Creation of a Direct Financial

On August 17, 2017, the Company executed a Warrant Conversion
Note (Note) in favor of BMO Private Equity (U.S.) Inc. (BMO Private Equity) for $797,881 plus interest
at 11.5% per annum. The Note represents payment due BMO Private Equity resulting from its exercise on August 10, 2017, of its put
right on 144,121 common stock warrants issued to BMO Private Equity in July, 2012. The Note matures on January 18, 2018, or such
earlier date the Company pays the balance owed to BMO Private Equity on the subordinated debt.


Pursuant to the requirements of the Securities Exchange Act
of 1934, CTI Industries Corporation has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized,< br>August 21, 2017.



/s/ Stephen M. Merrick

Stephen M. Merrick, President

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