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

                                   FORM 10-KSB
                                   -----------

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934
                   For the fiscal year ended   December 31, 2004
                                            ---------------------

[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
                   For the transition period from             to
                                                 -----------    -------------
                   Commission file number 000-27199
                                                   --------------------------

                          LION-GRI INTERNATIONAL, INC.
                          ----------------------------
                 (Name of Small Business Issuer in Its Charter)

           Colorado                                       91-2015608
-------------------------------                           -------------------
(State or Other Jurisdiction of                           (I.R.S. Employer
Incorporation or Organization)                            Identification No.)

801 Muncesti Street, Chisinau, Moldova                    MD-2029
----------------------------------------                  -------------------
(Address of principal executive offices)                  (Zip Code)

Issuer's telephone number  011 373-22-41-40-81
                          ---------------------------------------------------

Securities registered under Section 12(b) of the Exchange Act:

     Title of each class              Name of each exchange on which registered

            None                                        None
     -------------------              -----------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes [x]   No [ ]





<PAGE>





Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year. $12,528,613

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average bid and asked prices of such stock, as of May 18,
2005 is $2,194,298.82.

The number of shares outstanding of the issuer's common stock, par value $.001
per share ("Common Stock") as of April 1, 2005 is 46,665,000 shares.


                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

None.


Transitional Small Business Disclosure Format (check one):
Yes [ ]          No [X]

Forward Looking Statements
--------------------------

Certain statements contained herein constitute "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These forward-looking statements can be identified
by the use of predictive, future-tense or forward-looking terminology, such as
"believes," "anticipates," "expects," "estimates," "plans," "may," "intends,"
"will," or similar terms. These statements appear in a number of places in this
report and include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to,
among other things: (i) trends affecting the Company's financial condition or
results of operations, (ii) the Company's business and growth strategies (iii)
the Company's financing plans.

Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ from these projected in the
forward-looking statements. The discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements and notes related thereto included elsewhere in this
report.




<PAGE>





                                     PART I
                                     ------



ITEM 1.  DESCRIPTION OF BUSINESS.
---------------------------------

General. Lion-Gri International, Inc. (formerly Napoli Enterprises, Inc.) and
-------
its subsidiaries (collectively, the "Company") produce, market and sell premium
Moldovan wines in countries outside Moldova, with approximately 90% percent of
revenue coming from sales to the Russian Federation.

The Company was incorporated under the laws of the State of Colorado in January
1999 as IDS Internet Distribution systems Inc. In July 1999 the Company changed
its name to Denmans.com Inc. The business of the Company was to develop an
electronic website for the purpose of retail sale of jewelry and jewelry related
items. In November 2001, the Company changed its name to Impulse Media
Technologies, Inc. and shifted its business purpose. In November 2002, the
Company changed its name to Napoli Enterprise, Inc.

In June 2002, the Company incorporated a new subsidiary, Napoli Resources (USA)
Inc., to explore new business opportunities. As of December 31, 2004, the new
subsidiary has had no transactions.

In July 2003, the Company entered into a stock purchase agreement (the "Stock
Purchase Agreement") with the shareholders ("Novotech Shareholders") of Novotech
Holdings, Inc. ("Novotech"), a corporation organized under the laws of the
British Virgin Islands. Pursuant to the Stock Purchase Agreement the Novotech
Shareholders acquired the common stock constituting approximately 87% of
Napoli's issued and outstanding stock. The Novotech Shareholders together owned
100% of the issued and outstanding capital stock of Novotech. Novotech, in turn,
owns an approximate 99% ownership interest in Lion Gri, S.R. L. ("Lion Gri"), a
company organized under the laws of the Republic of Moldova which is engaged in
the production and sale of wine.

Pursuant to the Stock Purchase Agreement, the Novotech Shareholders sold to
Napoli approximately 90% of the issued and outstanding capital stock of Novotech
and thereby a controlling indirect ownership interest in Lion Gri. As
consideration for the transfer of a controlling interest in Novotech and Lion
Gri, the Company issued to the Novotech Shareholders 34,474,451 newly-issued
shares of common stock of Napoli constituting approximately 87% of Napoli's
outstanding capital stock after such issuance on a fully-diluted basis. As a
result of the acquisition Lion Gri is now the operating business of the Company.

The Company's subsidiary, Lion-Gri, a limited liability company in the Republic
of Moldova, commenced operations in 1998 and is 99.97% owned by Novotech with
the remaining .03% owned by Grineva S.R.L., a limited liability company in the
Republic of Moldova controlled by the Company's President, Gregory Sonic.
Additionally, Lion-Gri acquired controlling interest in Botritis S.A. (50.3%), a
Moldovan entity in the fiscal year 1998.




<PAGE>





Lion-Gri Plus SRL was incorporated on April 10, 2003 as a limited liability
company in the Republic of Moldova and is a wholly owned subsidiary of Lion-Gri,
with operations commencing in 2004.

Suppliers. Generally, a significant amount of grapes are not produced from newly
---------
planted vines or vines which are grafted to a new variety. As several of the
Company's vineyards are young (newly planted in last three (3) years), the
vineyards will only begin to bear grapes at full capacity in two (2) years,
subject to some variation due to the effects of factors such as weather
conditions, geographic location, variety of grape grown, vine density, quality
and type of soil and water quality.

As a result, the Company purchases more than 53% of the wine raw material used
in its wine production from third party suppliers, including Botritis S.A.,
Tomai Vin S.A., Vinar S.A., Generalvinproduct S.A. and Vierul-Vin S.R.L., each
of which is located in Moldova.

Products. Lion Gri is a wine producer operated out of the Republic of Moldova
--------
with its primary market in Russia and Western Europe. The wine industry in
Moldova is among the most historically well established in all of the former
Soviet Union. Lion Gri is among the largest wine producers in Moldova. Lion Gri
currently markets and sells over 120 varieties of wine including red and white
varietals, cognac, champagne, and desert wine. The Company also introduced a
brandy line to the Russian market in 2004.

Sales. Two customers, Vinnii Mir and Rusimport Ltd., accounted for approximately
-----
90% of Company sales for the years ended December 31, 2004 and 2003. The primary
market for the Company's wines is the Russian Federation, which accounts for
approximately 90% of the Company's sales. The Company exports its remaining
products, in varying amounts, to the United States, Poland, Ukraine, Belarus,
Czech Republic, Turkey, Belgium, the Netherlands, and Luxembourg, Germany and
Taiwan. The distribution strategies in each country are conducted and
implemented by the Company's importers.

The Company's operations are conducted in the Republic of Moldova. Accordingly,
the Company 's business, financial condition, and results of operations maybe
influenced by the political, economic, and legal environments in the Republic of
Moldova, and by the general state of the Moldovan economy.

Seasonality. The wine making business is seasonal. The Company normally produces
-----------
substantially all of its wine in September and October of each year, and
receives the majority of its cash from wine sales in the third quarter.

Government and Environmental Regulation. The Company's operations in the
---------------------------------------
Republic of Moldova are subject to considerations and significant risks not
typically associated with companies operating in North America and Western
Europe. These include risks associated with, among others the political,
economic and legal environments and foreign currency exchange. The Company's
results may be adversely affected by changes in the political and social
conditions in the Republic of Moldova, and by changes in governmental policies




<PAGE>





with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation among other
things.

Administrative Offices. The Company's main offices and each winery are located
----------------------
at the Lion Gri facilities in Chisinau City in the Republic of Moldova.

The Company does not currently maintain an office in the United States, but does
anticipate the need for an office within the New York City area in the near
future.

Employees. The Company currently has 971 full time employees of which 40 people
---------
serve in various managerial capacities, all of which are employed in the Company
facilities in Chisinau City in the Republic of Moldova.

Risk Factors. In connection with the "safe harbor" provisions of the Private
------------
Securities Litigation Reform Act of 1995, important risk factors are identified
below that could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to such future periods in any
current statements. The Company undertakes no obligation to publicly revise any
forward-looking statements to reflect future events or circumstances. Such
factors, risks and uncertainties include, but are not limited to:

     -    the dependence of the Russian Federation market for 90% of the
Company's sales;

     -    the dependence on two customers for approximately 90% of the Company's
sales;

     -    the requirement to commit substantial capital to vineyards and
processing facilities in advance of realizing income on such investments;

     -    success in planting, cultivating and harvesting of existing and new
vineyards, including the effects of weather conditions;

     -    effects of variances in grape yields and prices from harvest to
harvest due to agricultural, market and other factors and relatively fixed
farming costs;

     -    the potential effect on the Company's vineyards of certain diseases,
insects and pests;

     -    success in, and the timing of, future acquisitions, if any, of
additional properties for vineyard development and related businesses as well as
variability in acquisition and development costs;

     -    consumer demand and preferences for the wine grape varieties that the
Company produces;

     -    general health and social concerns regarding consumption of wine and
spirits;

     -    the size and growth rate of the Moldovan wine industry;





<PAGE>





     -    the seasonality of the wine grape producing business;

     -    the increases or changes in government regulations regarding
environmental impact, water use, labor or consumption of alcoholic beverages;

     -    the continued reliance upon, and retention of, the executive
management members of the Sonic family, especially Gregory Sonic;

     -    competition from other producers and wineries;

     -    the availability of financing on terms acceptable to the Company; and

     -    the Company's labor relations.


Item 2. DESCRIPTION OF PROPERTY
-------------------------------

The Company's main offices and winery are at the Company facilities in Chisinau
City in the Republic of Moldova. The Company's telephone number in Moldova is
011 373-22-41-40-81. The Company anticipates that it will require an executive
office in the New York City area in the near future in order to carry out its
plan of operations described herein.

Lion Gri owns 2870 acres of agricultural land, leases 952 acres, all of which is
in Moldova, and 1509 acres of which are vineyards. The Company owns two plants
for primary wine making, with total capacity of approximately 20,000 tons of
grapes per year and a bottling wine factory with the capacity of approximately
50,000,000 bottles per year. The Company is also constructing wine-cellars with
100,000 square meters of total acreage for maturing of vines out of which 20,000
square meters are presently being actively used for maturing of wines and
production of sparkling wines. Substantially all of the Company's property,
plant and equipment serve as collateral for debt.

ITEM 3.  LEGAL PROCEEDINGS.
---------------------------

The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated, except that in April 2005, the Company
received notice of service of process naming the Company in an action brought in
the Supreme Court of British Columbia. The plaintiff, Alexander Bardin, is
alleging that on or about January 3, 2002, he and the defendants, Marshall
MacLeod, Impulse Media Technologies (BC) Inc. and the Company, reached an
agreement wherein defendants would issue one million shares of the Company's
common stock to plaintiff, in consideration of which plaintiff was required to
pay defendants U.S.$100,000.00. Plaintiff alleges that although defendants
received plaintiff's payment, from the date of payment to July 15, 2002,
defendant's failed to deliver the shares and that since that time, defendants
have failed or refused to return the U.S.$100,000.00. As discussed above, the




<PAGE>





Company did not yet appear in this action and is in process of engaging counsel.
At this time, however, the Company believes that this action is without merit
and intends to vigorously pursue its defenses.

No director, officer or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
-------------------------------------------------------------

No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2004.


