GeoInvesting Rebuttal to the Shareholder Letter published by CGPIOn March 15, 2011 CGPI published a letter to its sharehol...
the Company’s cemetery license had been revoked and/or expired.An English transcript of the conversation on March 3, 2011 ...
person. We do not know the internal transaction (if there was one) between Foguang and Guiyuan Company (重庆市归园实业有限公司). We o...
(http://tieba.baidu.com/f?kz=942709596). We did not find any information to support claims Foguang has any relationship wi...
Issue 5                                                      CGPI Response                                                ...
GEO rebuttal to CGPI Response:We already explained the details of this issue in the first report.Based on the information ...
Issue 7                                                          CGPI ResponseThese prices for plots purchased by the inve...
Issue 8                                                        CGPI ResponseThe land (339,444 m2) the Company claims it ha...
Issue 9                                                         CGPI ResponseThe calculation of the intangible assets calc...
Issue 10                                                          CGPI ResponseThe leased land, where the cemetery does ex...
All documents provided by CGPI refer to the planning (construction planning and/or land planning) of the cemetery.In the c...
Issue 12                                                         CGPI ResponseIn 2007, Chinese media also broadly reported...
Issue 13                                                       CGPI ResponseThe company may have constructed the tourism b...
Disclaimer:You agree that you shall not republish or redistribute in any medium any information on the GeoInvesting websit...
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3 25-2011 GeoInvesting Rebuttal to CGPI Letter to Shareholders

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On March 15, 2011 CGPI published a letter to its shareholders. In this letter, CGPI summarized key issues raised by GeoInvesting and gave “facts” regarding those issues. In addition to its letter to shareholders, CGPI also sent GeoInvesting a “Cease & Desist Demand” letter via its attorney at the law firm of Richardson & Patel, LLP. In this letter, CGPI demanded through its attorney that GeoInvesting immediately and forever take down a grossly inaccurate and misleading report located on the GeoInvesting web site. What follows are (1) issues and “facts” (CGPI Response) summarized in CGPI’s letter to shareholders, (2) our response along with a written transcript of a conversation our assigned person had with the officers at the Funeral House and Cemetery Management Center of Chongqing Civil Affairs Bureau on March 3, 2011 and (3) an additional written transcript with the officers at the Funeral House and Cemetery Management Center of Civil Affairs Bureau including a recording of a conversation on March 25, 2011.

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3 25-2011 GeoInvesting Rebuttal to CGPI Letter to Shareholders

  1. 1. GeoInvesting Rebuttal to the Shareholder Letter published by CGPIOn March 15, 2011 CGPI published a letter to its shareholders. In this letter, CGPI summarized key issues raised by GeoInvestingand gave “facts” regarding those issues. In addition to its letter to shareholders, CGPI also sent GeoInvesting a “Cease & DesistDemand” letter via its attorney at the law firm of Richardson & Patel, LLP. In this letter, CGPI demanded through its attorney thatGeoInvesting immediately and forever take down a grossly inaccurate and misleading report located on the GeoInvesting web site.What follows are (1) issues and “facts” (CGPI Response) summarized in CGPI’s letter to shareholders, (2) our responses, (3) awritten transcript (see supplement 1) of a conversation our assigned person had with the officers at the Funeral House and CemeteryManagement Center of Chongqing Civil Affairs Bureau on March 3, 2011 and (3) an additional written transcript of a secondconversation on March 25, 2011 (See Supplement 2) with the officers at the Funeral House and Cemetery Management Center ofCivil Affairs Bureau including a recording of the conversation. Issue 1 CGPI ResponseThe Company’s cemetery license has been revoked and/or is The funeral service operation license issued to Foguang by theexpired. Chongqing Civil Administration Bureau in 2005 has never been revoked or suspended.GEO Rebuttal to CGPI Response:As we stated in the original report, in addition to the online information we obtained from the Chognqing Civil Administration Bureau,our assigned person also called the Chongqing Civil Administration Bureau on three separate occasions regarding this issue. Oursecond call to the bureau dated March 3rd 2011 was made immediately after CGPI publicly submitted a letter it says was writtenby the bureau claiming the company’s cemetery license was current. Based on the information we collected, we concluded that
