officer </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="2" face="Times New Roman, Times, serif"> 32.2 </font></td>
    <td><font size="2" face="Times New Roman, Times, serif"> Sarbanes-Oxley Act Section 906 Certification for Stephen M. Merrick, Chief Financial Officer </font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
<TR>
<TD vAlign=top>
<P><FONT face="Times New Roman, Times, Serif" size=2>* Also incorporated by reference the Exhibits filed as part of the SB-2 Registration Statement of the
Registrant, effective November 5, 1997, and subsequent periodic filings. </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>9</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
  <TD align="center" valign="bottom"><FONT face="Times New Roman, Times, Serif" size=2><B>SIGNATURES</B></FONT></TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
</TR>
<TR>
<TD><FONT face="Times New Roman, Times, Serif" size=2>Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized. </FONT></TD></TR>
</TABLE>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Dated: May 20, 2005&nbsp;&nbsp;</font></td>
    <td colspan="3"><font size="2" face="Times New Roman, Times, serif">CTI INDUSTRIES CORPORATION</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">By:&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">/s/Howard W. Schwan, President</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><hr align="left" width="200" size="1" noshade></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">Howard W. Schwan, President</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">By:&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">/s/ Stephen M. Merrick</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><hr align="left" width="200" size="1" noshade></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">Stephen M. Merrick</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">Executive Vice President and</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">Chief Financial Officer</font></td>
  </tr>
</table>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>10</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2"><b><font face="Times New Roman, Times, serif">CTI Industries Corporation and Subsidiaries </font></b><font face="Times New Roman, Times, serif"><br>
            <b>Consolidated Balance Sheets</b> </font></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" nowrap><b><font size="1" face="Times New Roman, Times, serif">March 31, 2005</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">December 31, 2004<br>
    </font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD valign="top"><b><font size="1" face="Times New Roman, Times, serif">ASSETS </font></b></TD>
    <TD valign="top"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">(Unaudited)</font></b></TD>
    <TD valign="top"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">(Audited)<br>
    </font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Current assets:</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Cash</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 373,627</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 526,470</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Accounts receivable, (less allowance for doubtful accounts of $ 350,000<br>
&nbsp;&nbsp;and $404,070 respectively)</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,654,705</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,123,137</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Inventories</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>7,329,794</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>8,348,494</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Prepaid expenses and other current assets</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>598,559</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>646,805</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>13,956,685</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>15,644,906</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Property, plant and equipment:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Machinery and equipment</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>18,527,417</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>18,451,428</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Building</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,614,271</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,614,271</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Office furniture and equipment</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,927,434</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,926,371</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Land</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>250,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>250,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Leasehold improvements</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>643,499</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>640,428</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Fixtures and equipment at customer locations</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,330,483</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,286,814</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Projects under construction</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>60,918</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>55,650</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>26,354,022</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>26,224,962</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Less : accumulated depreciation and amortization</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(16,038,488</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(15,636,451</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total property, plant and equipment, net</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>10,315,534</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>10,588,511</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Other assets:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Deferred financing costs, net</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>108,649</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>120,375</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Goodwill</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,113,108</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,113,108</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net deferred income tax asset</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>156,777</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>152,298</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Other assets</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>92,910</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>245,376</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other assets</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,471,444</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,631,157</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>TOTAL ASSETS</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 25,743,663</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 27,864,574</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=7><font size="2" face="Times New Roman, Times, serif">See accompanying notes to condensed consolidated unaudited statements</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=center><FONT FACE="Times New Roman, Times, serif" SIZE=2>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Checks written in excess of bank balance</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 467,616</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 513,417</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Trade payables</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,990,148</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,147,969</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Line of credit</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,201,897</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,401,225</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Notes payable - current portion (related party $60,000 and $60,000)</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,133,332</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,560,669</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Accrued liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,434,829</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,811,775</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>16,227,822</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>18,435,055</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Long-term liabilities:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Other liabilities (related parties $517,000 and $517,000)</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,394,917</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,348,374</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Notes payable</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,850,030</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,864,129</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Notes payable - officers</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,240,024</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,255,616</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total long-term liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,484,971</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,468,119</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Minority interest</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>11,197</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>10,230</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Commitments and contingency</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Stockholders&#146; equity:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Preferred Stock - no par value, 2,000,000 shares authorized, 0 shares<br>
&nbsp;&nbsp;issued and outstanding</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Common stock - no par value, 5,000,000 shares authorized,<br>
&nbsp;&nbsp;2,185,896 and 2,185,896 shares issued, 1,954,100 and<br>