                                     Part II
                                     -------

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
-----------------------------------------------------------------

The following table sets forth the high and low bid prices for the periods
ending December 31, 2004. The Company underwent a 50 share for 1 share stock
split on January 6, 2003 and the quotations below for 2003 are on a post split
basis. All quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not reflect actual transactions.

     2004            QUARTER             HIGH            LOW
--------------  -----------------   --------------  -------------
                        4th              .30              .12
                        3rd              .37              .16
                        2nd              .28              .20
                        1st              .34              .16

     2003            QUARTER             HIGH            LOW
--------------  -----------------   --------------  -------------
                        4th              .57              .20
                        3rd             1.70              .15
                        2nd              .15              .15
                        1st              .15              .10

As of December 31, 2004, there were 107 holders of record of the Company's
Common Stock.

Recent Issuances of Unregistered Securities. On August 1, 2004, the Company
-------------------------------------------
entered into a consulting agreement with a public relations firm. The term of
the agreement is two years. The Company must pay a monthly retainer of $10,000,




<PAGE>





and additionally, the Company granted the consultants 1,900,000 shares of Common
Stock, 35% of which vested upon the execution of the agreement and the remainder
of which vested on February 5, 2005. On January 12, 2005, in partial payment of
the above, the Company issued 665,000 shares of its Common Stock the public
relations firm.

The offer and sale of the securities in the foregoing transaction was exempt
from registration under the Act by virtue of Section 4(2) thereof and the rules
promulgated thereunder.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
------------------------------------------------------------------

     Certain matters discussed in this Management's Discussion and Analysis of
Financial Condition and Plan of Operation are "forward-looking statements".
These forward-looking statements can generally be identified as such because the
context of the statement will include such words as the Company "believes,"
"anticipates," "expects," or words of similar meaning. Similarly, statements
that describe the Company's future operating performance, financial results,
plans, objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to certain factors, risks and
uncertainties which could cause actual results to differ materially from those
currently anticipated. Such factors, risks and uncertainties include, but are
not limited to:

     o    Success in planting, cultivating and harvesting of existing and new
          vineyards, including the effects of weather conditions,
     o    Effects of variances in grape yields and prices from harvest to
          harvest due to agricultural, market and other factors and relatively
          fixed farming costs,
     o    The potential effect on the Company's vineyards of certain diseases,
          insects and pests,
     o    Success in, and the timing of, future acquisitions, if any, of
          additional properties for vineyard development and related businesses
          as well as variability in acquisition and development costs,
     o    Consumer demand and preferences for the wine grape varieties we
          produce,
     o    General health and social concerns regarding consumption of wine and
          spirits,
     o    The size and growth rate of the Moldovan wine industry,
     o    Seasonality of the wine grape producing business,
     o    Increases or changes in government regulations regarding environmental
          impact, water use, labor or consumption of alcoholic beverages,
     o    Competition from other producers and wineries,
     o    The availability of financing on terms acceptable to us, and
     o    Our labor relations.

     The following analysis of the results of operations and financial condition
of the Company should be read in conjunction with the consolidated financial
statements of Lion-Gri International, Inc. for the year ended December 31, 2004
and notes thereto contained herein.

OVERVIEW

     Lion-Gri International, Inc. (the "Company," or "Lion-Gri") was
incorporated under the laws of the State of Colorado in January 1999 as IDS
Internet Distribution Systems, Inc. In July 1999 the Company changed its name to
Denmans.com Inc. In November 2001, the Company changed its name to Impulse Media
Technologies, Inc. and shifted its business purpose. In November 2002, the
Company changed its name to Napoli Enterprise, Inc. On October 20, 2004, the
Company changed its name to Lion-Gri International, Inc.




<PAGE>





     In July 2003, the Company entered into a stock purchase agreement (the
"Stock Purchase Agreement") with the shareholders (Novotech Shareholders") of
Novotech Holdings, Inc. ("Novotech"), a corporation organized under the laws of
the British Virgin Islands. Pursuant to the Stock Purchase Agreement the
Novotech Shareholders acquired Lion-Gri's common stock constituting
approximately 87% of the Lions-Gri's issued and outstanding stock. The Novotech
Shareholders together own 100% of the issued and outstanding capital stock of
Novotech. Novotech, in turn, owns a 99.97% ownership interest in Lion-Gri, S.R.
L. ("Lion-Gri S.R.L."), a company organized under the laws of the Republic of
Moldova which is engaged in the production and sale of wine.

     Pursuant to the Stock Purchase Agreement, the Novotech Shareholders sold to
Lion-Gri approximately 90% of the issued and outstanding capital stock of
Novotech and thereby a controlling indirect ownership interest in Lion-Gri. As
consideration for the transfer of a controlling interest in Novotech and Lion
Gri, the Company issued to the Novotech Shareholders 34,474,451 newly-issued
shares of common stock of Lion-Gri constituting approximately 87% of Lion-Gri's
outstanding capital stock after such issuance on a fully-diluted basis. As a
result of the acquisition Lion Gri S.R.L. and its subsidiaries are now the
operating business of the Company.

     Lion-Gri is a wine producer operated out of The Republic of Moldova with
its primary market in Russia and Western Europe. The wine industry in Moldova is
among the most historically well-established in all of the former Soviet Union.
Lion-Gri is among the largest wine producers in Moldova. Lion-Gri currently
markets and sells over 120 varieties of wine including red and white varietals,
cognac, champagne, and desert wine. The primary market for the Company's wines
is Russia which accounts for in excess of 90% of the Company's sales.

REGULATORY AND ECONOMIC CONDITIONS IN MOLDOVA

     We produce all of our wines in Moldova, and as a result we may be affected
by changes in the regulatory and economic conditions in Moldova. The wine
industry is subject to extensive regulation by the Moldovan Ministry of
Agriculture and various foreign agencies, and local authorities. These
regulations and laws dictate such matters as licensing requirements, trade and
pricing practices, permitted distribution channels, permitted and required
labeling, advertising and relations with wholesalers and retailers. Any
expansion of our existing facilities or development of new vineyards or wineries
may be limited by present and future zoning ordinances, environmental
restrictions and other legal requirements.

     New regulations, requirements and/or increases in excise taxes, income
taxes, property and sales taxes or international tariffs, could reduce our
profits.

     The Republic of Moldova has undergone significant political and economic
change since 1990 and any substantial change in current laws or regulations (or
in the interpretations of existing laws or regulations), whether caused by
changes in the government of Moldova or otherwise, could have an impact on our
results of operations. The Republic of Moldova became the first former republic
of the USSR to elect a communist majority parliament and therefore a communist
president in 2001. Current political forces in the parliament are promoting
significantly greater government controls over the economy and in particular
over agricultural production. If the president and parliament decide to exert
additional control over agricultural production, our business, financial
condition and results of future operations could suffer. We could be forced to
sell some of our land or vineyards, restrict the acres of vineyards that we are
allowed to harvest or limit the amount of wine we are permitted to bottle and/or
sell in the Republic of Moldova or export to other countries. We may also be




<PAGE>





required to pay additional taxes and/or fees in connection with our production
of wine and we may not have as much control over the operations of our
day-to-day business operations in the Republic of Moldova. Additionally, because
we export most of our products, actions by the government implement additional
controls on import and export operations, whether prompted by concerns over
money laundering or other concerns, could limit our ability to quickly respond
to customer needs in other countries and/or bring in capital into the Republic
of Moldova for business operations.

ECONOMIC CONDITIONS IN OUR KEY MARKETS

     We derived approximately 99% of our total revenue in the fiscal 2004 and
2003 from sales of our products outside Moldova, with approximately 90% of our
total revenue coming from sales in the Russian Federation. While the Russian
market will remain our principal channel of distribution for the foreseeable
future, over the last three years we have worked to lessen our dependence on
this market and increase our sales to other geographic areas. Our plan is to
attempt to reduce our reliance on sales in the Russian Federation by increasing
our sales to our other current markets and entering new markets, including the
United States. However, our business will remain heavily influenced by the
general economic conditions in the countries in which we currently do business,
especially the Russian Federation. A significant deterioration in these
conditions, including a reduction in consumer spending levels, could reduce our
sales. In addition, we are affected by political and economic developments in
any of the other countries where we market and distribute our products. Our
operations are also subject to the imposition of import, investment or currency
restrictions, including tariffs and import quotas or any restrictions on the
repatriation of earnings and capital.

FOREIGN EXCHANGE CONSIDERATIONS

     Because revenues from our operations in The Republic of Moldova accounted
for approximately 99% of our total operations for the fiscal year ended December
31, 2004 and the fiscal year ended December 31, 2003, respectively, how we
report net revenues from our Moldovan-based companies is of particular
importance to understanding our financial statements. We incur most of our
expenses in Moldovan lei, however, many of our sales are to customers outside of
Moldova and are therefore denominated in currencies other than the lei.
Additionally, we have certain bank loans that are denominated in U.S. dollars
and EUROS, and make certain purchases that are denominated in U.S. dollars and
EUROS. As a result, our operating results can be affected by changes in the
exchange rate between the lei and other currencies. Such exchange rates reflect,
and may change, as a result of changes in economic and political conditions in
Moldova.

     Transactions and balances originally denominated in U.S. dollars are
presented at their original amounts. Transactions and balances in other
currencies are converted into U.S. dollars in accordance with Statement of
Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation,"
and are included in determining net income or loss. For foreign operations with
the local currency as the functional currency, assets and liabilities are
translated from the local currencies into U.S. dollars at the exchange rate
prevailing at the respective balance sheet date. Revenues and expenses are
translated at weighted average exchange rates for the period to approximate
translation at the exchange rates prevailing at the dates those elements are
recognized in the financial statements. Translation adjustments resulting from
the process of translating the local currency financial statements into U.S.
dollars are included in determining comprehensive loss.

     The functional currency of our Moldovan subsidiaries is the Moldovan Lei,
the local currency. The financial statements of the subsidiaries are translated
to U.S. dollars using period-end rates of exchange for assets and liabilities,
and average rates of exchange for the period for revenues, costs, and expenses.
Net gains and losses resulting from foreign exchange transactions are included




<PAGE>





in the consolidated statements of operations. The cumulative translation
adjustment and effect of exchange rate changes on cash at December 31, 2004 was
not material.

RESULTS OF OPERATIONS
---------------------

Seasonality and Quarterly Results
---------------------------------

     We have experienced and expect to continue to experience seasonal and
quarterly fluctuations in our revenues. Because of the inherent seasonality of
our operations, we have historically reported our highest revenues and net
income in our third fiscal quarter as we sell most of our bulk wine in the third
quarter, immediately after crush, and perform many of our wine processing
services in the first and second quarters. As a result, we typically report
lower revenues and net income (loss) in the first and fourth fiscal quarters.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

Revenues

     For the year ended December 31, 2004, we had consolidated revenues of
$12,528,613 as compared to $11,729,877 for the year ended December 31, 2003, an
increase of $ 798,736 or 6.8%. We experienced increased sales of our wines in
the Western European community. We are currently seeking to increase our
revenues from the sale of our wines into the United States markets.

Cost of Sales and Gross Profit

     For the year ended December 31, 2004, cost of sales amounted to $9,425,672
or 75.2% of net revenues as compared to $8,862,232 or 75.5% of net revenues for
the year ended December 31, 2003, an increase of 6.36%. This increase resulted
from increased revenues was proportional to the increase in our revenues.