  2. 2. the Company’s cemetery license had been revoked and/or expired.An English transcript of the conversation on March 3, 2011 between our assigned person and an officer of Chongqing CivilAdministration Bureau is enclosed along with an additional transcript with a recording dated March 25th 2011. Issue 2 CGPI ResponseThe revenue of Guiyuan Cemetery is incurred under the financial The correct translation of its legal name is Guiyuan Industrial Co.,book of Guiyuan Cemetery Company, rather than Foguang’s. Ltd. (“Guiyuan Industrial”) not Guiyuan Cemetery Company. It has nothing to do with the cemetery development business, nor does it have the permit of cemetery plot sales. It only provides property management services for Foguang while Foguang operates and owns a cashier’s office that collects 100% of the money from all plot sales. In the event that the assigned person from the author visited Company’s sales center on the cemetery site on January 8th Saturday, our cashier’s office was closed. However due to the assigned person’s repeated request to transact on that day which was Saturday, our sales accommodated his request by issuing him an ineffective issuer’s copy (not recipient’s copy and asked him to get Foguang sealed copy when pay in full) of the receipt and stamped with a seal of Guiyuan Industrial only insisted by the assigned person, and Guiyuan Industrial does open its office during the weekends. Guiyuan Industrial does not have access to the books and records of Foguang. The cash is collected and paid to Foguang on the next business day and the transaction is then recorded in Foguang’sGEO rebuttal to CGPI Response:On the day we purchased cemetery plots, the sales representative had a book of sealed receipts from Guiyuan Cemetery Company (重庆市归园实业有限公司) and filled out several sealed receipts. After that, the sales representative gave those receipts to our assigned www.geoinvesting.com
  3. 3. person. We do not know the internal transaction (if there was one) between Foguang and Guiyuan Company (重庆市归园实业有限公司). We only know that Guiyuan Company received the money, issued the receipts and is not mentioned in SEC filings. Issue 3 CGPI ResponseWe question that there is a Guiyuan Cemetery I in Changshou The plot of land referred to as “Guiyuan I” in our filings is theDistrict which was developed before 2002 and sold out already. Qinglongshan Cemetery project located in Fulin district ofAt the same time, it is impossible that Guiyuan Cemetery II Chongqing, on approximately 66,660 square meters of land. Priorstarted its business before 2002, rather than around 2005. to 2002, the Qinglongshan Cemetery was operated by a state owned entity called Fulin Funeral Home which is part of the Civil Administration Bureau. In 2002, Fulin Funeral Home outsourced the development of the Qinglongshan Cemetery to Foguang, and it was operated by Foguang until 2006 when all plots were sold out. The plot of land referred to as “Guiyuan II” in our filings is the land adjacent to Longqiao Lake that we started developing in 2005. We have comprised approximately 667,000 square meters of land upon which we plan to develop cemetery plots, of which approximately 79,373 square meters, or approximately 12%, has have been in development to date.GEO rebuttal to CGPI Response:In the SEC documents, CGPI clearly claimed that “Foguang’s first cemetery development project is the Chongqing Guiyuan CemeteryI (“ Guiyuan I ”), located in Changshou District of Chongqing on approximately 66,660 square meters of land.” Now, CGPI said thatGuiyuan I is the Qinglongshan Cemetery located in Fulin district of Chongqing.From the website of Qinglongshan Cemetery located in Fulin district, (http://www.flgm.gov.cn/index.asp) Qinglongshan Cemeterywas approved by Chongqing Civil Affairs Bureau on Dec. 20, 2005. We also found that the cemetery license of QinglongshanCemetery license is held by a company called Chongqing Fulin Qinglongshan Cemetery Co., Ltd., not by Foguang. www.geoinvesting.com
  4. 4. (http://tieba.baidu.com/f?kz=942709596). We did not find any information to support claims Foguang has any relationship withQinglongshan Cemetery Co., Ltd.Furthermore, before 2005, no subsidiary of CGPI obtained the required cemetery license for the claimed “Guiyuan I” cemetery. Issue 4 CGPI ResponseIt appears unreasonable for CGPI to have sold the claimed We have developed and sold 18,108 plots in our Guiyuan IInumbers of plots mentioned in its SEC documents. project The average selling price was approximately $4,400 in our fiscal year ended March 31, 2009, $5,400 in our fiscal year ended March 31, 2010, and $6,800 in the nine months ended December 31, 2010. . Our sales records have been audited by PMB Helin Donovan, LLP for the years ending March 31, 2009 and 2010, with an interim review performed on subsequent periods through December 31, 2010. We would be happy to host any investor who wishes to walk through the property and count the plots.GEO rebuttal to CGPI Response:We suggest that investors quickly visit Guiyuan Cemetery to count the constructed plots.In our supportive documents, we showed that by Jan of 2011, there only Foyuan, Xiaoyuan and Tianyuan were the constructedcemeteries. Based on the observation of our assigned person, the approximate number of constructed plots is around 2,500,which includes around 560 plots of Foyuan (20*28); around 560 plots of Xiaoyuan (20*28) and around 1,380 plots ofTianyuan(20*69). Furthermore, the sales representative told our assigned person that there were around 6,000 constructed plots (thisnumber is much higher than the number of constructed plots counted by our assigned person), in which 1,800 are already sold.Therefore, we regarded that it is not feasible for CGPI to sell 18,108 plots in Guiyuan II. www.geoinvesting.com