&nbsp;&nbsp;1,954,100 shares outstanding, respectively</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,764,020</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,764,020</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Class B Common stock - no par value, 500,000 shares authorized,<br>
&nbsp; 0 shares issued and outstanding</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Paid-in-capital</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,615,411</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,615,411</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Warrants issued in connection with subordinated debt and bank debt</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>595,174</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>595,174</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Accumulated deficit</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(5,922,950</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(6,007,437</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Accumulated other comprehensive loss</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(92,868</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(76,884</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Less:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury stock&nbsp;-&nbsp;231,796 shares</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(939,114</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(939,114</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>3,019,673</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,951,170</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>TOTAL LIABILITIES &amp; STOCKHOLDERS&#146; EQUITY</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 25,743,663</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 27,864,574</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=4><font size="2" face="Times New Roman, Times, serif">See accompanying notes to condensed consolidated unaudited statements</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font size="2" face="Times New Roman, Times, serif">CTI Industries Corporation and Subsidiaries <br>
      Consolidated Statements of Operations (unaudited) </font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">Quarter Ended March 31,</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="top"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Net Sales</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 9,103,327</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 10,893,984</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cost of Sales</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>7,229,334</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>8,746,614</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,873,993</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,147,370</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Operating expenses:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;General and administrative</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,019,004</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>988,513</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Selling</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>304,281</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>390,556</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Advertising and marketing</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>223,996</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>393,484</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,547,281</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,772,553</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Income from operations</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>326,712</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>374,817</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Other (expense) income:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Interest expense</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(305,380</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(331,136</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Foreign currency gain</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>58,580</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>76,756</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Other</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>486,896</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other (expense) income</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(246,800</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>232,516</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Income before income taxes and minority interest</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>79,912</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>607,333</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Income tax (benefit) expense</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(4,479</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>233,456</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Income before minority interest</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>84,391</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>373,877</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Minority interest in (loss) income of subsidiary</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(95</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,976</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Basic income per common share</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.19</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Diluted income per common share</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.18</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Weighted average number of shares and equivalent shares<br>
&nbsp;&nbsp;of common stock outstanding:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,954,100</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,918,420</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,970,360</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,044,501</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=5><font size="2" face="Times New Roman, Times, serif">See accompanying notes to condensed consolidated unaudited statements</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2" face="Times New Roman, Times, serif"><b>CTI Industries Corporation and Subsidiaries <br>
      Consolidated Statements of Cash Flows (unaudited) </b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">For the three Months Ended March 31,</font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="middle">&nbsp;</TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cash flows from operating activities:</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net income</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Adjustment to reconcile net income to cash<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided by (used in) operating activities:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>402,037</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>509,280</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Deferred gain on sale/leaseback</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(7,512</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>19,740</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>62,873</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Minority interest in (loss) income of subsidiary</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(95</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>967</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for losses on accounts receivable</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>20,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>50,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for losses on inventories</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>45,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>50,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(4,479</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>233,456</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Change in assets and liabilities:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>448,432</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,753,866</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>973,700</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>39,642</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current and other assets</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>212,439</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(139,917</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade payables, accrued and other liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(533,706</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(657,064</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,667,554</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,240,240</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cash flow from investing activity:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Purchases of property, plant and equipment</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(129,060</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(261,510</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activity</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(129,060</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(261,510</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cash flows from financing activities:</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Checks written in excess of bank balance</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(45,800</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>188,595</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net change in revolving line of credit</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,199,328</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,235,473</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Proceeds from issuance of long-term debt</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>50,936</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Repayment of long-term debt (related party $15,000 and $15,000)</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(481,161</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,003,442</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by financing activities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,675,353</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,420,626</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Effect of exchange rate changes on cash</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(15,984</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>82,571</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Net (decrease) increase in cash</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(152,843</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,447</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cash at beginning of period</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>526,470</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>329,742</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Cash at end of period</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 373,627</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 331,189</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5" ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5" ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD colspan="9"><font size="2" face="Times New Roman, Times, serif">See accompanying notes to condensed consolidated unaudited statements</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=3></TD>