     Gross profit is calculated by subtracting from total revenues the costs of
producing grapes and bulk wine that were sold, and costs related to the sales of
wine and wine-related merchandise. Gross profit for the year ended December 31,
2004 was $3,102,941 or 24.8% of revenues as compared to $2,867,645 or 24.5% of
revenues for the year ended December 31, 2003, an increase of $235,296, or 8.2%.
The increase was primarily due to increased revenues for the period. Our gross
profit margin is materially affected by the price we pay to purchase grapes and
bulk wine. In the harvest, which took place in the fall of 2003 the prices we
paid for grapes and bulk wine were generally higher than they were in 2002. The
grapes and bulk wine purchased in the fall of 2003 will produce wines that will
be marketed by us in 2004 and subsequent years. If we are not able to increase
the prices we charge our distributors to offset this higher cost of grapes and
bulk wine our gross profit percentage may decrease.

Operating Expenses

     For the year ended December 31, 2004, selling and marketing expenses were
$1,128,132 as compared to $1,139,305 for the year ended December 31, 2003, a
decrease of $11,173 or 0.01%. We have increased our marketing expenses in order
to increase our sales in markets such as the United States and Europe by
approximately $66,300 offset by decreases in shipping and transportation
expenses and packaging expenses of approximately $32,900, a decrease in bad debt
expense of $ 39,600 and a decrease in other selling expenses of $5,000.

     For the year ended December 31, 2004, non-cash consulting expenses were
$277,083 as compared to $1,300,000 for the year ended December 31, 2003, a



<PAGE>





decrease of $1,022,917 or 78.7%. In 2004 and 2003, we issued common shares to
consultants for business development and investor relations services.

     For the year ended December 31, 2004, settlement expenses were $0 as
compared to $780,000 for the year ended December 31, 2003, a decrease of
$780,000 or 1007%. In 2003, we issued common shares to consultants in
consideration with the termination of certain consulting contracts for business
development and investor relations services.

     For the year ended December 31, 2004, general and administrative expenses
were $687,745 as compared to $524,171 for the year ended December 31, 2003, an
increase of $163,574 or 31.2%. We experience an increase in professional fees
associated with our SEC filings and increased our staff due to increased
operations incurring an increase in payroll expense and related benefits of
approximately $35,000. Additionally, we incur additional general and
administrative expenses due to our expanding operations

     For the year ended December 31, 2004, other operating expenses were
$591,995 as compared to $153,742 for the year ended December 31, 2003, an
increase of $438,253 or 285%. The increase in primarily attributable to an
increase in fines and penalties due to late delivery of product of approximately
$122,000 and an increase in property losses.

Other Income (Expense)

     During the year ended December 31, 2004, we recorded other income of
$827,016. During the year ended December 31, 2003, we recognized other income of
$498,419. This represents an increase of $328,597 or 66%. In 2004, we recognized
other income of approximately $737,000 related to the sale of certain trade
secrets.

Foreign currency gain (loss)

     Foreign currency losses were $(62,305) for the year ended December 31, 2004
as compared to foreign currency gains of $101,276 for the year ended December
31, 2003. This change related to the fluctuation of the Moldovan Lei against
other currencies.

Interest Expense

     Interest expense, net was $514,760 for the year ended December 31, 2004 as
compared to $223,394 for the year ended December 31, 2003 due to increased
borrowings and excludes interest capitalized on borrowings related to our
property, plant and equipment.

OVERALL

     We reported net income for the year ended December 31, 2004 of $666,726
compared to a net loss for the year ended December 31, 2003 of $(717,046). This
translates to overall per-share income of $.01 for the year ended December 31,
2004 compared to per-share loss of $(.02) for the year ended December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     At December 31, 2004, we had a cash balance of $75,940. As of December 31,
2004, our cash position by geographic area is as follows:




<PAGE>





           United States    $          56
           Moldova                 75,884
                            ---------------
           Total            $      75,940
                            ===============

     Our primary sources of cash have historically been funds provided by
internally generated cash flow and bank borrowings. We have made substantial
capital expenditures to redevelop our existing vineyard properties, to acquire
and develop new acreage, and to construct our wine-cellars with 100,000 square
meters of total acreage for maturing of vines out of which 20,000 square meters
are presently being actively used for maturing of wines and production of
sparkling wines. We intend to continue these types of expenditures. Cash
generated from operations has not been sufficient to satisfy all of our working
capital and capital expenditure needs. As a consequence, we have depended upon
and continue to rely upon, both short and long-term bank borrowings. The Company
had working capital at December 31, 2004 of $258,587 as compared to $828,604 at
December 31, 2003, a decrease of $570,017.

     Under the Company's historical working capital cycle, working capital is
required primarily to finance the costs of growing and harvesting its wine grape
crop. We normally produce substantially all of our wine in September and
October, and receive the majority of our cash from wine sales in the third
quarter. In order to bridge the gap between incurrence of expenditures and
receipt of cash from wine sales, large working capital outlays are required each
year. Historically, we have obtained these funds pursuant to credit agreements
with banks.

     We currently have borrowings under credit agreements that provide both
short-term and long-term funds. We have long-term credit agreements which are
secured by property, plant and equipment and inventory. At December 31, 2004,
the outstanding amount owed by the Company under these credit agreements was
approximately $5,339,000. Interest on the borrowings is due monthly at rates
ranging from 9% to 22%. At December 31, 2004, the weighted average interest rate
on these facilities was approximately 17%. Additionally, we have short-term
credit agreements which are secured by property, plant and equipment and
inventory. At December 31, 2004, the outstanding amount owed by the Company
under these short-term credit agreements was approximately $630,641. Interest on
the borrowings is due monthly at rates ranging from 11% to 22.5%. At December
31, 2004, the weighted average interest rate on these facilities was
approximately 18%.

     During the year ended December 31, 2004 and 2003 our operations produced
positive cash flows, which we used during both periods to invest in property,
plant and equipment.

     Although no assurances can be given, management believes that the Company's
anticipated working capital levels and short-term borrowing capabilities will be
adequate to meet the Company's currently anticipated liquidity needs during the
next twelve months.

     Management anticipates that additional capital requirements will be needed
to support expected improvements in the Company's existing vineyard properties
and wine cellars and that this will result in the expenditure of the Company's
available cash and additional borrowing under credit lines and/or new
arrangements for term debt. The Company's planned vineyard development and
improvements are expected to require approximately $7.0 million in capital
investment over the next three years. In addition, the Company expects to invest
approximately $3.5 million in equipment purchases. Management believes it should
be able to obtain long-term funds from its present principal lender, but there
can be no assurance that the Company will be able to obtain financing when
required or that such financings will be available on favorable terms.




<PAGE>





     Net cash provided by operations was $1,881,920 for the year ended December
31, 2004, as compared to net cash provided by operations of $281,451 for the
year ended December 31, 2003. In 2004, we used cash to reduce our accounts
payable and accrued expense of $454,534, the repayment of related parties of
$156,770 and funded an increase in accounts receivable of $862,408 and other
current and non-current assets of $107,342 offset by net income of $666,726,
non-cash items such as depreciation and amortization expense of $328,135 and
stock-based consulting expense of $277,083. Additionally, we had lower levels of
inventories and advances to suppliers by 705,184 and received advances from
customers of $1,057,297 and advances from related parties of $407,265. For the
year ended December 31, 2003, our net cash provided by operations was from a net
loss of $717,046, cash used to fund inventories of $1,563,797, advances to
suppliers of $540,774 and the repayment of accounts payable of $496,489 offset
by adding back non-cash items such as depreciation of $257,550 and stock- based
consulting and settlement expense of $2,080,000, decreases in advances from
customers of $1,039,132, and decreases in accounts receivable of $202,301.

     Net cash used in investing activities for the year ended December 31, 2004
was $2,891,885 as compared to net cash used in investing activities for the year
ended December 31, 2003 of $2,744,331. For the year ended December 31, 2004, we
used cash for capital expenditures and the purchase of intangibles of $2,854,589
and $38,319, respectively. For the year ended December 31, 2003, we used cash
primarily for capital expenditures of $2,916,243 offset by net cash received
from the repayment of notes receivable of $183,977.

     Net cash provided by financing activities were $1,032,449 for the year
ended December 31, 2004 as compared to cash provided by financing activities of
$2,414,000 for the year ended December 31, 2003 and was primarily attributable
to our credit facilities and the repayment of related party loans.

     We currently have no material commitments for capital expenditures. Our
future growth is dependent on our ability to raise capital for expansion, and to
seek additional revenue sources. If we decide to pursue any acquisition
opportunities or other expansion opportunities, we may need to raise additional
capital, although there can be no assurance such capital-raising activities
would be successful.

CRITICAL ACCOUNTING POLICIES

     A summary of significant accounting policies is included in Note 1 to the
audited consolidated financial statements included herein. Management believes
that the application of these policies on a consistent basis enables the Company
to provide useful and reliable financial information about the company's
operating results and financial condition.

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates. Significant estimates in 2004
and 2003 include the allowance for doubtful accounts, the evaluation of
intangible assets, and the useful life of property, plant and equipment.

     We account for stock options issued to employees in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. As such,
compensation cost is measured on the date of grant as the excess of the current
market price of the underlying stock over the exercise price. Such compensation
amounts, if any, are amortized over the respective vesting periods of the option
grant. We adopted the disclosure provisions of SFAS No. 123, "Accounting for



<PAGE>





Stock-Based Compensation" and SFAS 148, "Accounting for Stock-Based Compensation
-Transition and Disclosure", which permits entities to provide pro forma net
income (loss) and pro forma earnings (loss) per share disclosures for employee
stock option grants as if the fair-valued based method defined in SFAS No. 123
had been applied. We account for stock options and stock issued to non-employees
for goods or services in accordance with the fair value method of SFAS 123.

     Inventories are stated at the lower of cost or market on the weighted
average cost basis, and includes finished goods, raw materials, packaging
material and product merchandise. Finished goods include costs of raw materials
(grapes and bulk wine), packaging, labor used in wine production, bottling,
shipping and warehousing of winery facilities and equipment. In accordance with
general practice in the wine industry, wine inventories are included in current
assets, although a portion of such inventories may be aged for periods longer
than one year.

     Property, plant and equipment are carried at cost. The cost of repairs and
maintenance is expensed as incurred; major replacements and improvements are
capitalized. Costs incurred in developing vineyards, including interest costs,
are capitalized until the vineyards become commercially productive. When assets
are retired or disposed of, the cost and accumulated depreciation are removed
from the accounts, and any resulting gains or losses are included in income in
the year of disposition. In accordance with Statement of Financial Accounting
Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the Company examines the possibility of decreases in the
value of property, plant and equipment when events or changes in circumstances
reflect the fact that their recorded value may not be recoverable.

     The Company follows the guidance of the Securities and Exchange
Commission's Staff Accounting Bulletin 104 for revenue recognition. In general,
the Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably assured.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's first quarter of fiscal 2007.
We are in process of evaluating the impact of this pronouncement on its
financial position.

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. We believe that the adoption of this
standard will have no material impact on our financial statements.