  5. 5. Issue 5 CGPI Response As previously stated in our SEC filings and in our January 26,The cemetery license held by the Company does not belong to 2011 corporate update, China Redstone, through our operatingFoguang. subsidiary Chongqing Foguang Tourism Development Co. Ltd. (“Foguang”), obtained a license on December 21, 2005 from the Chongqing Civil Administration Bureau to develop and operate cemeteries in Chongqing, China (see Exhibit 1). The license effective date was June 23, 2004. After applying for and obtaining approval to change the name of the project from Changshou Longqiao Cemetery to Chongqing Guiyuan (“Guiyuan”), the Changshou Civil Administration Bureau issued a new funeral service operation license to replace the old one on August 22, 2006 (see Exhibit 2). The new one’s effective date, however, remained as the old one’s June 23, 2004. On July 14, 2008, the Chongqing Civil Administration Bureau posted a notice stating that it would start to review and reissue a new license to all existing cemetery license holders. The first group included 39 funeral parlors and 61 cemeteries, which did not include Foguang. The entities such as Foguang who were not on the initial list could continue to operate legally under their current license while the Chongqing Civil Administration Bureau worked through the initial group of 100 entities. On March 3, 2010, the Chongqing Civil Administration Bureau posted an update on the reissue process as follows: 1. All holders of licenses issued prior to 2008 should return their current licenses and receive a new license. 2. All holders of the licenses issued prior to 2008 who have not replaced their licenses should pick up a replacement application form from the Civil Administration Bureau. Subsequent to the notice, Foguang submitted its replacement application form and contacted the Chongqing Civil Administration Bureau to ascertain when its license would be. www.geoinvesting.com
  6. 6. GEO rebuttal to CGPI Response:We already explained the details of this issue in the first report.Based on the information given by CGPI, “Chongqing Civil Administration required all holders of licenses issued prior to 2008 whohave not replaced their licenses to obtain a replacement application form from the Civil Administration Bureau.” As this stipulationwas announced on March 3, 2010, why did Foguang only submit the reassurance application on Feb. 23, 2011? (Exhibit 3.2 -Reassurance Application of CGPI)It is interesting that the date (Feb. 23, 2011) on which Foguang claims it submitted the reassurance application coincided exactlyafter our telephone conference with the management team and HC International IR of CGPI, rather than immediately after theabove mentioned March 3, 2010 announcement by Chongqing Civil Administration Bureau. Issue 6 CGPI ResponseIf there is any revenue of sales of plots generated after July 14th, As stated above, Foguang has maintained a valid cemetery2008 (at least after July 14, 2010), the revenue should be regarded operations license from the Chongqing Civil Administrationas illegal revenue. Bureau since December 21, 2005. All revenues generated to date are valid under both Chinese and US GAAP.GEO rebuttal to CGPI Response:The rebuttal is the same as the rebuttal to Issue 5. www.geoinvesting.com
  7. 7. Issue 7 CGPI ResponseThese prices for plots purchased by the investigator are Redstone offers a range of cemetery plots which have broad rangesubstantially lower than the average sale price (USD 6,500) per in prices depending upon size, location, view, access, and otherplot claimed by CGPI in press releases. factors. Please refer to (Exhibit 4 -Plot Inventory) for further sic - Minimal size, almost no landscaping, average Fengshui, no free -Small size, average landscaping, average -Medium size, average landscaping, good -Large size, nice landscaping, top Fengshui, potential decoration space For the period April 1, 2010 through January 31, 2011, Redstone has sold 5,786 plots at an average price of $6,975. During the past several years we have witnessed several competitors selling out of their property. By combining this along with meaningful appreciation in most asset classes across China, Redstone has been able to enjoy consistent price increases across its product offering since the inception of our cemetery. The average selling price was approximately $4,400 in our fiscal year ended March 31, 2009, $5,400 in our fiscal year ended March 31, 2010, and $6,800 in the nine months ended December 31, 2010.. Included in our 10-K filing for fiscal 2010 we included a pricing chart. This clearly shows that price points of $1,500 -$7,500 (including single and double graves) represented 82% of total sales.GEO rebuttal to CGPI Response:The price range provided by the sales representative is available in the supportive document we originally published. The prices in theprice range are also substantially lower than CGPI’s claimed prices. A price range of the Peach Glove Cemetery (桃园公墓) (theonly legal cemetery in Changshou District) is also provided in our supportive documents. This range is the price range of PeachGlove Cemetery (桃园公墓), which is also much lower than the claimed price of CGPI. www.geoinvesting.com