    <TD COLSPAN=5></TD>
    <TD></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><font size="2" face="Times New Roman, Times, serif"><b>CTI Industries Corporation and Subsidiaries<br>
      Consolidated Earnings per Share (unaudited)</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">Quarter Ended March 31,</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="top"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center">
    <TD COLSPAN=3><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=5><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2><b>Basic</b></FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2></FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Weighted average number of shares of<br>
&nbsp;&nbsp;&nbsp;&nbsp;common stock outstanding during the period</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,954,100</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,918,420</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net income</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Amount for per share computation</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Per share amount</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.19</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2><b>Diluted</b></FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Weighted average number of shares of<br>
&nbsp;&nbsp;&nbsp;&nbsp;common stock outstanding during the period</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,954,100</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,918,420</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net additional shares assuming stock<br>
&nbsp;&nbsp;&nbsp;&nbsp;options and warrants exercised and<br>
&nbsp;&nbsp;&nbsp;&nbsp;proceeds used to purchase treasury stock</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>16,260</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>126,081</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Weighted average number of shares and<br>
&nbsp;&nbsp;&nbsp;&nbsp;equivalent shares of common stock<br>
&nbsp;&nbsp;&nbsp;&nbsp;outstanding during the period</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,970,360</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>2,044,501</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Net income</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;&nbsp;Per share amount</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.18</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=6><font size="2" face="Times New Roman, Times, serif">See accompanying notes to condensed consolidated unaudited statements</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2>CTI Industries Corporation and Subsidiaries <br>
</FONT><FONT face="Times New Roman, Times, Serif" size=2>Notes to Unaudited Condensed Consolidated Financial Statements </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 1 - Basis of Presentation </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The accompanying financial statements are unaudited but in the opinion of management contain all the
adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly
the financial position and the results of operations and cash flows for the periods presented in
conformity with generally accepted accounting principles for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. Operating results for the three months ended
March 31, 2005 are not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2005. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company&#146;s annual report on Form 10-K for the fiscal year
ended December 31, 2004. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Principles of consolidation and nature of operations: </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The consolidated financial statements include the accounts of (&#147;CTI-US&#148;) and its wholly-owned
subsidiaries, CTI Balloons Limited and CTF International S.A. de C.V., as well as its majority-owned
subsidiaries CTI Mexico S.A. de C.V., and Flexo Universal, S.A. de C.V. (the &#147;Company&#148;).
All significant intercompany transactions and accounts have been eliminated in consolidation. The
Company (i) designs, manufactures and distributes balloon products throughout the world and (ii)
operates systems for the production, lamination, coating and printing of films used for food packaging
and other commercial uses and for conversion of films to flexible packaging containers and other products. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Use of estimates: </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>In preparing financial statements in conformity with accounting principles generally accepted in the
United States of America, management makes estimates and assumptions that affect the amounts reported
of the assets and liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenue and expenses during the reporting period
in the financial statements and accompanying notes. Actual results may differ from those estimates,&nbsp;The
company&#146;s significant estimates include reserves for doubtful accounts, reserves for the lower
of cost or market of inventory and recovery value of goodwill.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Stock-Based Compensation </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>At March 31, 2005, the Company had four stock-based compensation plans. The Company accounts for those
plans under the recognition and measurement principles of APB Opinion No. 25, &#147;Accounting for
Stock Issued to Employees&#148; and related interpretations. The Company recognizes compensation
cost for stock-based compensation awards equal to the difference between the quoted market price
of the stock at the date of grant or award and the price to be paid by the employee upon exercise
in accordance with the provisions of APB No. 25. Based upon the terms of Company&#146;s current stock
option plans, the stock price on the date of grant and price paid upon exercise are the same. Accordingly,
no stock-based employee compensation cost has been recognized, as all options granted under those
plans had an exercise price equal to the market value of the underlying common stock on the date
of grant. No stock options were granted during the three months ended March 31, 2005 or 2004. The
Company has adopted the disclosure provisions of Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No 148, &#147;Accounting for Stock-Based Compensation-Transition and Disclosure&#148;, an amendment
of SFAS Statement no. 123 (&#147;SFAS N0. 148&#148;). The following table illustrates the effect
on net income and earnings per share had compensation cost for all of the stock-based compensation
plans been determined based on the grant date fair value of awards.</FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD height="22"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5" valign="top"><font size="1" face="Times New Roman, Times, serif"><b>Quarter Ending 31,</b></font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD height="25"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="top"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="top"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Net Income:</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=10% ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH=4% ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH=1% ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Reported</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Deduct total stock-based employee compensation expense <br>
      determined under fair value based method for all awards, <br>
      net of related tax effects</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Pro forma net income</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>84,486</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>371,901</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Net income per share:</FONT></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Basic - As reported</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 0.19</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Basic &#150; Proforma</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.19</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Diluted &#150; As reported</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.18</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Diluted &#150; Proforma</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.04</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>0.18</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
<TR>
<TD vAlign=top>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 2 - Legal Proceedings</B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>On September 5, 2003, Airgas, Inc., Airgas-Southwest, Inc., Airgas-South, Inc. and Airgas-East, Inc.