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "Accounting In Certain Investments In Debt and
Equity Securities." EITF 03-01 also included accounting considerations



<PAGE>





subsequent to the recognition of an other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. We
believe that the adoption of this standard will have no material impact on our
financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

Under SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. An off-balance sheet arrangement means
a transaction, agreement or contractual arrangement to which any entity that is
not consolidated with us is a party, under which we have:

     o    Any obligation under certain guarantee contracts;
     o    Any retained or contingent interest in assets transferred to an
          unconsolidated entity or similar arrangement that serves as credit,
          liquidity or market risk support to that entity for such assets;
     o    Any obligation under a contract that would be accounted for as a
          derivative instrument, except that it is both indexed to our stock and
          classified in stockholder's equity in our statement of financial
          position; and
     o    Any obligation arising out of a material variable interest held by us
          in an unconsolidated entity that provides financing, liquidity, market
          risk or credit risk support to us, or engages in leasing, hedging or
          research and development services with us.

As of the date of this report, we do not have any off-balance sheet arrangements
that we are required to disclose pursuant to these regulations. In the ordinary
course of business, we enter into operating lease commitments, purchase
commitments and other contractual obligations. These transactions are recognized
in our financial statements in accordance with generally accepted accounting
principles in the United States.

OPERATING RISK

(a)  Country risk

     Our operations are conducted in the Republic of Moldova. Accordingly, the
Group's business, financial condition, and results of operations may be
influenced by the political, economic, and legal environments in the Republic of
Moldova, and by the general state of the Moldovan economy.

     Our operations in the Republic of Moldova are subject to considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others the political,
economic and legal environments and foreign currency exchange. Our results may
be adversely affected by changes in the political and social conditions in the
Republic of Moldova, and by changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion and
remittance abroad, and rates and methods of taxation among other things.

(b)  Our future performance is dependent on its ability to retain key personnel




<PAGE>





     Our performance is substantially dependent on the performance of our senior
management. In particular, the Company's success depends on the continued effort
of our Senior Management to maintain all contact with our Moldovan subsidiaries.
Our inability to retain Senior Management could have a material adverse effect
on our prospects, businesses, Moldovan operations, financial conditions

ITEM 7. FINANCIAL STATEMENTS.
-----------------------------

See Financial Statements.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------

On December 23, 2003 the Company engaged the accounting firm of Sherb & Co. as
it's independent accountants to audit the Company's financial statements
beginning with the fiscal year ended December 31, 2003. The Company amicably
concluded it's relationship with its former accountants Miller & McCollum with
the appointment of Sherb & Co.

There have been no disagreements with accountants on accounting matters or
financial disclosure.

ITEM 8A. Controls and procedures
--------------------------------

     We carried out an evaluation as of the end of the period covered by this
Annual Report on Form 10-KSB for the year ended December 31, 2004, under the
supervision and with the participation of our management, including our chief
executive officer and chief financial officer, of the effectiveness of the
design and operation of our "disclosure controls and procedures," as such term
is defined under Exchange Act Rule 13a-15(e).

     Based on this evaluation, our chief executive officer and chief financial
officer concluded that, as of the end of the period covered by this report, such
disclosure controls and procedures were reasonably designed to ensure that
information required to be disclosed by us in the reports we file or submit
under the Exchange Act is: (a) recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission, and (b) accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.

     In designing and evaluating the disclosure controls and procedures, our
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives and in reaching a reasonable level of assurance our
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

     There were no changes in our internal controls over financial reporting
during the fourth fiscal quarter for the fiscal year ended December 31, 2004,
that materially affected, or were reasonably likely to materially affect, our
internal controls over financial reporting.




<PAGE>





                                    Part III
                                    --------



ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
--------------------------------------------------------------------------------
WITH SECTION 16(A) OF THE EXCHANGE ACT.
---------------------------------------

The directors and executive officers currently serving the Company are as
follows:

Name                 Age     Position(s) held
----                 ---     ----------------------------
Gregory Sonic        49      President, Chief Executive Officer, Director

Nelly Sonic          44      Vice-President, Secretary, Chief Financial Officer,
                             Director

Valdimir Sonic       46      Director

The directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, of which
none currently exists or is contemplated. There is no arrangement or
understanding between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer.

Biographical Information
------------------------

PRESIDENT, CEO and Director
---------------------------

Gregory Sonic. Gregory Sonic has been the President of Lion-Gri, S.R.L., since
-------------
1997. In July, 1999 the Highest Interacademical Certificate Commission of the
Interacademical Union awarded Mr. Sonic the scientific degree of Candidate of
Economic Science -Diploma KA Nr.0246. Also in 1999 the Russian Academy of
Natural Science chose Mr. Sonic as Foreign Member of the Department "Noospher
studies and technologies". From 1992 through 2004, Mr. Sonic served as an
Executive Director of Rabel S.A.

VICE-PRESIDENT SECRETARY, CHIEF FINANCIAL OFFICER and Director
--------------------------------------------------------------

Nelly Sonic. Since 1997, Ms. Sonic has worked as Vice-President of Lion-Gri,
-----------
S.R.L. Prior to that Ms. Sonic held various management positions in Moldova,
including Assistant Director of Grineva Ltd. from 1991 through 1997 and Manager



<PAGE>





of an Assortment Laboratory for the Ministry of Agriculture and Winery from 1985
through 1996.

DIRECTOR
--------

Vladimir Sonic. Vladimir Sonic was appointed a General Director of Lion-Gri,
--------------
S.R.L. in 1998. Prior to that, Mr. Sonic acted a Director of the Galbena wine
factory from 1984 through 1998.

Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------

The Company believes that, for the year ended December 31, 2004, all filing
requirements of Section 16(a) of the Securities Act of 1934, as amended,
applicable to its officers, directors and 10% stockholders were complied with
timely.

Committees
----------

The Company does not maintain any committees. Our board of directors currently
acts as our audit committee. Currently, no members of our board are
"independent" in accordance with rule 4200(a)(14) of the Nasdaq Marketplace
Rules. Our board of directors does not have an "audit committee financial
expert," within the meaning of that phrase under applicable regulations of the
SEC, serving on the audit committee. In an attempt to comply with the "audit
committee financial expert" requirement, the board of directors engages the
services of Adam Wasserman. The board believes that, as Mr. Wasserman is a
certified public accountant, he (1) understands generally accepted accounting
principles ("GAAP") and financial statements, (2) has experience assessing the
general application of GAAP principles in connection with a company's accounting
for estimates, accruals and reserves, (3) is capable of analyzing and evaluating
the Company's financial statements, (4) understands the Company's internal
controls and procedures for financial reporting, and (5) understands audit
committee functions, all of which are attributes of an audit committee financial
expert. As is the case with many small companies, it is difficult for the
Company to attract and retain board members who qualify as "audit committee
financial experts," and competition for such individuals is significant. The
board of directors believes that its current audit committee, with the
assistance of Mr. Wasserman, is able to fulfill its role under SEC regulations
despite not having a designated "audit committee financial expert."

ITEM 10.  EXECUTIVE COMPENSATION.
---------------------------------

None of the executive officers of the Company receive compensation in excess of
$100,000.

The Company has no stock option, retirement, pension, or profit-sharing programs
for the benefit of directors, officers or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.




<PAGE>





ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
------------------------------------------------------------------------

The following table sets forth, as of the end of the Company's most recent
fiscal year, the number of shares of Common Stock owned of record and
beneficially by executive officers, directors and persons who hold 5.0% or more
of the outstanding Common Stock of the Company. Also included are the shares
held by all executive officers and directors as a group.

Name and                             Number of Shares       Percent of
Address                              Owned Beneficially     Class Owned
---------------------------------------------------------------------------

Gregory Sonic                           11,721,315              25.5%
801 Muncesti Street
MD-2029, Chisinau, Moldova

Nelly Sonic                             11,376,568              24.7%
801 Muncesti Street
MD-2029, Chisinau, Moldova

Vladimir  Sonic                         11,376,568              24.7%
801 Muncesti Street
MD-2029 Chisinau, Moldova

Executive officers (3) persons         *34,474,451              74.9%

* Gregory Sonic and Nelly Sonic are husband and wife. Vladimir Sonic is Gregory
Sonic's brother.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

There were no transactions during the last two years to which the Company was or
is a party in which any of the directors, executive officers, nominee for
election as a director beneficial owner of more than 5% of the Company shares or
members of the immediate family of any of the forgoing had a direct or indirect
material interest. The President of the Company had and has minority interest in
certain entities in which the Company has business relationships as is more
fully described in the Notes to the attached financial statement.

Indemnification of Officers and Directors
-----------------------------------------

As permitted by Colorado law, the Company's Articles of Incorporation provide
that the Company will indemnify its directors and officers against expenses and



<PAGE>





liabilities they incur to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or having been Company
directors or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
------------------------------------------

(a)  The Exhibits listed below are filed as part of this Amended Report.

Exhibit No.                            Document
-----------                            --------

3.1            Articles of Incorporation (incorporated by reference from
               Registration Statement on Form 10-SB filed with the Securities
               and Exchange Commission on August 31, 1999.)

3.2            By-laws (incorporated by reference from Registration Statement on
               Form 10-SB filed with the Securities and Exchange Commission on
               August 31, 1999).

10.1           Agreement, dated July 10, 2004, between the Company and Rusimport
               Ltd.

10.2           Agreement, dated August 1, 2004, between the Company and
               Strategic Growth International, Inc.

14.1           Company Code of Ethics Statement (incorporated by reference from
               the Annual Report on Form 10-KSB filed with the Securities and
               Exchange Commission on April 16, 2004).

31.1           Rule 13a-14(a) Certification of Chief Executive Officer.

31.2           Rule 13a-14(a) Certification of Chief Financial Officer.

32.1           Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
               Chief Executive Officer.

32.2           Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
               Chief Financial Officer.

b)   The Company filed the following reports on Form 8-K during the fiscal year
     ended December 31, 2004:




<PAGE>





On January 14, 2004, the Company filed an 8-K under Item 8 relating to a change
in the Company's end of fiscal year from February 28 to December 31.

On March 23, 2004, the Company filed an 8-K under Item 4 relating to the change
in the Company's independent accountants, which occurred during the fiscal year
ended December 31, 2003.

ITEM 14. Principal Accountant Fees & Services
---------------------------------------------

Audit Fees
----------

Sherb & Company provided audit services to us for our annual reports for the
fiscal years ended December 31, 2004 and 2003. The aggregate fees billed for the
audit of our annual financial statements and review of financial statements
included 10-QSB's was approximately $45,000 for the two fiscal years.

Audit-Related Fees
------------------

There were no fees billed in each of 2004 and 2003 for professional services
that are reasonably related to the audit or review of your financial statements
that are not covered in the Audit Fees" disclosure above.

Tax Fees
--------

There were no fees billed for the years 2004 and 2003 for professional services
rendered by our audits for tax advice and planning.

All Other Fees
--------------

There were no fees billed in each of 2004 and 2003 for professional services
rendered by our audits for all other services not disclosed above.



<PAGE>





                                   SIGNATURES
                                   ----------

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


Dated:   May 19, 2005


                                    LION-GRI INTERNATIONAL, INC.



