Jan. 12, 2007 letter from Dan R. Waite, Esq., attorney for Terry Dingwall

Dear Shareholders of iESi:

On December 6, 2005, I wrote to advise each of you about the status of the Nevada Lawsuit (Case No. A508740) that exists between iESi and, among others, Terry Dingwall. In that Lawsuit, Mr. Dingwall, the former President and Board member of iESi, filed claims on behalf of himself and on behalf of all iESi shareholders against current Board members, Mssrs. Ron Foster, Patrick Cochrane and Fred Dornan. I have attached a copy of the December 6, 2005, email for your convenience (and to avoid the need to repeat myself here).

Recent events have occurred which prompt this email communication to you. Specifically, three events in the past week have occurred which may be of interest to you.

1. Approximately a month ago, the lawyer representing iESi (Mr. Douglas Kurdziel) and the lawyer representing Mssrs. Foster, Cochrane and Dornan (Mr. Marc Cook) filed separate motions asking the Nevada court to relieve them from any further obligation to represent the company and Mssrs. Foster, Cochrane and Dornan. Last Friday (January 5, 2007), the judge in the Nevada Lawsuit (Judge Elizabeth Gonzalez) granted the attorneys' requests and allowed them to terminate and withdraw their legal representation. No other attorneys have substituted into the Lawsuit for iESi or Mssrs. Foster, Cochrane and Dornan.

2. On Tuesday and Wednesday of this week, Dr. Yang's attorney (James Kohl), Terry Dingwall and I were in Edmonton, Alberta, to take the depositions of Mssrs. Dornan and Cochrane. A deposition is a proceeding where the person is placed under oath and required to answer questions under penalty of perjury. Mr. Dornan and Mr. Cochrane failed to appear for their depositions.

3. On Tuesday afternoon, Mr. Ron Foster signed and filed documents placing iESi in bankruptcy. The bankruptcy (Case No. 07-10092-lbr) was filed in Las Vegas, Nevada, under Chapter 7. A copy of the bankruptcy filings and schedules are attached for your convenience. Of particular interest to Mr. Dingwall was iESi's representation (on page 11 of 50) that iESi has no "Patents, copyrights, and other intellectual property" and the further representation (on the same page) that iESi has no licenses (i.e., licenses from patent holders) nor does it even have any office furniture or equipment. These representations are regrettably consistent with information recently obtained in the Lawsuit from iESi where Mr. Cochrane surprisingly represented in December 2006 that iESi "does not currently engage in any business operations and has not since prior to January 1, 2006." Despite this written representation, company records obtained in the Nevada Lawsuit reveal that iESi paid Mr. Cochrane at least $35,000 in the first 60 days of 2006. Those same company records reveal that iESi paid Mr. Foster at least $29,979.39 between January and May of 2006. Furthermore, a company believed to be associated with director Tom Bugg (Geo Petrol International) received $25,000 in 2006 and a company believed to be associated with director Fred Dornan (Airways Rental) received $1,243.75 from iESi in February 2006. Thus, even though Mr. Cochrane represented in writing that iESi has not engaged in any business "since prior to January 1, 2006," the company has curiously paid its directors (or companies associated with its directors) a total of $91,223.14 after January 1, 2006. Why? This was just one of numerous questions I wanted to ask Mr. Cochrane and Mr. Dornan during their depositions. Unfortunately, Mr. Cochrane and Mr. Dornan failed to appear and answer questions under oath and subject to the penalties of perjury.

In any event, the recent bankruptcy filing by iESi should not affect Mr. Dingwall's right to continue his suit against Mssrs. Foster, Cochrane and Dornan (or his defense of their claims against him) and, to the extent allowed by law, he intends to continue pursuing those gentlemen aggressively for the wrongs he believes they caused (and, derivatively, to all shareholders). Please feel free to email me with your questions or comments related to past events in the Nevada Lawsuit. As it relates to iESi's bankruptcy, please direct your questions/comments to the bankruptcy trustee, Mr. Timothy Cory. Mr. Cory can be reached by telephone at (702) 388-1996 or through the offices of the United States Trustee located at 300 Las Vegas Boulevard South, Suite 4300, Las Vegas, Nevada 89101.

Best regards,
Dan R. Waite, Esq.
Attorney for Terry Dingwall