  8. 8. Issue 8 CGPI ResponseThe land (339,444 m2) the Company claims it has to build future As explained in our business update on January 26, 2011, thecemetery plots may be the Longqiao Lake on which not any plot 339,444 square meters is the land which is adjacent to the lakecan stand. and part of our key cemetery property, not the Longqiao Lake. (Please see Exhibit 5 and Exhibit 6 showing the land on the land transfer agreement).GEO rebuttal to CGPI Response:As we stated in the report, we copied the files from the Land & Resource Bureau of Changshou District. Exhibit 5 does not explainwhere the land is and where the borders of the land are. Exhibit 6 contains the meeting minutes that we already included in oursupportive documents. We content that these documents (Exhibit 5 and Exhibit 6 of CGPI) cannot invalidate our finding. www.geoinvesting.com
  9. 9. Issue 9 CGPI ResponseThe calculation of the intangible assets calculated by CGPI based We have obtained land use rights to develop and operate cemeteryon the “approximately 210,000 plots that can be developed and operations on 339,444 square meters of land. upon receipt of thesold from the 339,444 square meters of land” may be misleading. land use rights in 2005, the Company obtained an independentIf our finding is accurate, the intangible assets of the Longqiao Land Assessment Report (see Exhibit 7) from a certified valuator,Lake for the cemetery business of CGPI will become substantially which valued the land at RMB 90.97 million (approximatelyless than what is disclosed in SEC documents. $13.8 million using the December 31, 2010 exchange rate of 6.592 RMB/USD). This report was the source for the original cost basis of the land. The Company performs annual reviews of all long-lived assets, including land use rights, for impairment. Based on our reviews, no impairment has occurred with respect to these land use rights.GEO rebuttal to CGPI Response:The rebuttal to issue 9 is the same as the rebuttal to issue 8. www.geoinvesting.com
  10. 10. Issue 10 CGPI ResponseThe leased land, where the cemetery does exist, is illegally leased Foguang has legally leased 381,794 square meters of land fromfrom the government of Jiangnan Town as the lease agreement the government of Jiangnan county.and the principle activities on the leased land violate the PRC On December 11, 2003, the Changshou CHURD approved thelaws. Topographic Chart (see Exhibit 8) of Longqiao Lake Cemetery and noted at the right bottom corner of the chart that Loangqiao Lake Cemetery could be developed within the red circle area. The red circle includes all the lands belong to the Chongqing Municipality Changshou District Jiangnan County Longqiao Lake and Qianfo Group 6. On January 29, 2008, Foguan and Chongqing Municipality Changshou District Jiangnan County Longqiao Lake and Qianfo Group 6 reached the Rural Land Operation Right Transfer Agreement (see Exhibit 9). In the Agreement, the villagers transferred their Land Contractual Management Rights of 381,794 square meters to Foguang. According to Article 32 and 34 under the PRC Law on Land Contract in Rural Areas, the villagers have the right to lease their Land Contractual Management Rights to Foguang who is then authorized to utilize the land for the development of Guiyuan Cemetery (aka Longqiao Lake Cemetery) Project. The usage of the leased land was converted to that of the construction land by government planning bureau (see Exhibit 10). Under PRC Law, the usage nature of a land is decided and regulated by government planning bureau according to the need of development instead of individuals or civil entities.GEO rebuttal to CGPI Response:For this issue, we suggest investors do the internet research in Chinese on different search engines, such as, Google and/or Baidu. Thekey words are “耕地” (agricultural land), “非法” (illegal), “公墓”(cemetery) and “占用”(occupy). Investors can find many usefulresources to support our conclusions regarding this issue. www.geoinvesting.com
  11. 11. All documents provided by CGPI refer to the planning (construction planning and/or land planning) of the cemetery.In the conversation between our assigned person and the officer of Chongqing Civil Administration Bureau, the officer also mentionedthat the reason that Guiyuan Cemetery does not have a current cemetery license is because of “Land”. Issue 11 CGPI ResponseBased on the PRC law, to purchase any land collectively owned In PRC Law, the usage nature of a land is decided and regulatedby farmers, the government shall nationalize the land at first and by government planning bureau according to the need oftransfer to the company after the nationalization. Furthermore, the development instead of individuals or civil entities. On Januarygovernment of Chongqing City published a rule called Cemetery 15, 2004, Changshou District Commission of Housing and Urbanand Funeral Management Rules of 1998, which clearly states that Rural Development (“CHURD”) issued the No. 83 of Year 2003a cemetery shall not occupy agricultural land and/or forest (article official construction land planning permission certificate (see20) Exhibit 10) which shows: the land-use project name: Longqiao Lake Cemetery, Land-use area: 1,333,400 square meters, refer to the Notice of Approval of The Location Selection and Topographic Chart for location and scope.GEO rebuttal to CGPI Response:The rebuttal to issue 11 is the same as the rebuttal to issue 10. www.geoinvesting.com
