**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




___________




**FORM
      10-QSB**





**xQUARTERLY
      REPORT UNDER
      SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





FOR
      THE
      QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006





**oTRANSITION
      REPORT UNDER SECTION 13 OR
      15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





FOR
      THE
      TRANSITION PERIOD FROM ________ TO ________


Commission
      File Number: 000-28865




**YARRAMAN
      WINERY, INC.**


(Exact
      name of small business issuer in its charter)





**Nevada**
              (State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            **88-0373061**
              (I.R.S.
                Employer
              Identification
                No.)**700
                Yarraman Road**
              **Wybong**
              **Upper
                Hunter Valley**
              **New
                South Wales, Australia 2333**
              (Address
                of Principal Executive Offices)




**(61)
      2 6547-8118**


(Issuer’s
      Telephone Number)




_______________________________________________________


(Former
      Name and Address and Former Fiscal Year, if Changed


Since
      Last Report)




Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities 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 o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES o NO
x




There
      were 25,000,000 shares of the Issuer’s common stock outstanding on October 30,
      2006.




Transitional
      Small Business Disclosure Format (check one): YES o NO x







**TABLE
      OF CONTENTS**





**Page**PART
                I -
            FINANCIAL
              INFORMATION
            3ITEM
                1.
            
            FINANCIAL
                STATEMENTS
            3ITEM
                2.
            
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            26ITEM
                3.
            
            CONTROLS
                AND PROCEDURES
            32PART
                II -
            OTHER
              INFORMATION
            33ITEM
                1.
            
            LEGAL
                PROCEEDINGS.
            33ITEM
                2.
            
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
            33ITEM
                3.
            
            DEFAULTS
                UPON SENIOR SECURITIES.
            33ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS.
            33ITEM
                5.
            
            OTHER
                INFORMATION.
            33ITEM
                6.
            
            EXHIBITS
            34




2


FINANCIAL
      INFORMATION




**ITEM
      1.**  **FINANCIAL
      STATEMENTS**




YARRAMAN
      WINERY, INC. AND SUBSIDIARY





CONSOLIDATED
      UNAUDITED FINANCIAL STATEMENTS





SEPTEMBER
      30, 2006





**TABLE
      OF CONTENTS**





Consolidated
                Unaudited Balance Sheet
            
            
            4Consolidated
                Unaudited Statements of Operations
            
            
            5Consolidated
                Unaudited Statements of Cash Flow
            
            
            6Consolidated
                Unaudited Statements of Changes in Stockholders’ Equity
            
            
            7Notes
                to Unaudited Consolidated Financial Statements
            
            
            8 -
                25




3




**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**


**(FORMERLY
      KNOWN AS DAZZLING INVESTMENTS, INC., A DEVELOPMENT STAGE
      COMPANY)**


**UNAUDITED
        CONSOLIDATED BALANCE SHEET**


**SEPTEMBER
        30, 2006**


**ASSETS****Current
              Assets**Cash
                and cash equivalents
            
            $
            26,987Accounts
                receivable, net
            
            
            746,329Inventory
            
            
            5,027,357Other
                receivables
            
            
            159,537Other
                assets
            
            
            205,177Total
                Current Assets
            
            
            6,165,387**Property,
                plant and equipment, net**
            
            
            3,855,475**Intangible
                asset**
            
            
            186,653**Total
                Assets**
            
            $
            10,207,515**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Accounts
                payable and accrued expenses
            
            $
            1,289,899Capital
                leases, current portion
            
            
            86,927Due
                to related party
            
            
            373,305Total
                Current Liabilities
            
            
            1,750,131**Long
                Term Liabilities**Capital
                leases, net of current portion
            
            
            88,608Related
                party loans
            
            
            2,174,087Long-term
                debt
            
            
            4,207,230Total
                Long Term Liabilities
            
            
            6,469,925**Total
                Liabilities**
            
            
            8,220,056**Stockholder's
                Equity**Common
                stock, $.001 par value,25,000,000
                shares authorized and outstanding, respectively
            
            
            25,000Additional
                paid in capital
            
            
            4,583,945Other
                comprehensive income
            
            
            175,975Accumulated
                deficit
            
            
            (2,797,461
            )Total
                Stockholder's Equity
            
            
            1,987,459**Total
                Liabilities and Stockholder's Equity**
            
            $
            10,207,515The
                accompanying notes are an integral part of these unaudited consolidated
                financial statements.





4




**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**


**(FORMERLY
        KNOWN AS DAZZLING INVESTMENTS, INC., A DEVELOPMENT STAGE
        COMPANY)**
 **UNAUDITED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **FOR
        THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005**
  **2006**
              
              **2005**Sales,
                  net
              
              $
              404,745
              
              $
              706,084Cost
                  of sales
              
              
              280,062
              
              
              639,963**Gross
                  profit**
              
              
              124,683
              
              
              66,121Selling,
                  general and administrative expenses
              
              
              553,526
              
              
              286,575**Loss
                  from operations**
              
              
              (428,843
              )
              
              (220,454
              )Other
                  (Income) ExpenseInterest
                  income
              
              
              (498
              )
              
              (484
              )Interest
                  expense
              
              
              156,631
              
              
              55Gain
                  on foreign currency
              
              
              (3,093
              )
              
              (2,535
              )Total
                  Other (Income) Expense
              
              
              153,040
              
              
              (2,964
              )**Net
                  loss**
              
              $
              (581,883
              )
              $
              (217,490
              )Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              
              23,786
              
              
              0**Comprehensive
                  Loss**
              
              $
              (558,097
              )
              $
              (217,490
              )**Net
                  loss per share:**Basic
                  & diluted
              
              
              (0.02
              )
              
              (0.01
              )**Weighted
                  average number of shares outstanding:**Basic
                  & diluted
              
              
              25,000,000
              
              
              15,000,000The
                  accompanying notes are an integral part of these unaudited consolidated
                  financial statements.