                                    By: /s/ Gregory Sonic
                                       -----------------------------------------
                                       Name:   Gregory Sonic
                                       Title:  President, Chief Executive
                                               Officer, Director




                                    By: /s/ Nelly Sonic
                                       -----------------------------------------
                                       Name:   Nelly Sonic
                                       Title:  Vice President, Secretary,
                                               Chief Financial Officer, Director



                                    By: /s/ Vladimir Sonic
                                       -----------------------------------------
                                       Name:  Vladimir Sonic
                                       Title:  Director



<PAGE>












                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2004 AND 2003









































                                       F-1
<PAGE>












                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





                                                                       Pages
                                                                     --------

Report of Independent Registered Public Accounting Firm                 F-3

Consolidated Balance Sheet                                              F-4

Consolidated Statements of Operations                                   F-5

Consolidated Statements of Changes in Stockholders' Equity              F-6

Consolidated Statements of Cash Flows                                   F-7

Notes to Consolidated Financial Statements                          F-8 to F-20

























                                       F-2
<PAGE>










             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders of
Lion-Gri International, Inc.


     We have audited the  accompanying  consolidated  balance  sheet of Lion-Gri
International,  Inc and  Subsidiaries  as of  December  31, 2004 and the related
consolidated statements of operations,  changes in stockholders' equity and cash
flows  for the years  ended  December  31,  2004 and  2003.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

     We  conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the circumstances,  but not for the purposes of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly, we express no such opinion. An audit includes examining
on a  test  basis,  evidence  supporting  the  amount  and  disclosures  in  the
consolidated  financial  statements.   An  audit  also  includes  assessing  the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Lion-Gri
International,  Inc. and Subsidiaries as of December 31, 2004 and the results of
their  operations and their cash flows for the years ended December 31, 2004 and
2003 in conformity with accounting  principles  generally accepted in the United
States of America.




                                                    Sherb & Co., LLP
New York, New York                                  Certified Public Accountants
April 10, 2005















                                       F-3
<PAGE>



<TABLE>
<CAPTION>
                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2004



                                     ASSETS

CURRENT ASSETS:
<S>                                                                    <C>
  Cash                                                                 $       75,940
  Trade receivables                                                         1,685,270
  Inventories                                                               6,222,928
  Advances to suppliers                                                     1,150,165
  Due from related party                                                      251,459
  Other current assets                                                         39,897
                                                                      ----------------

    Total Current Assets                                                    9,425,659

INVESTMENT IN EQUITY-METHOD INVESTEES                                          49,112
PROPERTY, PLANT AND EQUIPMENT, net                                          9,451,256
OTHER ASSETS                                                                  163,132
                                                                      ----------------

    Total Assets                                                      $    19,089,159
                                                                      ================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                                   $     2,681,669
  Short-term bank loans                                                       630,641
  Other short-term loans                                                       38,476
  Short-term advances from customers                                        2,477,652
  Trade accounts payable                                                    2,836,271
  Related party payables                                                      422,495
  Accrued liabilities                                                          79,868
                                                                      ----------------

    Total Current Liabilities                                               9,167,072

LONG-TERM LIABILITIES:
  Long-term debt                                                            2,657,551
  Other                                                                       210,629
                                                                      ----------------

    Total Liabilities                                                      12,035,252
                                                                      ----------------

MINORITY INTEREST                                                             112,511
                                                                      ----------------

STOCKHOLDERS' EQUITY:
  Common stock ($.001 Par Value; 500,000,000 Shares Authorized;
    46,000,000 shares issued and outstanding and 1,900,000
     shares issuable at December 31, 2004)                                     47,900
  Additional paid-in capital                                                4,180,901
  Retained earnings                                                         2,533,882
  Deferred compensation                                                      (197,917)
  Accumulated other comprehensive income                                      376,630
                                                                      ----------------

    Total Stockholders' Equity                                              6,941,396
                                                                      ----------------

    Total Liabilities and Stockholders' Equity                        $    19,089,159
                                                                      ================
</TABLE>



          See accompanying notes to consolidated financial statements.
                                       F-4
<PAGE>



<TABLE>
<CAPTION>
                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                         For the Year
                                                                      Ended December 31,
                                                             ------------------------------------
                                                                   2004                2003
                                                             ----------------    ----------------

<S>                                                          <C>                 <C>
NET REVENUES                                                 $    12,528,613     $    11,729,877

COST OF SALES                                                      9,425,672           8,862,232
                                                             ----------------    ----------------

GROSS PROFIT                                                       3,102,941           2,867,645
                                                             ----------------    ----------------

OPERATING EXPENSES:
  Selling and marketing                                            1,128,132           1,139,305
  General and administrative                                         687,745             524,171
  Non-cash consulting expenses                                       277,083           1,300,000
  Settlement expenses                                                      -             780,000
  Other operating expenses                                           591,995             153,742
                                                             ----------------    ----------------

    Total Operating Expenses                                       2,684,955           3,897,218
                                                             ----------------    ----------------

INCOME (LOSS) FROM OPERATIONS                                        417,986          (1,029,573)
                                                             ----------------    ----------------

OTHER INCOME (EXPENSE):
  Other income                                                       827,016             498,419
  Loss on equity-method investment                                         -             (49,022)
  Foreign currency gain (loss)                                       (62,305)            101,276
  Interest expense, net                                             (514,760)           (223,394)
                                                             ----------------    ----------------

    Total Other Income (Expense)                                     249,951             327,279
                                                             ----------------    ----------------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES                      667,937            (702,294)

PROVISION FOR INCOME TAXES                                            (1,674)             (7,249)
                                                             ----------------    ----------------

INCOME (LOSS) BEFORE MINORITY INTEREST                               666,263            (709,543)

MINORITY INTEREST IN INCOME (LOSS) OF SUBSIDIARY                         463              (7,503)
                                                             ----------------    ----------------

NET INCOME (LOSS)                                                    666,726            (717,046)

OTHER COMPREHENSIVE INCOME (LOSS):
  Unrealized foreign currency translation                            338,098             212,953
                                                             ----------------    ----------------

COMPREHENSIVE INCOME (LOSS)                                  $     1,004,824     $      (504,093)
                                                             ================    ================

  Net income (loss) per common share - basic and diluted     $          0.01     $         (0.02)
                                                             ================    ================

  Weighted common shares outstanding - basic and diluted          46,789,071          43,606,779
                                                             ================    ================
</TABLE>



          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>



<TABLE>
<CAPTION>
                 LION-GRI INTERNATIONAL, INC.. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 For the Years Ended December 31, 2004 and 2003




                                Common Stock, $.001 Par Value
                                -----------------------------   Additional                                                 Total
                                   Number of                     Paid-in      Retained       Deferred   Comprehensive  Stockholders'
                                    Shares          Amount       Capital      Earnings     Compensation  Income (Loss)     Equity
                                 --------------  ------------  ------------  ------------  ------------  ------------   ------------

<S>                              <C>             <C>           <C>           <C>           <C>           <C>            <C>
Balance, December 31, 2002          34,474,451   $    34,474   $   143,517   $ 2,584,202   $         -   $  (174,421)   $ 2,587,772

Recapitalization of company          5,525,549         5,526       (95,526)            -             -             -        (90,000)

Common stock issued for services     6,000,000         6,000     2,074,000             -             -             -      2,080,000

Capital contribution                         -             -     1,585,810             -             -             -      1,585,810

Comprehensive income (loss):
  Net loss for the year                      -             -             -      (717,046)            -             -       (717,046)

  Foreign currency translation
   adjustment                                -             -             -             -             -       212,953        212,953
                                 --------------  ------------  ------------  ------------  ------------  ------------   ------------

Balance, December 31, 2003          46,000,000        46,000     3,707,801     1,867,156             -        38,532      5,659,489

Common stock issued for services     1,900,000         1,900       473,100             -      (475,000)            -              -

Amortization of deferred
   compensation                              -             -             -             -       277,083             -        277,083

Comprehensive income (loss):
  Net income for the period                  -             -             -       666,726             -             -        666,726

  Foreign currency translation
   adjustment                                -             -             -             -             -       338,098        338,098
                                 --------------  ------------  ------------  ------------  ------------  ------------   ------------

Balance, December 31, 2004          47,900,000   $    47,900   $ 4,180,901   $ 2,533,882   $  (197,917)  $   376,630    $ 6,941,396
                                 ==============  ============  ============  ============  ============  ============   ============
</TABLE>






          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>



<TABLE>
<CAPTION>
                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                         For the Year
                                                                      Ended December 31,
                                                             ------------------------------------
                                                                   2004                2003
                                                             ----------------    ----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>                 <C>
Net income (loss)                                            $       666,726     $      (717,046)
Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
  Depreciation and amortization                                      328,135             257,550
  Stock-based compensation                                           277,083           2,080,000
  Loss on sale/disposal of property, plant and equipment              (4,691)                  -
  Minority interest                                                     (463)              7,503
  Loss on equity investment                                                -              49,022
Changes in operating assets and liabilities:
  Trade receivables                                                 (862,408)            202,301
  Inventories                                                        148,958          (1,563,797)
  Advances to suppliers                                              556,226            (540,774)
  Due from related parties                                          (156,770)            (86,101)
  Other current and non-current assets                              (107,342)             50,150
  Advances from customers                                          1,057,297           1,039,132
  Accounts payable                                                  (454,534)           (496,489)
  Related party payables                                             407,265                   -
  Other liabilities                                                   26,438                   -
                                                             ----------------    ----------------

Net cash provided by operating activities                          1,881,920             281,451
                                                             ----------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                            (2,854,589)         (2,916,243)
  Purchase of intangibles                                            (38,319)            (11,167)
  Payments received on note receivables                                    -             183,977
  (Purchase of) reduction in long-term investments                     1,023                (898)
                                                             ----------------    ----------------

Net cash used in investing activities                             (2,891,885)         (2,744,331)
                                                             ----------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Capital contributions                                                    -              49,143
  Principal payments on related party loans                       (1,390,650)         (1,049,358)
  Proceeds from bank debt                                          4,781,052           1,749,750
  Proceeds from other short-term loans                             1,780,678           2,826,735
  Proceeds from related party loans                                        -           1,200,815
  Principal payments on bank debt                                 (2,349,842)           (579,120)
  Principal payments on other short-term loans                    (1,788,789)         (1,783,965)
                                                             ----------------    ----------------

Net cash provided by financing activities                          1,032,449           2,414,000
                                                             ----------------    ----------------

Effect of exchange rate changes on cash                                2,851               1,777

NET INCREASE (DECREASE) IN CASH                                       25,335             (47,103)

Cash, at beginning of year                                            50,605              97,708
                                                             ----------------    ----------------

Cash, at end of year                                         $        75,940     $        50,605
                                                             ================    ================

Supplementary disclosures of cash flow information:
  Interest paid                                              $       735,773     $       289,223
                                                             ================    ================
  Taxes paid                                                 $           651     $             -
                                                             ================    ================

Non-cash investing and financing activities:
  Common stock issued for deferred compensation              $       475,000     $             -
                                                             ================    ================
  Related party loan contributed to capital                  $             -     $     1,536,667
                                                             ================    ================
</TABLE>



          See accompanying notes to consolidated financial statements.
                                       F-7
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         -----------------------------------------------------------

Organization
------------

Lion-Gri International, Inc. (formerly Napoli Enterprises, Inc.) (the "Company")
was  incorporated  on January 6, 1999 in the State of Colorado  as IDS  Internet
Distribution  Systems,  Inc. On July 23, 1999,  the Company  changed its name to
Denmans.com,   Inc.,  and  subsequently  on  November  19,  2001,  following  an
acquisition  changed  its  name  to  Impulse  Media  Technologies,  Inc.  In the
acquisition,  the Company  acquired Impulse Media  Technologies,  Inc., a Nevada
corporation (Impulse). Prior to the acquisition,  the Company had nominal assets
and  considerable  liabilities.   The  transaction  was  treated  as  a  reverse
acquisition for accounting  purposes,  which is a capital  transaction and not a
business  combination.  The financial  statements of the acquired subsidiary are
presented for the period prior to the acquisition.  The Company changed its name
to Napoli  Enterprises  in  November,  2002.  On October 20,  2004,  the Company
changed its name to Lion-Gri International, Inc.