  12. 12. Issue 12 CGPI ResponseIn 2007, Chinese media also broadly reported the illegal During the construction process of the Guiyuan project in 2005construction of Guiyuan Cemetery on the agricultural land and the company hired an independent contractor to clear some forestother relevant Allegations. Furthermore, The Land and Resource area, but the contractor did not obtain the appropriate “treeBureau of Chongqing District also fined (nominal) the removal” permit. The Land and Resource Bureau of Chongqingconstruction of Guiyuan Cemetery in 2005 and required District ordered the contractor to stop work, pay a nominal fine,Foguang/Guiyuan to stop the construction. and obtain the proper permits. Once the proper permits were obtained they were able to resume work. This was a simple oversight by the contractor, who was responsible for obtaining the permit, and was corrected immediately. This incident had no impact on the status of our cemetery license or our ability to develop and sell cemetery plots from that point forward.GEO rebuttal to CGPI Response:We recommend that retail investors utilize a translator to translate the media reports that can be found online. The media reports areas follows: 1. http://wszc.ws.online.cq.cn/fc/news/list.asp?id=401 2. http://news.xinhuanet.com/house/2007-08/08/content_6491168.htm 3. http://xamsg.focus.cn/news/2007-08-08/347618.html www.geoinvesting.com
  13. 13. Issue 13 CGPI ResponseThe company may have constructed the tourism business plan to This allegation is false. As disclosed above, we made a strategicincrease the chances of raising money from investors. We also decision to divest the tourism project, which has nothing to dobelieve that CGPI may be attempting to recover its investment in with the development of Longqiao Lake Cemetery Park, in orderorder to raise money to purchase land use rights and operate to focus on its successful main business, rather than enter into alegally. new industry altogether in which we do not have core competency. The sale of this project has nothing to do with land use rights, as the land use rights have been properly obtained as described above. We have properly classified the related assets as held for sale on its balance sheet for all periods after the determination was made to discontinue the project, and have made timely and appropriate disclosures about the change in plans. We are currently taking bids for the project and initial findings show that we should be able to recover the full costs incurred to date.GEO rebuttal to CGPI Response:Our assumption regarding why CGPI abandoned the tourism project was only our opinion. Even so, it has little to do with the majorissues at hand. From the conversation with the government officer of Chongqing Civil Administration Bureau, we understand that theoutstanding problem for Guiyuan Cemetery is the “Land”.Disclosure: No positions in CGPI www.geoinvesting.com
  14. 14. Disclaimer:You agree that you shall not republish or redistribute in any medium any information on the GeoInvesting website without ourexpress written authorization. You acknowledge that GeoInvesting is not registered as an exchange, broker-dealer or investmentadvisor under any federal or state securities laws, and that GeoInvesting has not provided you with any individualized investmentadvice or information. Nothing in the website should be construed to be an offer or sale of any security. You should consult yourfinancial advisor before making any investment decision or engaging in any securities transaction as investing in any securitiesmentioned in the website may or may not be suitable to you or for your particular circumstances. GeoInvesting, its affiliates, and thethird party information providers providing content to the website may hold short positions, long positions or options in securitiesmentioned in the website and related documents and otherwise may effect purchase or sale transactions in such securities.GeoInvesting, its affiliates, and the information providers make no warranties, express or implied, as to the accuracy, adequacy orcompleteness of any of the information contained in the website. All such materials are provided to you on an "as is" basis, withoutany warranties as to merchantability or fitness neither for a particular purpose or use nor with respect to the results which may beobtained from the use of such materials. GeoInvesting, its affiliates, and the information providers shall have no responsibility orliability for any errors or omissions nor shall they be liable for any damages, whether direct or indirect, special or consequential evenif they have been advised of the possibility of such damages. In no event shall the liability of GeoInvesting, any of its affiliates, or theinformation providers pursuant to any cause of action, whether in contract, tort, or otherwise exceed the fee paid by you for accessto such materials in the month in which such cause of action is alleged to have arisen. Furthermore, GeoInvesting shall have noresponsibility or liability for delays or failures due to circumstances beyond its control. www.geoinvesting.com

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