October 3, 2012 Dear Shareholders, It has be

October 3, 2012
Dear Shareholders,

It has been a few weeks since our last communication and we apologize for the delay in this process. We would like to address a few of the current items that are in progress within the company and bring everyone up to speed. As things are becoming much busier on both the domestic and international fronts, the team is continuing to add additional tasks and function to our daily routine.

The first item we would like to cover is our current “STOP” status on the OTC Markets. We are aware of the situation and are working to bring it back to “CURRENT” status as soon as possible. We estimate this will be completed no later than the end of October and hope to have it remedied much sooner. The company has made some internal changes to both the financial process and the financial software over the last few months in order to facilitate the ever growing complexities of the operation. These changes were more involved than initially anticipated but they were necessary and the timing would have never been optimal. The company is now much better positioned to move forward and, as we have changed our Fiscal Year end to September 31st, our filings for the OTC status upgrade will include the Year End Information Statement as well.

Beijing Operations and the CGI Retail Store have been progressing as planned. There has been several communications regarding the issuance of a formal press release regarding the Grand Opening. The international business challenges exceed the typical operational hurdles of a domestic company in that we are subject to a global environment. Our goal was to have the support and participation of the governmental agencies in Beijing involved with a formal announcement. While the recent events in Libya do not directly affect China, the current tensions between China and Japan over an island chain and who owns it,   http://www.ft.com/cms/s/0/e0bc4358-0ba5-11e2-...z28FyMudnj, has the US Diplomatic community in China on heightened alert and prompted notifications to be sent out to the ex-pat community warning them to avoid certain situations and locations within Beijing. Therefore, we have rethought our initial plans of a highly publicized opening. http://www.businessinsider.com/attack-on-us-a...ing-2012-9

Despite the recent activities in Beijing and the decision to hold off on a public awareness campaign for the consumers in Beijing, we have averaged sales of over $300 USD per day and have held substantial events on a weekly basis in the CGI Retail Shop. The pictures below are from our hosted event with the Crimson Wine Group last week! As you can see there is no shortage of California Wine consumers in Beijing and the traditional word of mouth marketing of the California Grapes Wine Shop is spreading fast.

We are looking forward to the real market campaign in Beijing to kick in!

We are working on a few really exciting opportunities that we should be able to share with you in the coming weeks!

The Domestic operations have been progressing as well. With Mr. Thomas Rappe putting some needed refinements on the Broker Alliance Program (BAP) and working through some of the inconsistencies in the way brokers have done business in the past vs. the way CGI operates with the independent brokers. We have our  first container of wine clearing China Customs originated by one of our BAP members and we are looking at the  second container to be put together very soon with another BAP partner. With the current market conditions of the California Wine Industry’s export sales being driven by transactional deals, the ability to build repeat or long term business for a winery has been a challenge. Through our direct email communication campaign with the wineries, we are providing the education, awareness and potential risks to their brands of that type of sales mentality. Wineries are beginning to realize that the solution being offered by CGI is of tremendous value when dealing with export sales to China and potentially beyond. We have begun to catch the eye of some of the more limited and sought after cult wine producers and we hope it is only a matter of time before the industry begins to seek us out as their export service provider. We have created a unique service in the industry and we have the potential of capturing a solid percentage of the export sales as a whole.


CGI has, and is, accomplishing a tremendous amount. We are a growing company and will make mistakes. With what we are establishing, building and developing, there is no roadmap for us to work with and that makes us pioneers in this industry. We are very thankful for the supporters who communicate directly with us, as it is very encouraging. We encourage constructive criticism. Success will not come easy but, it is a great opportunity and we are working hard to make sure that it comes to fruition for all of us.


Best regards,

California Grapes International, Inc.


“Bringing The Best Wines In The World To The World”
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