filed a joint action against CTI Industries Corporation for claimed breach of contract in the Circuit

Court of Lake County, Illinois claiming as damages the aggregate amount of $162,242. The Company

filed an answer denying the material claims of the complaint, affirmative defenses and a counterclaim.

In the action, the plaintiffs claimed that CTI Industries Corporation owed them certain sums for

(i) helium sold and delivered, (ii) rental charges with respect to helium tanks and (iii) replacement

charges for tanks claimed to have been lost. On November 2, 2004, this matter was settled. The
amount
agreed to be paid by the Company in settlement totaled $100,000. The first payment of $50,000
was
paid on November 15, 2004. The balance of $50,000 is payable in five consecutive $10,000 monthly

installments, commencing December 30, 2004. This amount was fully accrued as of the settlement date.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>On June 4, 2004, Spar Group, Inc. initiated an arbitration proceeding in New York City against the
Company. In the proceeding, Spar Group claimed that there was due from the Company to Spar Group
a sum for services rendered in the amount of $180,043, plus interest. Spar Group claimed to have
rendered services to the Company in various Eckerd stores with respect to the display and ordering
of metalized and latex balloons for sale in those stores. The Company filed an answer denying liability
with respect to the claim and asserted a counterclaim for damages against Spar Group for breach of
its agreement to provide such services. On January 13, 2005, this matter was settled. The amount
agreed to be paid by the Company in settlement totaled $100,000. The first payment of $30,000 was
paid on February 1, 2005. The balance of $70,000 is payable in seven consecutive $10,000 monthly
installments, commencing March 1, 2005. This amount was fully accrued as of December 31, 2004.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>In addition, the Company and its subsidiaries are party to certain lawsuits arising in the normal course
of business. The ultimate outcome of these matters is unknown but, in the opinion of management,
the settlement of these matters is not expected to have a significant effect on the future financial
position or results of operations of the Company. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 3 &#150; Comprehensive (Loss) Income </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Other comprehensive (loss) income is comprised of (loss) income from foreign currency translation amounting
to ($15,984) and $82,569, for the three months ending March 31, 2005 and 2004, respectively. </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>2</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<FONT face="Times New Roman, Times, Serif" size=2><B>Note 4 - Inventories, net </B></FONT>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=3></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">March 31, 2005</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" nowrap><b><font size="1" face="Times New Roman, Times, serif">December 31, 2004<br>
    </font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Raw materials</FONT></TD>
    <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 780,868</FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 888,644</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Work in process</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>710,224</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>806,495</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Finished goods</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,060,586</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>6,840,068</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Allowance, excess quantities</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(221,884</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(186,713</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Total inventories,</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 7,329,794</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 8,348,494</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
<TR>
<TD vAlign=top>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 5 - Geographic Segment Data </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company has determined that it operates primarily in one business segment which designs, manufactures,
and distributes film products for use in packaging and novelty balloon products. The Company operates
in foreign and domestic regions. Information about the Company&#146;s operations by geographic areas
is as follows. </FONT></P></TD></TR>
<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR></TABLE>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=4></TH>
    <TH COLSPAN=3></TH>
    <TH COLSPAN=4></TH>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">Net Sales to External Customers</font></b></TD>
    <TD><font size="1">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif">Total Assets at</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5"><b><font size="1" face="Times New Roman, Times, serif"> For the Three Months Ended March 31, </font></b></TD>
    <TD><font size="1">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">March 31,</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><b><font size="1" face="Times New Roman, Times, serif">December 31,</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="5">
    <HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2"><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center" VALIGN=Bottom>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="middle"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD valign="middle"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD valign="middle"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2005</font></b></TD>
    <TD valign="middle"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="2" valign="middle"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR align="center">