5




**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **(FORMERLY
        KNOWN AS DAZZLING INVESTMENTS, INC., A DEVELOPMENT STAGE
        COMPANY)**
 **UNAUDITED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **FOR
        THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005**
  **2006**
              
              **2005****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              
              $
              (581,883
              )
              $
              (217,490
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
              
              
              86,843
              
              
              27,888(Increase)
                  / decrease in assets:Account
                  receivables
              
              
              (165,305
              )
              
              (157,712
              )Inventory
              
              
              (86,111
              )
              
              (54,032
              )Other
                  receivables
              
              
              (45,860
              )
              
              (223,581
              )Other
                  assets
              
              
              (4,200
              )
              
              (5,214
              )Increase
                  / (decrease) in current liabilities:Accounts
                  payable and accrued expenses
              
              
              306,342
              
              
              273,292Total
                  Adjustments
              
              
              91,709
              
              
              (139,359
              )**Net
                  cash used in operations**
              
              
              (490,174
              )
              
              (356,849
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of property, plant & equipment
              
              
              -
              
              
              0**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from note payable
              
              
              35,418
              
              
              -Payments
                  on capital leases
              
              
              (21,148
              )
              
              -Proceeds
                  from loans from related parties
              
              
              378,545
              
              
              358,772**Net
                  cash provided by financing activities**
              
              
              392,815
              
              
              358,772Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              13,908
              
              
              (1,999
              )**Net
                  increase (decrease) in cash and cash equivalents**
              
              
              (83,451
              )
              
              (76
              )**Cash
                  and cash equivalents, beginning balance**
              
              
              110,438
              
              
              43,723**Cash
                  and cash equivalents, ending balance**
              
              $
              26,987
              
              $
              43,647**SUPPLEMENTAL
                  DISCLOSURES:**Cash
                  paid during the year for:Income
                  tax payments
              
              $
              -
              
              $
              -Interest
                  payments
              
              $
              118,897
              
              $
              55The
                  accompanying notes are an integral part of these unaudited consolidated
                  financial statements.




6


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**


**(FORMERLY
        KNOWN AS DAZZLING INVESTMENTS, INC., A DEVELOPMENT STAGE
        COMPANY)**
 **CONSOLIDATED
        UNAUDITED STATEMENTS OF STOCKHOLDERS' EQUITY**
 **SEPTEMBER
        30, 2006**
  **Additional**
              
              **Other**
              
              
              
              **Total****Common
                  Stock**
              **Paid-In**
              
              **Comprehensive**
              
              **Retained**
              
              **Stockholders'****Shares**
              
              **Amount**
              
              **Capital**
              
              **Income**
              
              **Deficit**
              
              **Equity****Balance
                  June 30, 2004**
              
              
              15,000,000
              
              $
              15,000
              
              $
              1,710,751
              
              $
              19,913
              
              $
              (603,613
              )
              $
              1,142,051Other
                  comprehensive income
              
              
              -
              
              
              -
              
              
              -
              
              
              114,375
              
              
              -
              
              
              114,375Net
                  loss for the year ended June 30, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (377,298
              )
              
              (377,298
              )**Balance
                  June 30, 2005**
              
              
              15,000,000
              
              
              15,000
              
              
              1,710,751
              
              
              134,288
              
              
              (980,911
              )
              
              879,128Recapitalization
                  as result of merger
              
              
              3,496,500
              
              
              3,497
              
              
              (51,449
              )
              
              -
              
              
              -
              
              
              (47,953
              )Additional
                  capital from former stockholder
              
              
              -
              
              
              -
              
              
              931,146
              
              
              -
              
              
              -
              
              
              931,146Stock
                  issued for finders fee
              
              
              1,250,000
              
              
              1,250
              
              
              (1,250
              )
              
              -
              
              
              -
              
              
              -Sale
                  of stock
              
              
              5,253,500
              
              
              5,254
              
              
              1,994,747
              
              
              -
              
              
              -
              
              
              2,000,000Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              17,901
              
              
              -
              
              
              17,901Net
                  loss for the year ended June 30, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,234,667
              )
              
              (1,234,667
              )**Balance
                  June 30, 2006**
              
              
              25,000,000
              
              
              25,000
              
              
              4,583,945
              
              
              152,189
              
              
              (2,215,578
              )
              
              2,545,556Other
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              23,786
              
              
              
              
              
              23,786Net
                  loss for the three months ended September 30, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (581,883
              )
              
              (581,883
              )**Balance
                  September 30, 2006**
              
              
              25,000,000
              
              $
              25,000
              
              $
              4,583,945
              
              $
              175,975
              
              $
              (2,797,461
              )
              $
              1,987,459The
                  accompanying notes are an integral part of these consolidated financial
                  statements.