In June 2002, the Company incorporated a new subsidiary,  Napoli Resources (USA)
Inc.,  which will explore new business  opportunities.  As of December 31, 2004,
the new subsidiary has had no transactions.

During July 2003, the Company issued  34,474,451  shares of the Company's common
stock for the  acquisition of all of the  outstanding  capital stock of Novotech
Holdings,  Inc.  ("Novotech"),  a  corporation  organized  under the laws of the
British Virgin Islands.  This transaction  closed on October 29, 2003.  Novotech
owns a 99.7% ownership  interest in Lion Gri, S.R.L., a company  organized under
the laws of the Republic of Moldova, which is engaged in the production and sale
of wine. Under the agreement, the Company issued 34,474,451 shares of its common
stock in exchange  for each and every  share of common  stock of  Novotech.  For
financial  accounting  purposes,   the  exchange  of  stock  was  treated  as  a
recapitalization  of  Novotech  with  the  former  shareholders  of the  Company
retaining  5,525,549  or  approximately  13.8%  of the  outstanding  stock.  The
stockholders'  equity  section  reflects the change in the capital  structure of
Novotech due to the recapitalization  and the consolidated  financial statements
reflect  the  operations  of  Novotech  and its  subsidiaries  for  the  periods
presented.

The  Company's  subsidiary,  Lion-Gri  S.R.L.("Lion-Gri"),  a limited  liability
company in the Republic of Moldova,  commenced  operations in 1998 and is 99.97%
owned by Novotech with the  remaining  .03% owned by Grineva  S.R.L.,  a limited
liability  company  in the  Republic  of  Moldova  controlled  by the  Company's
President,  Gregory Sonic. Additionally,  Lion-Gri acquired controlling interest
in Botritis S.A.  (50.3%),  a Moldovan entity in the fiscal year 1998, which was
recorded as a purchase.

Basis of presentation
---------------------

The consolidated  financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US GAAP"). This
basis of accounting differs from that used in the statutory financial statements
of  the  Moldovan  subsidiaries  which  are  prepared  in  accordance  with  the
accounting principles generally accepted in Moldova. The principal difference in
which  adjustments  were  made to  conform  to US GAAP  include  write  downs of
property, plant and equipment with an offset to paid-in capital of approximately
$3,280,000  for the year ended  December  31,  2002.  There were no  significant
adjustments made to property, plant and equipment and paid-in capital to conform
to US GAAP for the year  ended  December  31,  2004 and 2003.  The  consolidated
financial  statements of the Company  include the Company and its  subsidiaries.
All material intercompany balances and transactions have been eliminated.






                                       F-8
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         -----------------------------------------------------------------------

Use of estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect certain  reported amounts and  disclosures.  Accordingly,  actual results
could  differ  from  those  estimates.  Significant  estimates  in 2004 and 2003
include the allowance for doubtful accounts, the evaluation of intangible assets
and property,  plant and equipment,  and the useful life of property,  plant and
equipment.

Fair value of financial instruments
-----------------------------------

The  carrying  amounts  reported  in  the  balance  sheet  for  cash,   accounts
receivable,  accounts payable and accrued expenses,  payroll taxes payable,  and
loans  payable  approximate  their fair  market  value  based on the  short-term
maturity of these instruments.

Cash and cash equivalents
-------------------------

For purposes of the statement of cash flows, the Company  considers all cash and
other demand deposits to be cash and cash equivalents.  As of December 31, 2004,
the Company had no cash equivalents.

Accounts receivable
-------------------

Accounts  receivable  are  reported  at net  realizable  value.  The Company has
established an allowance for doubtful accounts based upon factors  pertaining to
the credit risk of specific customers, historical trends, and other information.
Delinquent  accounts are written-off  when it is determined that the amounts are
uncollectible.  At December 31, 2004,  the allowance for doubtful  accounts were
$0.

Inventories
-----------

Inventories  are stated at the lower of cost or market on the  weighted  average
cost basis, and includes finished goods, raw materials,  packaging  material and
product  merchandise.  Finished goods include costs of raw materials (grapes and
bulk wine),  packaging,  labor used in wine production,  bottling,  shipping and
warehousing  of winery  facilities  and  equipment.  In accordance  with general
practice in the wine industry,  wine inventories are included in current assets,
although a portion of such  inventories  may be aged for periods longer than one
year.

Property, plant and equipment
-----------------------------

Property,  plant and  equipment  are  carried at cost.  The cost of repairs  and
maintenance is expensed as incurred;  major  replacements  and  improvements are
capitalized.  Costs incurred in developing vineyards,  including interest costs,
are capitalized until the vineyards become commercially productive.  When assets
are retired or disposed of, the cost and  accumulated  depreciation  are removed
from the accounts,  and any resulting  gains or losses are included in income in
the year of disposition.  In accordance  with Statement of Financial  Accounting
Standards  (SFAS)  No.  144,  "Accounting  for the  Impairment  or  Disposal  of
Long-Lived  Assets",  the Company  examines the  possibility of decreases in the
value of property,  plant and equipment when events or changes in  circumstances
reflect the fact that their recorded value may not be recoverable.  Depreciation
is calculated  on a  straight-line  basis over the estimated  useful life of the
assets as follows (in years):

               Buildings                       10-30
               Machines and equipment           2-10
               Vehicles and other               3-7



                                       F-9
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         -----------------------------------------------------------------------

Investments in equity-method investees
--------------------------------------

Investments  in which the Company  does not have a majority  voting or financial
controlling  interest are  accounted  for under the equity  method of accounting
unless its ownership constitutes less than 20% interest in such entity for which
such investment would then be included in the consolidated  financial statements
on the cost method.

Other assets
------------

Other assets include licenses,  trademarks,  technology  process  know-how,  and
other receivables and cost method  investments.  Intangible assets are amortized
using the  straight-line  method  over the term of the  agreement  or  estimated
useful lives.

Intangibles and other long-lived assets
---------------------------------------

The Company  reviews the  carrying  value of  intangibles  and other  long-lived
assets  for  impairment  at least  annually  or  whenever  events or  changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of long-lived  assets is measured by comparison of
its carrying amount to the undiscounted cash flows that the asset or asset group
is expected to  generate.  If such assets are  considered  to be  impaired,  the
impairment  to be  recognized  is measured  by the amount by which the  carrying
amount of the property, if any, exceeds its fair market value.

Revenue recognition
-------------------

The Company  follows the guidance of the  Securities  and Exchange  Commission's
Staff Accounting Bulletin 104 for revenue  recognition.  In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred,  the sales price to the customer
is  fixed  or  determinable,  and  collectibility  is  reasonably  assured.  The
following policies reflect specific criteria for the various revenues streams of
the Company:

Revenues  derived from the sale of wine and wine  products are  recognized  upon
shipment and title passing to the customer.

Advertising
-----------

Advertising  costs are expensed when incurred.  For the years ended December 31,
2004  and  2003,   advertising   expense   amounted  to  $103,642  and  $37,349,
respectively.

Stock-based compensation
------------------------

The Company  accounts for stock options  issued to employees in accordance  with
the  provisions  of  Accounting   Principles   Board  ("APB")  Opinion  No.  25,
"Accounting  for Stock Issued to  Employees,"  and related  interpretations.  As
such,  compensation  cost is  measured on the date of grant as the excess of the
current  market  price of the  underlying  stock over the exercise  price.  Such
compensation  amounts are amortized over the respective  vesting  periods of the
option grant.  The Company  adopted the  disclosure  provisions of SFAS No. 123,
"Accounting  for  Stock-Based   Compensation"  and  SFAS  148,  "Accounting  for
Stock-Based Compensation -Transition and Disclosure",  which permits entities to
provide  pro forma net  income  (loss) and pro forma  earnings  (loss) per share
disclosures for employee stock option grants as if the fair-valued  based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to  non-employees  for goods or services in accordance with the
fair value method of SFAS 123.



                                      F-10
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         -----------------------------------------------------------------------

Income (loss) per common share
------------------------------

Basic income  (loss) per share is computed by dividing net income  (loss) by the
weighted average number of shares of common stock outstanding during the period.
Diluted  income per share is  computed by  dividing  net income by the  weighted
average  number  of  shares  of  common  stock,  common  stock  equivalents  and
potentially  dilutive securities  outstanding during each period. As of December
31,  2004 and 2003,  the Company did not have any common  stock  equivalents  or
potentially dilutive securities outstanding.

Foreign currency translation
----------------------------

Transactions and balances  originally  denominated in U.S. dollars are presented
at their original  amounts.  Transactions  and balances in other  currencies are
converted into U.S. dollars in accordance with Statement of Financial Accounting
Standards  (SFAS) No. 52, "Foreign  Currency  Translation,"  and are included in
determining net income or loss.

For  foreign  operations  with the local  currency as the  functional  currency,
assets  and  liabilities  are  translated  from the local  currencies  into U.S.
dollars at the exchange rate prevailing at the balance sheet date.  Revenues and
expenses are  translated at weighted  average  exchange  rates for the period to
approximate  translation  at the exchange  rates  prevailing  at the dates those
elements are  recognized in the financial  statements.  Translation  adjustments
resulting  from  the  process  of  translating  the  local  currency   financial
statements into U.S.  dollars are included in determining  comprehensive  income
(loss).

The  functional  currency of the Company's  Moldovan  subsidiaries  is the local
currency  (Moldovan  Lei).  The  financial  statements of the  subsidiaries  are
translated  into United  States  dollars  using  year-end  rates of exchange for
assets and liabilities  (12.46 Lei to one U.S. dollar at December 31, 2004), and
average  rates of exchange  for the period for  revenues,  costs,  and  expenses
(12.3283 Lei to one U.S. dollar for the year ended December 31, 2004). Net gains
and losses  resulting  from foreign  exchange  transactions  are included in the
consolidated  statements of operations and were not material  during the periods
presented.

Comprehensive (loss) income
---------------------------

The Company uses Statement of Financial  Accounting Standards No. 130 (SFAS 130)
"Reporting  Comprehensive  Income".  Comprehensive  income is  comprised  of net
income (loss) and all changes to the statements of stockholders'  equity, except
those due to  investments  by  stockholders',  changes  in paid-in  capital  and
distributions to stockholders.  Comprehensive  (loss) income for the years ended
December 31, 2004 and 2003 amounted to $1,004,824 and $(504,093), respectively.

