---

Dear Shareholders,

An unfavorable ruling received January 19, 2000, from Pollution Control Hearings Board reversed previously issued rights and vacated the Quality Certification. This ruling has created a significant delay in completing the process.

The PCHB stated that studies predicting the impact on quantity and quality do not provide sufficient certainty to support joint venture’s proposed plans. The PCHB also held that the mitigation plan, which was approved by the Department of Ecology, was not adequate. A hearing date has been set for March 2002. However, pending the time availability of the court, a hearing date has been conditionally set for October 2001.

Convertible Debenture Repayment
Our company paid the next to last interest payment on its $15 million convertible debentures on March 22, 2001 (due on February 27), within the 30-day grace period to remain in compliance with the terms of the debenture. Our company does not currently have the financial resources to pay the $15 million principal and final interest payment due on August 27, 2001.

Sale of the Property
On January 18, 2001, our company exchanged 100% of the shares in its wholly owned subsidiary for 200,000 shares of common stock. Our company’s holdings consisted of a royalty and certain rights. Production ceased in the fourth quarter of 2000. Our company will record a gain on sale from the transaction of approximately $200,000 in the first quarter of 2001.

Other News
As a result of continued low prices, our company wrote down its investments with a charge of $2.5 million in the fourth quarter of 2000. Our company continues to hold its core positions in anticipation of higher prices.

Acquisitions
As a result of the acquisition, our company issued approximately 6.5 million shares of stock. Our company’s 9.63 million shares now constitute a 41% equity interest, down from 57% before the merger. With this reduction in percent ownership, our company’s accounting treatment was changed from a consolidated subsidiary to an equity investment.

Other Mergers
With the successful closing of the Plan of Arrangement merger in mid-October, our company is now well positioned to become the leader. Prices have surged during the past two years and during the fourth quarter of 2000. The acquisition strengthened our company’s property portfolio with the addition of two high quality projects.

Financial Results
In the fourth quarter of 2000, our company changed its accounting method for its equity stake from a consolidated subsidiary treatment to the equity method of accounting treatment. We reported a net loss of $1,659,000, or $0.11 per share, for 2000 compared to a net loss of $2,666,000, or $0.18 per share before cumulative effect of accounting change. At December 31, 2000 our company had $971,000 in cash and a negative working capital of $14,211,000.

During the fourth quarter of 1999, our company changed its method of accounting from capitalizing costs to expensing such costs. The change was applied retroactively to January 1, 1999 and the cumulative effect of this accounting change of $8,451,000 is included in the 1999 results.

Our company’s potential inability to pay the debentures raises substantial doubt as to its ability to continue as a going concern. The accompanying financial statements do not contain any adjustments that might reflect this uncertainty.

Sincerely,

Ralph Gibson
Chief Executive Officer & Chef

Jean Claude Laupretre
President & Wine Maker