7


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**




NOTE
      1 - NATURE
      OF OPERATIONS





Yarraman
      Winery, Inc., formerly Dazzling Investments, Inc. (“the Company” or “we”) was
      incorporated on December 6, 1996 under the laws of the State of Nevada.





On
      December 22, 2005, we entered into a Share Exchange Agreement (the “Exchange
      Agreement”) with Yarraman Estate Pty Limited, a privately owned Australian
      company (“Yarraman Australia”), and the beneficial owners of all of Yarraman
      Australia’s shares, (the “Shareholders”) and Delta Dawn Pty Limited as trustee
      of the Yarraman Road Trust (the “Trust”), the nominal holder of such shares,
      pursuant to which the Registrant acquired all of the issued and outstanding
      shares of stock of Yarraman Australia in exchange for the issuance in the
      aggregate of 15,000,000 shares of common stock of the Company (the “Shares”) to
      the Trustee (the “Share Exchange”) for the benefit of the
      Shareholders.





The
      exchange of shares with Yarraman Australia has been accounted for as a reverse
      acquisition under the purchase method of accounting since the stockholders
      of
      the Yarraman Australia obtained control of the consolidated entity. Accordingly,
      the acquisition has been recorded as a recapitalization of Yarraman Australia,
      with Yarraman Australia being treated as the continuing entity. The historical
      financial statements presented are those of Yarraman Australia. The continuing
      company has retained June 30 as its fiscal year end. The financial statements
      of
      the legal acquirer are not significant; therefore, no pro forma financial
      information is submitted.





Yarraman
      Australia is an Australian Winery with a distinguished history and a reputation
      for outstanding quality wines.





Yarraman
      Australia produces and sells premium, super premium and ultra premium varietal
      wines. Yarraman Australia’s wines are made from grapes grown at its vineyard
      (the “Vineyard”) and from grapes purchased from other Australian vineyards. The
      grapes are crushed, fermented and made into wine at Yarraman Australia’s winery
      and the wines are sold principally under the “Yarraman Estate Vineyard”, “Black
      Cypress”, “Banjo” and “Down Under” labels. Yarraman Australia’s vineyard and
      winery are located in the Upper Hunter Valley, approximately 200 miles north
      of
      Sydney, Australia.




On
      February 3, 2006, the Company's Board of Directors
      elected to change its fiscal year end from December 31 to June 30 to correspond
      with the fiscal year end of the operating entity.




8


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**




NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Basis
      of Presentation





The
      accompanying consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of America.
      The functional currency of Yarraman Australia is the Australian Dollar (“AUD”);
      however the accompanying consolidated financial statements have been translated
      and presented in United States Dollars (“$”).





Principles
      of Consolidation





The
      consolidated financial statements include the accounts of Yarraman Winery,
      Inc.
      and its wholly owned subsidiary Yarraman Estate Pty Limited, collectively
      referred to within as “the Company.” All material intercompany accounts,
      transactions and profits have been eliminated in consolidation.





Revenue
      Recognition




The
      Company’s revenue recognition policies are in compliance with Staff accounting
      bulletin (SAB) 104. We
      recognize revenue when the product is shipped and title passes to the customer, when
      a
      formal arrangement exists, the price is fixed or determinable, the delivery
      is
      completed, no other significant obligations of the Company exist and
      collectibility is reasonably assured. The
      Company's standard terms are 'FOB' shipping point, with no customer acceptance
      provisions. No products are sold on consignment. Credit sales are recorded
      as
      trade accounts receivable and no collateral is required. Revenue from items
      sold
      through the Company's retail location is recognized at the time of sale. 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. Revenues are recognized net of the amount of
      goods and services tax (GST) payable to the Australian taxing
      authority.




The
      company also receives processing revenue which represents fees charged to
      contract process fruit for other winemaking companies. It is recognized when
      the
      service is provided to the customer.




The
      Company sells substantial amount of its products in the domestic
      market.




Accounts
      Receivable





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. Allowance for doubtful debts amounted to $55,996
      as
      at September 30, 2006.




9




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Segment
      Reporting





Statement
      of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About
      Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
      is based on the way a company’s management organizes segments within the company
      for making operating decisions and assessing performance. Reportable segments
      are based on products and services, geography, legal structure, management
      structure, or any other manner in which management disaggregates a company.
      SFAS
      131 has no effect on the Company’s consolidated financial statements as the
      Company consists of one reportable business segment.




Fair
      Value of Financial Instruments





Statement
      of Financial Accounting Standards No. 107, Disclosures about fair value of
      financial instruments, requires that the Company disclose estimated fair values
      of financial instruments. The carrying amounts reported in the statements of
      financial position for assets and liabilities qualifying as financial
      instruments are a reasonable estimate of fair value.




Inventories




Yarraman
      Australia’s annual crop and production costs are recognized as work-in- process
      inventories. Such costs are accumulated with related direct and indirect
      harvest, wine processing and production costs, and are transferred to finished
      goods inventories when the wine is produced, bottled, and ready for sale. The
      cost of finished goods is recognized as cost of sales when the wine product
      is
      sold. Inventories are stated at the lower of first-in, first-out (“FIFO”) cost
      or market by variety. In accordance with general practices in the wine industry,
      wine inventories are generally included in current assets in the accompanying
      balance sheet, although a portion of such inventories may be aged for more
      than
      one year. As of September 30, 2006 inventory consisted of raw material, work
      in
      progress and finished goods as follows:




10


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Winemaking
                  and packaging materials
              
              $
              68,968Work
                  in progress (costs related to unprocessedand/
                  or unbottled products)
              
              
              4,375,753Finished
                  good (bottled wine)
              
              
              582,636Total
              
              $
              5,027,357




Property,
      Plant and Equipment




Property,
      plant and equipment are stated at cost less accumulated depreciation.
      Expenditures for major additions and improvements are capitalized and minor
      replacements; maintenance and repairs are expensed as incurred. Whenever an
      asset is retired or disposed of, its cost and accumulated depreciation or
      amortization are removed from the respective accounts and the resulting gain
      or
      loss is credited or charged to income.