Concentrations of credit risk and major customers
-------------------------------------------------

Financial instruments which potentially subject the Company to concentrations of
credit risk  consist  principally  of cash and trade  accounts  receivable.  The
Company places its cash with high credit quality financial institutions.  Almost
all of the  Company's  sales are credit  sales which are  primarily to customers
whose  ability to pay is dependent  upon the industry  economics  prevailing  in
these  areas;  however,  concentrations  of credit  risk with  respect  to trade
accounts  receivables  is limited due to  generally  short  payment  terms.  The
Company  also  performs  ongoing  credit  evaluations  of its  customers to help
further reduce credit risk.

Two  customers  accounted  for  approximately  95% and 84% of sales for the year
ended  December  31,  2004 and  2003  respectively.  Over  90% of the  Company's
revenues are from sales in Russia.



                                      F-11
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         -----------------------------------------------------------------------

Income taxes
------------

Taxes are calculated in accordance with taxation principles  currently effective
in the Republic of Moldova.  Income taxes are  accounted for under the asset and
liability  method of  Statement  of  Financial  Accounting  Standards  No.  109,
"Accounting  for Income Taxes ("SFAS  109").  Under SFAS 109 deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  Under SFAS 109,  the effect on  deferred  tax assets and
liabilities  of a change in tax rates is recognized in income in the period that
includes the enactment date.

Economic and political risks
----------------------------

The Company faces a number of risks and  challenges  since its operations are in
the Republic of Moldova and its primary market is in the Russian Federation. The
Company  may  withdraw  funds  from its  subsidiaries  in Moldova  provided  the
subsidiaries  have paid their income taxes and meet certain other  requirements.
The  requirement to obtain the clearance of the government of Moldova that these
requirements have been met can cause delays in the withdrawal of funds.

Segment reporting
-----------------

The Company  produces and sells  average to premium  quality table wines and has
determined  that its product line  operating  segments,  although  consisting of
multiple products and brands,  all have similar production  processes,  customer
types,  distribution  methods and other economic  characteristics.  Accordingly,
these operating  segments have been aggregated as a single operating  segment in
the consolidated financial statements.

Shipping and costs
------------------

Shipping  costs are  included  in selling  and  marketing  expenses  and totaled
$672,384  and  $688,688  for  the  years  ended  December  31,  2004  and  2003,
respectively.

Recent accounting pronouncements
--------------------------------

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R").  FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based  compensation  issued to employees.  FAS
No. 123R is effective  beginning in the Company's second quarter of fiscal 2006.
The Company is in process of evaluating the impact of this  pronouncement on its
financial position.

In December  2004,  the FASB  issued  SFAS  Statement  No.  153,  "Exchanges  of
Non-monetary  Assets."  The  Statement  is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary  exchanges of similar productive assets
and replaces it with a general  exception for exchanges of  non-monetary  assets
that do not have commercial substance. The Company believes that the adoption of
this standard will have no material impact on its financial statements.




                                      F-12
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         -----------------------------------------------------------------------

Recent accounting pronouncements (continued)
--------------------------------------------

In March 2004, the Emerging  Issues Task Force  ("EITF")  reached a consensus on
Issue  No.  03-1,  "The  Meaning  of  Other-Than-Temporary  Impairment  and  its
Application  to Certain  Investments."  The EITF  reached a consensus  about the
criteria  that should be used to  determine  when an  investment  is  considered
impaired,  whether that impairment is other-than-temporary,  and the measurement
of an  impairment  loss and how that criteria  should be applied to  investments
accounted for under SFAS No. 115, "Accounting in Certain Investments in Debt and
Equity   Securities."  EITF  03-01  also  included   accounting   considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary   impairments.   Additionally,   EITF  03-01  includes  new
disclosure  requirements  for  investments  that are  deemed  to be  temporarily
impaired.  In September  2004, the Financial  Accounting  Standards Board (FASB)
delayed  the  accounting  provisions  of  EITF  03-01;  however  the  disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company believes that the adoption of this standard will have no material impact
on its financial statements.

Reclassifications
-----------------

Certain  amounts  in  the  2003  consolidated  financial  statements  have  been
reclassified   to  conform  to  the  2004   consolidated   financial   statement
presentation.  These  reclassifications had no impact on previously reported net
results of operations or stockholders' equity (deficit).

NOTE 2 - TRADE RECEIVABLES
         -----------------

Trade receivables are summarized as follows at December 31, 2004:

                                              2004
                                        ----------------

        Domestic (Moldova)              $        116,516
        Foreign (Outside Moldova)              1,568,754
                                        ----------------

                                        $      1,685,270
                                        ================

Certain trade receivables are pledged as collateral for loans.

NOTE 3 - INVENTORIES
         -----------

Inventories are summarized as follows at December 31, 2004:

                                              2004
                                        ----------------

           Raw materials                $      2,022,696
           Work-in-process                     3,819,835
           Finished goods                        380,397
                                        ----------------

                                        $      6,222,928
                                        ================

Certain inventory is pledged as collateral for loans.




                                      F-13
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
         -----------------------------

Property, plant, and equipment consisted of the following at December 31, 2004:

       Land and buildings                 $       2,867,926
       Construction in progress                   4,365,802
       Machinery and equipment                    3,656,895
       Vehicles and other                           307,481
                                          ------------------
                                                 11,198,104
       Less accumulated depreciation             (1,746,848)
                                          ------------------

                                          $       9,451,256
                                          ==================

Certain  property,  plant and  equipment  are pledged as  collateral  for loans.
Depreciation   expense  for  2004  and  2003  totaled   $321,707  and  $250,804,
respectively

NOTE 6 - INVESTMENT IN EQUITY-METHOD INVESTEES
         -------------------------------------

The Company holds investments accounted for under the equity method. The Company
accounts for  investments  under the equity method if the  investment  gives the
Company the ability to exercise significant influence,  but not control, over an
investee.  Significant influence is generally deemed to exist if the Company has
an  ownership  interest in the voting  stock of the  investee of between 20% and
50%,  although other factors,  such as representation on the investee's Board of
Directors  and  the  impact  of  commercial  arrangements,   are  considered  in
determining  whether  the equity  method of  accounting  is  appropriate.  As of
December 31, 2004,  the Company  owned various  interests in wine  producing and
farming  operations.  The  Company  has  the  ability  to  exercise  significant
influence, but not control these investees. Accordingly, under the equity method
of  accounting,  the  Company's  share  of the  investee's  earnings  or loss is
included in the consolidated  statements of operations.  The Company records its
investments  in  equity-method  investees on the  consolidated  balance sheet as
"Investment in equity-method  investee" and its share of the investee's earnings
or losses in "Loss on equity-method  investment." In the statement of operations
for the years ended December 31, 2004 and 2003, the Company  recorded  equity in
losses of investee of $0 and $49,022, respectively.

NOTE 7 - INTANGIBLE ASSETS
         -----------------

Intangible assets are included in other assets and consisted of the following at
December 31, 2004:

       Licenses and trademarks            $           4,160
       Technology process know-how                    1,891
       Other intangibles                             62,543
                                          ------------------
                                                     68,594
       Less accumulated amortization                (19,512)
                                          ------------------

                                          $          49,082
                                          ==================

Amortization  expense on  intangible  assets during 2004 and 2003 was $6,428 and
$6,746, respectively. For the next five years, amortization of intangible assets
will approximate $6,200 per year.







                                      F-14
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 8 - TRADE ACCOUNTS PAYABLE
         ----------------------

Trade payables are summarized as follows at December 31, 2004:

                                               2004
                                        ------------------
     Domestic (Moldova)                 $        1,750,854
     Foreign (Outside Moldova)                     847,549
     Other                                          60,000
                                        ------------------

                                        $        2,658,403
                                        ==================


NOTE 9 - SHORT-TERM BANK LOANS
         ---------------------

Short-term bank loans consisted of the following at December 31, 2004

     Note to Victoria Bank, Moldova dated August 12, 2004
     due August 2005. Interest rate at 11%. Secured by
     equipment and inventory                                    $       158,129

     Notes to Banca de Economii, Moldova dated December 23,
     2004 due December 2005. Interest rate 22%. Secured by
     equipment and inventory                                            360,152

     Note to Moldova Agroindbank dated September 30, 2003
     due May 2005. Interest rate 22.5%. Secured by equipment
     and inventory                                                      112,360
                                                                ----------------

           Total                                                $       630,641
                                                                ================




















                                      F-15
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 10 - LONG-TERM DEBT
          --------------

Long-term debt consisted of the following at December 31, 2004:

Note to Moldova Agroindbank dated July 31, 2002, due in
monthly installments through June 2005. Interest rate at
13.5%. Secured by equipment                                     $        16,000

Note to Banca de Economii dated April 15, 2003, due in
monthly installments through March 2006. Interest rate at
9%. Secured by equipment                                                220,000

Note to Victoria Bank, Moldova dated September 17, 2004, due
in monthly installments through December 2005. Interest rate
at 22%. Secured by equipment and inventory.                           1,203,852

Note to Victoria Bank, Moldova dated March 29, 2004, due in
monthly installments through September 2005. Interest rate
at 22%. Secured by equipment and inventory.                             481,541

Note to Banca de Economii dated November 19, 2003, due in
monthly installments through May 2006. Interest rate at 19%.
Secured by equipment                                                    802,568

Note to Banca de Economii dated January 26, 2004, due in
monthly installments through January 2006. Interest rate at
11%. Secured by equipment                                               340,173

Note to Victoria Bank, Moldova dated March 7, 2003, due in
monthly installments through March 2008. Interest rate at
19%. Secured by equipment and inventory.                                 75,912

Note to Moldova Agroindbank dated May 14, 2004, due in
monthly installments through November 2007. Interest rate at
20%. Secured by equipment                                               325,040

Note to Moldova Agroindbank dated May 14, 2004, due in
monthly installments through November 2007. Interest rate at
11%. Secured by equipment                                             1,292,656

Loan payable to vendor payable on December 5, 2008. Secured
by equipment and land.                                                  105,478

Note to Victoria Bank, Moldova dated March 17, 2003, due in
monthly installments through March 2008. Interest rate at
9%. Secured by equipment and inventory.                                 476,000
                                                                ----------------

     Total                                                            5,339,220

     Less current portion                                            (2,681,669)
                                                                ----------------

                                                                $     2,657,551
                                                                ================



                                      F-16
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 10 - LONG-TERM DEBT (continued)
          --------------------------

The scheduled maturities of long-term debt are as follows:

               2005 (included in current liabilities)       $      2,681,669
               2006                                                1,530,668
               2007                                                1,051,514
               2008                                                   75,369
                                                            ----------------

                                                            $      5,339,220
                                                            ================

NOTE 11 - RELATED PARTY PAYABLES
          ----------------------

During August 2003, the Company entered into an unsecured  non-interest  bearing
loan agreement of approximately $900,000 with Grineva S.R.L. (Grineva), the .03%
owner of the Company and controlled by the Company's President. According to the
agreement,  the  Company  is  obligated  to export  wine on behalf of Grineva as
repayment  of the loan.  The  agreement  calls for annual  penalties  of 19% for
products that are not delivered in accordance  with the agreement.  For the year
ended  December  31, 2004 and 2003,  the Company  recorded  $57,575 and $31,114,
respectively,  in penalties as certain products were not delivered in accordance
with the  agreement.  At December 31, 2004,  the Company owed this related party
$133,305 and is included in related  party payable on the  accompanying  balance
sheet. Additionally, at December 31, 2004, Grineva owed the Company $251,459 and
is included in due from related party on the accompanying balance sheet.