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2><HR NOSHADE SIZE=1></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>United States</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 7,504,000</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 9,617,000</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=5% ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 22,279,000</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 24,072,000</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Mexico</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,148,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,532,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,207,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>5,319,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>United Kingdom</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>798,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>751,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,858,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>1,989,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>Eliminations</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(347,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(1,006,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(3,600,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>(3,492,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>)</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=1></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom bgcolor="#eaf9e8">
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 9,103,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 10,894,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 25,744,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2>$</FONT></TD>
    <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, serif" SIZE=2> 27,888,000</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=2></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
</TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD vAlign=top><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD></TR>
<TR>
<TD vAlign=top>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 6 - Concentration of Credit Risk </B></FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Concentration of credit risk with respect to trade accounts receivable is generally limited due to
the number of entities comprising the Company&#146;s customer base. The Company performs ongoing
credit evaluations and provides an allowance for potential credit losses against the portion of accounts
receivable which is estimated to be uncollectable. Such losses have historically been within management&#146;s
expectations. For the three months ended March 31, 2005, the Company had three customers that accounted
for approximately; $2,396,000 or 27.3%, $1,150,000 or 12.6%, and $938,000 or 10.3%, respectively,
of consolidated net sales. Sales to these customers in 2004 were $1,978,000 or 18.2%, $1,142,000
or 10.5% and $1,245,000 or 11.4% respectively. For the quarter ending March 31, 2005, total amount
owed by these customers was $865,000, $863,000 and $179,000, respectively. The balance owed at March
31, 2004 was $1,021,000, $894,000 and $257,000, respectively. </FONT></P></TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>3</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
<P style="PAGE-BREAK-AFTER: always"></P><PAGE><BR>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR>
<TD>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 7 &#150; Related Party Transactions</B> &nbsp;</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>John H. Schwan, is Chairman of the Company. Mr. Schwan is President of Packaging Systems, L.L.C. and
affiliated companies. The Company made purchases of packaging materials from Packaging Systems in
the amount of $65,000 and $136,000 during&nbsp;the quarters ending March 31, 2005 and 2004, respectively.
During the quarter, Mr. Schwan was paid $6,000 for services provided to the Company. John Schwan and
Howard W. Schwan are brothers.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Stephen M. Merrick, Executive Vice President and Secretary of the Company, is a principal of the law
firm of Merrick &amp; Associates, P.C., which serves as general counsel of the Company. In addition,
Mr. Merrick is a principal stockholder of the Company. Other principals of the firm of Merrick &amp;
Associates P.C. own less than 1% of the Company&#146;s outstanding Common Stock. Legal fees incurred
from the firm of Merrick &amp; Associates, P.C. for the quarter ending March 31, 2005 and March&nbsp;31,
2004 were $35,000 and $41,000, respectively. Mr. Merrick was paid $12,000 for services provided to
the company. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Interest payments have been made to John H. Schwan and Stephen M. Merrick for loans made to the Company
these interest payments for the three months ending March 31, 2005 totaled&nbsp;$36,000 and $13,000
respectively,&nbsp;In 2004, for the three months ending March 31, 2004 the amounts were $37,000 and
$14,000, respectively. </FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>The Company entered into a 10-year lease agreement for office and warehouse facilities in November
1999, requiring monthly payments of $17,404, to Pepper Road, Inc., a company related through common
ownership. In 2003, the rent was reduced to $15,500 per month. Approximately 50% of the facility
was subleased through March 2002, and after that, the Company assumed the remaining 50% of the facility.
In the three months ended March 31, 2004 the Company paid $47,000 rent to Pepper Road, Inc. In July
of 2004, the Company cancelled its lease with Pepper Road, Inc.</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2><B>Note 8 &#150; Reclassifications</B> &nbsp;</FONT></P>
<P><FONT face="Times New Roman, Times, Serif" size=2>Reclassifications were made to the year end 2004 balance sheet to conform to the first quarter ended 2005 presentation.
</FONT></P>


</TD></TR></TABLE>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">

<TR vAlign=top>
<TD width="600"><BR>
<P align=center><FONT face="TIMES NEW ROMAN, TIMES, SERIF" size=2>4</FONT></P>
<HR color=gray noShade SIZE=5></TD></TR></TABLE>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>d63992_ex31-1.htm
<DESCRIPTION>CERTIFICATIONS
<TEXT>
<html>
<head>
<title></title>
</head>