Depreciation
      is computed using the straight-line and declining-balance methods over the
      following estimated useful lives:





Land
                improvements
            
            
            15
                yearsWinery
                building
            
            
            30
                yearsEquipment
            
            
            5-7
                years




Expenditures
      for repairs and maintenance are charged to operating expense as incurred.
      Expenditures for additions and betterments are capitalized. When assets are
      sold
      or otherwise disposed of, the cost and related accumulated depreciation are
      removed from the accounts, and any resulting gain or loss is included in
      operations.




As
      of
      September 30, 2006 Property, Plant and Equipment consist of the
      following:


Buildings
                  and improvements
              
              $
              48,543Land
              
              
              790,239Plant
                  and equipment
              
              
              3,378,626Computer
                  equipment
              
              
              36,526Furniture
                  and fixtures
              
              
              20,1604,274,094Accumulated
                  depreciation
              
              
              (418,619
              )$
              3,855,475


11


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Capital
      Lease Obligations




Included
      in Property, Plant and Equipment are $224,720 of fixed assets that were
      purchased on capital lease arrangements (note 8).





Intangible
      Assets





Effective
      July 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No.
      142, “Goodwill and Other Intangible Assets.” The adoption of SFAS No. 142
      required an initial impairment assessment involving a comparison of the fair
      value of trademarks, patents and other intangible assets to current carrying
      value. No impairment loss was recognized for the period ended September 30,
      2006
      and 2005. As of September 30, 2006, the intangible assets comprised of water
      licenses valued at $186,653 which are held in perpetuity.





Trademarks
      and other intangible assets determined to have indefinite useful lives are
      not
      amortized. The Company tests such trademarks and other intangible assets with
      indefinite useful lives for impairment annually, or more frequently if events
      or
      circumstances indicate that an asset might be impaired. Trademarks and other
      intangible assets determined to have definite lives are amortized over their
      useful lives or the life of the trademark and other intangible asset, whichever
      is less.





Contingencies





Certain
      conditions may exist as of the date the financial statements are issued which
      may result in a loss to the Company but which will only be resolved when one
      or
      more future events occur or fail to occur. The Company’s management and legal
      counsel assess such contingent liabilities, and such assessment inherently
      involves an exercise of judgment. In assessing loss contingencies related to
      legal proceedings that are pending against the Company or unasserted claims
      that
      may result in such proceedings, the Company’s legal counsel evaluates the
      perceived merits of any legal proceedings or unasserted claims, as well as
      the
      perceived merits of the amount of relief sought or expected to be
      sought.





If
      the
      assessment of a contingency indicates that it is probable that a material loss
      has been incurred and the amount of the liability can be estimated, then the
      estimated liability would be accrued in the Company’s financial statements. If
      the assessment indicates that a potential material loss contingency is not
      probable but is reasonably possible, or is probable but cannot be estimated,
      then the nature of the contingent liability, together with an estimate of the
      range of possible loss, if determinable and material, would be disclosed.





Loss
      contingencies considered to be remote by management are generally not disclosed
      unless they involve guarantees, in which case the guarantee would be disclosed.
      As of September 30, 2006, there is one matter that warrants disclosure in the
      financial statements (See Note 6).


12


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Advertising





Advertising
      expenses consist primarily of costs of promotion for corporate image and product
      marketing and costs of direct advertising. The Company expenses all advertising
      costs as they are incurred.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make certain estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates. Significant
      estimates include collectibility of accounts receivable, accounts payable,
      sales
      returns, and recoverability of long-term assets.





Concentration
      of Credit Risk





Financial
      instruments, which subject us to credit risk, consist primarily of cash
      equivalents and trade accounts receivable arising from its normal business
      activities. We place our cash in what we believe to be credit-worthy financial
      institutions. Concentration of credit risk with respect to trade accounts
      receivable are from customers located throughout the world. We actively evaluate
      the creditworthiness of the customers with which we conduct business through
      credit approvals, credit limits and monitoring procedures.




Basic
      and Diluted Earnings Per Share




Earnings
      per share is calculated in accordance with the Statement of Financial Accounting
      Standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
      Accounting Principles Board Opinion No. 15 (APB 15). Net loss per share for
      all
      periods presented has been restated to reflect the adoption of SFAS No. 128.
      Basic net loss per share is based upon the weighted average number of common
      shares outstanding. Diluted net loss per share is based on the assumption that
      all dilutive convertible shares and stock options were converted or exercised.
      Dilution is computed by applying the treasury stock method. Under this method,
      options and warrants are assumed to be exercised at the beginning of the period
      (or at the time of issuance, if later), and as if funds obtained thereby were
      used to purchase common stock at the average market price during the period.