During March 1998, the Company entered into an agreement with Argo LLC (Argo), a
former 30% owner of Lion-Gri and controlled by the Company's President,  whereby
Argo will  provide  financing  for the  Company in  exchange  for the  Company's
products.  During November 2002,  various customer advances were settled by Argo
and the  obligations  were  assigned  to Argo.  On  November  29,  2002,  Argo's
receivable  from the Company of $1,448,628  was assigned to NovoTech.  On May 6,
2003,  the  Company's  related  party loan of  $1,448,628  that was  assigned to
NovoTech on November 29, 2002 was  transferred  and  re-assigned to Argo. On May
12, 2003 Argo converted this loan to capital of the Company and obtained  99.97%
ownership  of the  Company.  On July  10,  2003,  Argo  transferred  its  99.97%
ownership of the Company to NovoTech.  Accordingly,  in 2003,  the amount due to
NovoTech was reflected as contributed  capital on the consolidated  statement of
changes in stockholders' equity in the amount of $1,585,810.

The consolidated  financial  statements  include balances and transactions  with
related  parties.  For the years ended  December 31, 2004 and 2003,  the Company
purchased  approximately  $176,179 and $53,000,  respectively,  of equipment and
transportation  services  from a  Fabbri-Inox  S.R.L,  (Fabbri-Inox)  which  was
controlled by the President of the Company.  At December 31, 2004 and 2003,  the
Company had a payable to Fabbri-Inox of $204,901 and $109,170, respectively.

The Company purchased  $44,731 and $48,765 of property,  plant and equipment and
services from  Agrotehnica-Invest  S.A. during 2004 and 2003  respectively.  The
Company had a trade payable to Agrotehnica of $2,006, which has been in included
in trade accounts payable. The Company has an investment in Agrotechnica-Invest,
S.A.

At December 31,  2004,  the Company has a payable to Weis-MD Vine Co. SRL in the
amount of $84,289.







                                      F-17
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 12 - INCOME TAXES
          ------------

The nominal statutory tax rate in the Republic of Moldova is 20% in 2004 and 22%
in 2003.  Taxes are calculated in accordance  with Moldovan  regulations and are
paid on an annual basis.  Taxes are calculated on a separate  entity basis since
consolidation  is not allowed in Moldova.  Based on compliance  with certain tax
laws of the Republic o f Moldova,  Lion Gri S.R.L.  has  qualified for the "Free
Enterprise  Zone" for five years (years 2001 through  2005),  in which  Lion-Gri
S.R.L.  is not  required to pay income  taxes for these  years.  No  significant
deferred tax assets or liabilities  existed for Lion-Gri S.R.L., at December 31,
2004 and 2003.  Botritis S.A. is subject to the  applicable  statutory tax rates
and the  provision for taxes on earnings for Botritis S.A. was $1,674 and $7,249
for the years ended  December  31, 2004 and 2003  respectively.  No  significant
deferred tax assets or liabilities existed at December 31, 2004 and 2003.

The income tax expense was  different  than the amount  computed  using the U.S.
Federal Income tax rate of 35% as a result of the following:

<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                               ------------------------------------
                                                     2004                2003
                                               ----------------    ----------------
<S>                                            <C>                 <C>
    Computed "expected" tax expense (benefit)  $        233,354    $      (243,796)
    Difference in foreign subsidiary rates            (136,283)            (41,106)
    Income tax exemption                              (192,377)           (433,715)
    Stock for services                                   96,980             723,367
    Other                                                     -               2,499
                                               ----------------    ----------------
                                               $          1,674    $          7,249
                                               ================    ================
</TABLE>

The unaudited proforma effect of the tax holiday on net income is as follows:

                                                 Years Ended December 31,
                                           ------------------------------------
                                                 2004                2003
                                           ----------------    ----------------

    Net income (loss) as reported          $        666,726    $      (717,046)
                                           ================     ===============

    Proforma net income (loss)             $       (474,349)   $    (1,150,761)
                                           ================    ================

NOTE 13 - STOCKHOLDERS' EQUITY
          --------------------

In July 2003,  in connection  with a consulting  agreement,  the Company  issued
2,000,000 shares of common stock for services rendered. The Company valued these
shares  at their  market  value on the date of  issuance  of $.25 per  share and
recorded  non-cash  consulting  expense of $500,000  related to these consulting
services.

In  consideration  for  General  Releases  (see Note  17),  the  Company  issued
2,000,000 restricted shares to former consultants  (1,000,000 each). The Company
valued  these  shares at their  market value on the date of issuance of $.48 and
$.30 per share,  respectively.  In connection with issuance of these shares, the
Company recorded settlement expense of $780,000.

In October 2003, in connection with a consulting  agreement,  the Company issued
2,000,000 shares of common stock for services rendered. The Company valued these
shares  at their  market  value on the date of  issuance  of $.40 per  share and
recorded  non-cash  consulting  expense of $800,000  related to these consulting
services.










                                      F-18
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 13 - STOCKHOLDERS' EQUITY (continued)
          --------------------------------

On August 1, 2004, the Company entered into a consulting agreement with a public
relations  firm.  The term of the agreement is two years with the Company having
the right to terminate  the agreement  after six months.  The Company must pay a
monthly  retainer  of $10,000,  and  additionally,  the  Company  will grant the
consultants  1,900,000 shares of common stock which vests 35% upon the execution
of the  agreement  and the  remainder  vesting on February 5, 2005.  The Company
valued  these  common  shares at the fair market  value on the dates of grant or
$0.25 based on the quoted trading price.  In connection  with these shares,  the
Company recorded deferred compensation of $475,000, which will be amortized into
consulting  expense over the term of the contract.  For the year ended  December
31, 2004, the Company amortized $277,083 into consulting expense.

N0TE 14 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
          ---------------------------------------------------

The Company's operations are conducted in the Republic of Moldova.  Accordingly,
the Group's  business,  financial  condition,  and results of operations  may be
influenced by the political, economic, and legal environments in the Republic of
Moldova, and by the general state of the Moldovan economy.

The   Company's   operations   in  the   Republic  of  Moldova  are  subject  to
considerations and significant risks not typically  associated with companies in
North America and Western Europe.  These include risks  associated  with,  among
others the  political,  economic  and legal  environments  and foreign  currency
exchange.  The  Company's  results may be  adversely  affected by changes in the
political and social  conditions  in the Republic of Moldova,  and by changes in
governmental  policies with respect to laws and  regulations,  anti-inflationary
measures,  currency  conversion and remittance  abroad, and rates and methods of
taxation among other things.

NOTE 15 - COMMITMENTS AND CONTINGENCIES
          -----------------------------

Arranger Services Agreement
---------------------------

During July 2002, the Company entered into an Arranger  Services  Agreement (the
"Agreement") with Market  Management  International,  Inc. (the  "Arranger"),  a
Florida,   U.S.   Corporation,   and  Intreprinderea   Mixta  Market  Management
International  S.R.L. (the "Agent"), a limited liability company in the Republic
of  Moldova.  The  services to be rendered by the  Arranger  are  arranging  for
securities  offerings  and of marketing of  securities  in the United  States of
America.  This  includes  arranging  for an SB-2  for the  Company,  introducing
investors  and  potential  partners for fund raising and  arranging  for various
other  investor  services  during and after the  effective  date of the SB-2. As
consideration  for the  services  to be  rendered,  the  Company  shall  pay the
Arranger a fee of $15,000 upon signing the Agreement. In addition, the Agreement
calls for significant  payments  including cash,  issuances of stock, and option
contracts  to  be  paid  to  the  Arranger  for  services  related  to  an  SB-1
registration and certain periods thereafter. The total values of these payments,
if any, are not  determinable.  The period of  performance  under the  Agreement
shall be two years from the date of the Agreement.  On June 5, 2003, the Company
terminated  the  Agreement  and had not  filed an SB-1 with the  Securities  and
Exchange  Commission in the United States of America.  There have been no claims
or  lawsuits  against  the  Company  related  to the  Agreement  and  Management
represents certain provisions of the Agreement have been breached.  The ultimate
outcome of this matter cannot be predicted with  certainty,  however the Company
believes,  based on advice  from  legal  counsel,  this  matter  will not have a
material adverse effect on the Company's financial statements.







                                      F-19
<PAGE>



                  LION-GRI INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


NOTE 15 - COMMITMENTS AND CONTINGENCIES (continued)
          -----------------------------------------

Guarantee of Credit
-------------------

The Company guarantees credit of approximately $426,000 plus interest granted to
Weis-MD Vine Co., S.R.L.  (Weis).  The Company has a 40.4% equity  investment in
Weis.  The  obligation  is due on March 18, 2007,  with a daily  penalty rate of
0.15% for non-payment.

NOTE 16 - SETTLEMENT EXPENSE
          ------------------

During February 2003, the Company entered into a one-year  consulting  agreement
with Marx One, Inc. (Marx) related to consultation and advisory services for the
equity and/or debt raising  process and other  services.  During March 2003, the
Company  entered into a legal  services  memorandum  with  Feingold & Kam L.L.C.
(Feingold)  which sets forth various  corporate  legal  services  including U.S.
Securities and Exchange  Commission  filings and other  requested legal services
after the Company becomes a publicly traded corporation.  Marx and Feingold each
signed a General  Release,  which releases and discharges the Company from these
agreements.  In  consideration  for the General  Releases,  the  Company  issued
1,000,000 restricted shares to Marx and 1,000,000 restricted shares to Feingold,
and the General  Releases  shall only be binding in the event that these  shares
become registered as free trading/unrestricted  securities within ninety days of
the date of the General  Releases.  For the year ended  December  31,  2003,  in
connection  with  issuance  of these  shares,  the Company  recorded  settlement
expense of $780,000.

NOTE 17 - SUBSEQUENT EVENTS
          -----------------

On March 24,  2005,  the Company  entered  into a loan  agreement  with Banca de
Economii borrowing 320,000 EURO  (approximately  $415,300 as of March 24, 2005).
The loan is due on March 24, 2006, bears interest at a rate of 11% per annum and
is payable in monthly principal payments of approximately  $69,212 plus interest
beginning  in the  seventh  month.  The loan is  secured  by the  assets  of the
Company.

In March 2005, the Company entered into an unsecured  non-interest  bearing loan
agreement  amounting to approximately  $1,557,000 with Rabel S.A.  (Rabel).  The
Company's  President was a former Executive Director of Rabel.  According to the
agreement,  the  Company  is  obligated  to  export  wine on  behalf of Rabel as
repayment  of the loan.  The  agreement  calls for annual  penalties  of 20% for
products that are not delivered in accordance  with the  agreement.  As of April
10, 2005, the Company borrowed approximately $666,000 under this loan agreement.


















                                      F-20