<body>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">
  <TR>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD><P align="center"><FONT face="Times New Roman, Times, Serif" size=2><B>EXHIBIT 31.1<br>
      </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>CERTIFICATIONS </B></FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>I, Howard W. Schwan, President of CTI Industries Corporation, certify that: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>1. I have reviewed this Quarterly report on Form 10-Q of CTI Industries Corporation. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>4. The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>b) Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>d) Disclosed in this report any change in the registrant&#146;s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>5. The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>Date: May 20, 2005 </FONT></P>
        <P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>CTI INDUSTRIES CORPORATION </B></FONT></P></TD>
  </TR>
</TABLE>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="25%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="25%">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i>By:</i></font></td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i>/s/ Howard W. Schwan</i></font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><hr size="1" noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i>Howard W. Schwan, President</i></font></td>
    <td>&nbsp;</td>
  </tr>
</table>
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  <TR vAlign=top>
    <TD width="600"><BR>
        <HR color=gray noShade SIZE=5></TD>
  </TR>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>d63992_ex31-2.htm
<DESCRIPTION>CERTIFICATIONS
<TEXT>
<html>
<head>
<title></title>
</head>

<body>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">
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    <TD><div align="center"><FONT face="Times New Roman, Times, Serif" size=2><B>EXHIBIT 31.2<br>
        CERTIFICATIONS </B></FONT> </div>
        <P><FONT face="Times New Roman, Times, Serif" size=2>I, Stephen M. Merrick, Executive Vice-President and Chief Financial Officer of CTI Industries Corporation certify that: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>1. I have reviewed this Quarterly report on Form 10-Q of CTI Industries Corporation. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>4. The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>b) Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986; </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>d) Disclosed in this report any change in the registrant&#146;s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>5. The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting. </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>Date: May 20, 2005 </FONT></P>
        <P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>CTI INDUSTRIES CORPORATION </B></FONT></P></TD>
  </TR>
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<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="25%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="25%">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i>By:</i></font></td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i><I>/s/ Stephen M. Merrick</I></i></font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><hr size="1" noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="Times New Roman, Times, serif"><i><I>Stephen M. Merrick, Executive<br>
      Vice-President and Chief Financial<br>
      Officer</I></i></font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<TABLE cellSpacing="0" cellPadding="0" width="600" border="0">
  <TR vAlign=top>
    <TD width="600"><BR>
        <HR color=gray noShade SIZE=5></TD>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>d63992_ex32-1.htm
<DESCRIPTION>CERTIFICATIONS
<TEXT>
<html>
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<title></title>
</head>
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    <TD><P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>Exhibit 32.1 <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>CERTIFICATION PURSUANT TO <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>18 U.S.C. SECTION 1350, <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>AS ADOPTED PURSUANT TO <br>
      </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B></FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>In connection with the Quarterly Report of CTI Industries Corporation (the &#147;Company&#148;) on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Stephen M. Merrick, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. &#167;1350, as adopted pursuant to &#167;906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. </FONT></P></TD>
  </TR>
</TABLE>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="35%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif"><i>/s/ Stephen M. Merrick</i></font></td>
    <td width="35%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><hr size="1" noshade></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif"><I>Stephen M. Merrick<br>
    </I><I>Chief Financial Officer</I><BR>March 20, 2005</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
</table>
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    <TD width="600"><BR>
        <HR color=gray noShade SIZE=5></TD>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>d63992_ex32-2.htm
<DESCRIPTION>CERTIFICATIONS
<TEXT>
<html>
<head>
<title></title>
</head>

<body>
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    <TD><P align=center><FONT face="Times New Roman, Times, Serif" size=2><B>EXHIBIT 32.2 <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>CERTIFICATION PURSUANT TO <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>18 U.S.C. SECTION 1350, <br>
        </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>AS ADOPTED PURSUANT TO <br>
      </B></FONT><FONT face="Times New Roman, Times, Serif" size=2><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B></FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>In connection with the Quarterly Report of CTI Industries Corporation (the &#147;Company&#148;) on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Howard W. Schwan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. &#167;1350, as adopted pursuant to &#167;906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and </FONT></P>
        <P><FONT face="Times New Roman, Times, Serif" size=2>(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. </FONT></P></TD>
  </TR>
</TABLE>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="35%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif"><i>/s/ Howard W. Schwan</i></font></td>
    <td width="35%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><hr size="1" noshade></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td><font size="2" face="Times New Roman, Times, serif"><i>Howard W. Schwan<br>
      Chief Executive Officer</i><BR>March 20, 2005</font></td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
</table>
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    <TD width="600"><BR>
        <HR color=gray noShade SIZE=5></TD>
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</SEC-DOCUMENT>
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