13


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Statement
      of Cash Flows




In
      accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
      Company’s operations are based upon the currencies used in the countries where
      the operations occur. As a result, amounts related to assets and liabilities
      reported on the statement of cash flows will not necessarily agree with changes
      in the corresponding balances on the balance sheet.




Income
      Taxes





Income
      taxes have been provided based upon the tax laws and rates in the countries
      in
      which operations are conducted and income is earned. The income tax rates
      imposed by the taxing authorities vary. Taxable income may vary from pre-tax
      income for financial accounting purposes. There is no expected relationship
      between the provision for income taxes and income before income taxes, because
      the countries have different taxation rules, which vary not only to nominal
      rates but also in terms of available deductions, credits and other benefits.
      Deferred tax assets and liabilities are recognized for the anticipated future
      tax effects of temporary differences between the financial statement basis
      and
      the tax basis of our assets and liabilities using the applicable tax rates
      in
      effect at year end as prescribed by SFAS No. 109 “Accounting for Income
      Taxes”.





Translation
      Adjustment





As
      of
      September 30, 2006, the accounts of Yarraman Australia were maintained, and
      their financial statements were expressed, in Australian Dollars (AUD). Such
      financial statements were translated into U.S. Dollars (“$”) in accordance with
      SFAS No. 52, “Foreign Currency Translation”, with the AUD as the functional
      currency. According to SFAS No. 52, all assets and liabilities were translated
      at the current exchange rate, stockholder’s equity are translated at the
      historical rates and income statement items are translated at the weighted
      average exchange rate for the period. The resulting translation adjustments
      are
      reported under other comprehensive income in accordance with SFAS No. 130,
      “Reporting Comprehensive Income” as a component of shareholders’
equity.




14


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





New
      Accounting Pronouncements





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.





In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.”
This statement applies to all voluntary changes in accounting principle and
      requires retrospective application to prior periods' financial statements of
      changes in accounting principle, unless this would be impracticable. This
      statement also makes a distinction between “retrospective application” of an
      accounting principle and the “restatement” of financial statements to reflect
      the correction of an error. This statement is effective for accounting changes
      and corrections of errors made in fiscal years beginning after December 15,
      2005.





In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
      Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006.




In
      March
      2006, FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets”
amending FASB Statement No. 140, “Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities” with respect to the
      accounting for separately recognized servicing assets and servicing liabilities.
      This Statement:




15


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




New
      Accounting Pronouncements (continued)




1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.




2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if practicable.




3.
            Permits
                an entity to choose ‘Amortization method’ or ‘Fair value measurement
                method’ for each class of separately recognized servicing assets and
                servicing liabilities.




4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.




5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.




This
      Statement is effective as of the beginning of the Company’s first fiscal year
      that begins after September 15, 2006.




In
      September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years.




16


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




New
      Accounting Pronouncements (continued)




In
      September 2006, FASB issued SFAS No. 158 “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87, 88, 106, and 132(R)”. This Statement improves financial reporting by
      requiring an employer to recognize the over funded or under funded status of
      a
      defined benefit postretirement plan (other than a multiemployer plan) as an
      asset or liability in its statement of financial position and to recognize
      changes in that funded status in the year in which the changes occur through
      comprehensive income of a business entity or changes in unrestricted net assets
      of a not-for-profit organization. This Statement also improves financial
      reporting by requiring an employer to measure the funded status of a plan as
      of
      the date of its year-end statement of financial position, with limited
      exceptions. An employer with publicly traded equity securities is required
      to
      initially recognize the funded status of a defined benefit postretirement plan
      and to provide the required disclosures as of the end of the fiscal year ending
      after December 15, 2006. An employer without publicly traded equity securities
      is required to recognize the funded status of a defined benefit postretirement
      plan and to provide the required disclosures as of the end of the fiscal year
      ending after June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements:




a.
            A
                brief description of the provisions of this Statement




b.
            The
                date that adoption is required




c.
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.




The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008. Management is currently evaluating
      the effect of this pronouncement on financial statements.




The
      Company is still in the process of evaluating the effect of these statements
      on
      its financials.





Reclassifications:





For
      comparative purposes, prior year’s consolidated financial statements may have
      been reclassified to conform with report classifications of the current
      year.




17


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





NOTE
      3
      - CASH
      & CASH EQUIVALENTS





Cash
      and
      cash equivalents include cash in hand and cash in time deposits, certificates
      of
      deposit and all highly liquid debt instruments with original maturities of
      three
      months or less.




NOTE
      4 - ACCOUNTS
      PAYABLE AND ACCRUED EXPENSES





As
      of
      September 30, 2006, the accounts payable and accrued expenses comprised of
      the
      following:





Trade
                Creditors
            
            $
            562,256Other
                Creditors
            
            
            609,452Payroll
                liabilities
            
            
            118,191Total
            
            $
            1,289,899




The
      provision for employee benefits to annual leave represents the value of the
      estimated future cash outflows to be made resulting from employees’ services
      provided to the reporting dates based on their current wage rate. As of
      September 30, 2006 annual leave liability existed in the amount of $59,164
      which
      is included in the payroll liabilities.





Note
      5 - RELATED
      PARTY TRANSACTIONS





We
      entered into various related party transactions with our former parent, the
      Trust, various unit holders of theTrust, related entities of unit holders of
      the
      Trust and officers of the Company.





