Lion Gri Intl Inc. (fka LGII)

[Dream]

10K out and as expected, it looks good. :)

http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001127855%2D05%2D000368%2Etxt&FilePath....

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


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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.