Yarraman
      Australia leased vineyards and related plant and equipment from the Trust.
      Terms
      of the agreement included annual payment of approximately $239,000. The lease
      began on July 1, 2003 and terminated on December 22, 2005 when Yarraman
      Australia purchased the vineyard and related plant and equipment.





We
      also
      pay the Trust approximately $34,000 per month for the use of additional vineyard
      land also located in Australia per a verbal agreement. On January 1, 2006 we
      entered into a written agreement to lease this vineyard land for approximately
      $35,000 per month. The term was from January 1, 2006 through June 30, 2006.
      As
      of July 1, 2006 this lease is on a month to month basis with the same payment
      terms.





Prior
      to
      December 22, 2005, Yarraman Australia received loans from Delta Dawn to fund
      operations and purchase assets. The loan liabilities were assumed by Yarraman
      Australia. The outstanding principal balance of this loan was $1,177,000 and
      will be paid in accordance with such terms more specifically disclosed in Note
      8
      below.




18


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**




Note
      5 - RELATED
      PARTY TRANSACTIONS (CONTINUED)





On
      May 1,
      2006, Yarraman Australia entered into a loan agreement with Delta Dawn in the
      principal amount of approximately $665,000. Interest is payable at an annual
      rate of 8%. On May 25, 2006, Delta Dawn extended to Yarraman Australia an
      additional $10,950, to be repaid in accordance with the same terms as the May
      1,
      2006 loan.





Stockholders
      and Directors of the Company and of the Trust were provided wine during the
      three months ended September 30, 2006 valued at $7,637.




The
      Company had wine sales to entities related to various Stockholders, Officers
      and
      Directors totaling $2,714 during the three months ended September 30,
      2006.





We
      have a
      liability to one of the Unit Holders of Delta Dawn related to consulting fees
      of
      approximately $9,283 as of September 30, 2006.





On
      January 1, 2006, Yarraman Australia entered into a consulting agreement with
      Delta Dawn to provide business consulting services related to the wine industry
      for a term of two years or until such time as their ownership percentage in
      our
      Company is reduced to less then 15%. We agree to pay approximately $78,000,
      annually. During the three months ended September 30, 2006 we paid Delta Dawn
      $29,129.





During
      the three months ended September 30, 2006 the Company included in its revenue,
      fees for wine making and storage of wine of approximately $174,168 to a company
      (related through common shareholders) with whom Yarraman Australia had an
      agreement.





On
      August
      1, 2006, Yarraman Australia entered into a loan agreement with a private
      corporation to borrow up to approximately $365,000, with interest payable at
      8.75% per annum, due on September 30, 2006.





On
      December 16, 2005 the Company purchased from its former parent, the Trust,
      certain assets including land, buildings and equipment and water license rights
      by assuming certain debt (Note 8), capital leases (Note 8), contribution to
      paid
      in capital by the Trust and a liability to the Trust. The assets and liabilities
      were recorded at the historical cost of the related party. No cash was
      exchanged. See the summary below:





Assets
                purchased
            
            $
            5,759,740Liabilities
                assumed
            
            
            (4,384,740
            )Payable
                to former parent
            
            
            (431,151
            )Contribution
                to capital
            
            
            (943,850
            )Net
            
            
            -




19


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**




Note
      5 - RELATED
      PARTY TRANSACTIONS (CONTINUED)





The
      Company’s assets are also pledged as collateral for indebtedness of Yarraman
      Australia’s prior Parent, the Trust. As of September 30, 2006 the outstanding
      balance on this debt was approximately $3,834,737. See Note 6.





Note
      6 - COMMITMENTS
      AND CONTINGENCIES





Operating
      Leases





Yarraman
      Australia leased approximately 200 acres of vineyard land and plant and
      equipment from the Trust for approximately $239,000. The lease was entered
      into
      on July 1, 2003 and is for a term of two years, but may continue past that
      date
      at the same rate until canceled by either party. This lease was terminated
      on
      December 22, 2005 when the Company purchased all property under this lease.
      Please see Note 5 - Related Party Transactions.





On
      January 1, 2006 Yarraman Australia entered into a written agreement with Delta
      Dawn to lease additional vineyard land in Australia. The monthly rent is
      approximately $35,000. The lease term commenced on January 1, 2006 and was
      scheduled to terminate on June 30, 2006. After June 30, 2006, the vineyard
      has
      been leased on a month to month basis. See Note 5 above.





Corporate
      Sponsorship





Yarraman
      Australia entered into a five year Sponsorship Agreement beginning on April
      1,
      2004 with Luna Park Sydney. The terms of the sponsorship require the Company
      to
      pay approximately $37,676 for year one, a minimum of approximately $45,992
      for
      year two. The fee for the years two through five will be calculated based on a
      formula related to the number of patrons attending the Luna Park Sydney
      facility.





Guarantor





Our
      assets have been pledged as collateral for indebtedness owed by the Trust,
      to a
      financial institution in Australia, the repayment of which the Company has
      guaranteed. The outstanding balance on this debt was approximately $3,834,737
      as
      of September 30, 2006.




20


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





Note
      6 - COMMITMENTS
      AND CONTINGENCIES (Continued)





Consulting
      Agreements





On
      February 24, 2006, the Company entered into a consulting agreement with a
      company in New York to assist us to identify potential candidates for
      acquisition purposes and assist in the negotiation and execution of such
      transactions. As compensation the Company agreed to pay the firm a monthly,
      nonrefundable, fee of $6,500 beginning March 1, 2006 and ending on July 1,
      2006,
      but may continue past that date at the same rate until canceled by either party.
      The Company also agreed to pay a transaction fee that is based on a sliding
      percentage of any completed acquisition. The total monthly fees paid under
      the
      agreement may be deducted from the total transaction fee.





On
      January 1, 2006 we entered into a consulting agreement with Delta Dawn to
      provide business consulting services related to the wine industry for a term
      of
      two years or until such time as their ownership percentage in our Company is
      reduced to less then 15%. We agree to pay approximately $78,000, annually.
      See
      Note 5.





Arbitration





We
      have
      entered into arbitration on a legal matter regarding one of our grape processing
      arrangements. A dispute has arisen regarding storage charges that were invoiced
      related to the storage of wine processed under the arrangement. The total amount
      in dispute is approximately $165,000. This amount had been recorded as income
      during the fiscal years ended June 30, 2006, 2005 and 2004. No reserve has
      been
      accrued for this amount as we intend to vigorously defend our
      position.





Note
      7 - COMMON
      STOCK





On
      August
      15, 2005, the Company's Board of Directors declared a 4.55 for 1 common stock
      dividend to the shareholders of record as of August 26, 2005. The number of
      common stock shares outstanding increased from 2,100,000 shares to 11,655,000
      shares.




On
      December 12, 2005, the Board of Directors submitted to, and a majority of
      shareholders eligible to vote, approved a proposal that pursuant to the terms
      of
      a Share Exchange Agreement (the “Agreement”), the Company acquired all of the
      outstanding capital stock of Yarraman Australia in exchange for 15,000,000
      shares of the Company’s common stock to the Trustee (the “Transaction”).




In
      connection with the Transaction, certain shareholders of the Company agreed
      to
      cancel an aggregate of 8,158,500 shares of the Company common stock resulting
      in
      3,496,500 shares of common stock outstanding.




21


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





Note
      7 - COMMON
      STOCK **** (CONTINUED)




On
      December 22, 2005, the Company entered into a stock purchase agreement (the
      “Purchase Agreement”) with certain investors (the “Investors”) for the sale of
      an aggregate of 5,253,500 shares of common stock (the “Share Sale”) for
      aggregate gross proceeds in the form of promissory notes with an aggregate
      principal amount equal to $2,000,000
      (the “Notes”) .
      The
      Notes have a maturity of 300 days and principal is payable in approximately
      quarterly installments, with interest accruing on the original principal amount
      at the rate of prime plus 2.5%, payable at maturity. Pursuant to the Purchase
      Agreement, the Company has granted the Investors rights of first refusal on
      financing the Company may do in the future. The principal balance of the note
      has been collected as of September 30, 2006. Interest receivable amounting
      $36,851 is due on this Note at September 30, 2006 and has been classified as
      other receivable in the accompanying financial statements.




In
      connection with the Share Sale, the Company issued 1,250,000 shares of common
      stock in exchange to MillhouseIAG Limited as a finder’s fee.




On
      February 3, 2006, the Board of Directors of the Company and the holders of
      a
      majority of the Company’s outstanding common stock voted to increase the number
      of authorized shares of its capital stock. Pursuant to this authorization,
      on
      March 17, 2006, the Company increased the number of authorized shares of its
      capital stock to 100,000,000 shares, of which ninety million (90,000,000) shares
      are Common Stock, par value of $0.001, and ten million (10,000,000) shares
      are
      Preferred Stock, par value of $0.001, which may be issued in one or more series
      or classes as designated by the Board of Directors, from time to time, without
      the approval of stockholders.





All
      prior
      year information has been adjusted to reflect the stock cancellation and the
      stock dividend.




Note
      8 - LONG
      TERM DEBT





Loans





On
      December 21, 2005 we entered into a loan agreement with a financial institution
      located in Australia. The amount of the loan is $5,577,397 Australian Dollars,
      approximately $4,071,000 with monthly interest payments due on the
      15 th of each
      month at the rate of 10% per annum, rising to 16% per annum if the Company
      is
      late in its payments. The principal balance is due and payable on December
      31,
      2007. The loan is secured by certain property, plant and equipment of the
      Company as well as a guarantee by the Trust and Delta Dawn. As of September
      30,
      2006, the loan balance is $4,207,230 inclusive of accrued and unpaid interest.




22


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





Note
      8 - LONG
      TERM DEBT (Continued)





On
      December 22, 2005, Yarraman Australia entered into a loan agreement with Delta
      Dawn. The principal amount of the loan is approximately $1,177,000.





On
      May 1,
      2006, Yarraman Australia entered into a loan agreement with Delta Dawn in the
      amount of approximately $656,000. Interest is payable at an annual rate of
      8%.
      On May 25, 2006, Delta Dawn loaned Yarraman Australia an additional $10,950
      to
      be repaid in conjunction with the May 1, 2006 loan.





The
      Delta
      Dawn loan agreements require principal payments as follows for the fiscal years
      ending on June 30 th :




2007
              
              $
              -2008
              
              
              153,7452009
              
              
              307,4912010
              
              
              307,4912011
              
              
              1,076,217$
              1,844,944




On
      August
      1, 2006, Yarraman Australia entered into a loan agreement with a private
      corporation that is one of the unitholders in the trust which owns most of
      the
      Company’s common stock to borrow $365,000, with interest payable at 8.75% per
      annum, due on September 30, 2006. The outstanding principal of this loan as
      of
      September 30, 2006 remains unpaid. We have accrued interest of $7,312 related
      to
      this loan.




Leases


As
      a part
      of the asset purchase agreement in December 2005, the Company assumed a capital
      lease obligation to finance the acquisition of plant and equipment. Minimum
      lease payments relating to the equipment have been capitalized and are being
      depreciated over the estimated useful lives of the equipment acquired. Assets
      under capital lease and related accumulated amortization at September 30, 2006
      are as follows:





Plant
                and equipment
            
            $
            224,720Accumulated
                depreciation
            
            
            37,771$
            186,949




23




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





Note
      8
      - LONG
      TERM DEBT (Continued)





The
      future minimum lease payments under the capital lease and the net present value
      of the future minimum lease payments at September 30, 2006 are as
      follows:




Total
                minimum lease payments
            
            $
            175,536Amount
                representing interest
            
            
            (22,087
            )Present
                value of net minimum lease payments
            
            
            169,908Current
                portion
            
            
            (73,649
            )Long-term
                capital lease obligation
            
            $
            96,259




Amortization
      expense for assets under capital lease is included in depreciation
      expense.





The
      future aggregate minimum annual lease payments arising from these lease
      agreements are as follows:


September
                  30,2007
              
              $
              70,2112008
              
              
              80,0362009
              
              
              25,289Total
              
              $
              175,536




Note
      9
      - STOCK
      EXCHANGE AGREEMENT





On
      December 22, 2005 the Company completed a share exchange with Yarraman
      Australia. The exchange of shares has been accounted for as a “reverse
      acquisition” under the purchase method of accounting because the stockholders of
      Yarraman Australia obtained control of the consolidated entity. Accordingly,
      the
      acquisition has been recorded as a recapitalization of Yarraman Australia,
      with
      Yarraman Australia being treated as the continuing entity. The historical
      financial statements presented are those of Yarraman Australia. The continuing
      company has retained June 30 as its fiscal year end. The financial statements
      of
      the legal acquirer are not significant; therefore, no pro forma financial
      information is submitted.





Accordingly,
      the financial statements include the following:





(1)
      The
      balance sheet consists of the net assets of the accounting acquirer at
      historical cost and the net assets of the legal acquirer at historical
      cost.


(2)
      The
      statements of operations include the operations of the accounting acquirer
      for
      the period presented and the operations of the legal acquirer from the date
      of
      the acquisition.




24


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006**





Note
      10 - OTHER
      COMPREHENSIVE INCOME





Balances
      of related after-tax components comprising accumulated other comprehensive
      income (loss), included in stockholder’s equity at September 30, 2006 are as
      follows:


Balance
                  at June 30, 2005
              
              $
              134,288Change
                  for 2006
              
              
              17,901Balance
                  at June 30, 2006
              
              
              152,189Change
                  three months September 2006
              
              
              23,786Balance
                  at September 30, 2006
              
              $
              175,975





Note
      11 -
      MAJOR CUSTOMERS AND VENDORS





For
      the
      three months ended September 30, 2006 the largest customer accounted for
      10.1% of Yarraman Australia's sales. There was no receivable from the
      customer as of September 30, 2006. For the three months ended September 30,
      2006 Yarraman Australia's largest vendor accounted for 11.6% of its
      purchases.





Note
      12 - GOING
      CONCERN





The
      accompanying financial statements have been prepared on a going concern basis
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. As shown in the financial statements, during
      the three months ended September 30, 2006 and 2005, the Company incurred losses
      of $581,883 and $217,490, respectively. In addition, the Company has suffered
      recurring losses from operations, cash deficiencies and the inability to meets
      it’s maturing obligations without borrowing from related parties and sale of its
      stock.  These issues may raise substantial concern about its ability to
      continue as a going concern.




The
      financial statements do not include any adjustments relating to the
      recoverability and classification of liabilities that might be necessary should
      the Company be unable to continue as a going concern. The Company's continuation
      as a going concern is dependent upon its ability to generate sufficient cash
      flow to meet its obligations on a timely basis, to retain its current financing,
      to obtain additional financing, and ultimately to attain  profitability.





Management
      has prepared the following statement in order to address these and other
      concerns:




Yarraman
      Australia has completed its merger with Yarraman Winery, Inc. as stated in
      Note
      9. Related to this merger the Company sold 5,253,500 shares of stock for
      $2,000,000. Yarraman Australia also borrowed $675,950, from Delta
      Dawn.




25




**ITEM
      2.** **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




THE
      FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE INFORMATION
      CONTAINED IN THE FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO
      APPEARING ELSEWHERE HEREIN AND IN CONJUNCTION WITH THE MANAGEMENT’S DISCUSSION
      AND ANALYSIS SET FORTH IN THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE
      YEAR ENDED JUNE 30, 2006.




**PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




The
      statements contained in this Form 10-QSB that are not purely historical are
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
      1934,
      as amended. These include statements about the Company’s expectations, beliefs,
      intentions or strategies for the future, which are indicated by words or phrases
      such as “anticipate,” “expect,” “intend,” “plan,” “will,” “the Company
      believes,” “management believes” and similar words or phrases. The
      forward-looking statements are based on the Company’s current expectations and
      are subject to certain risks, uncertainties and assumptions. The Company’s
      actual results could differ materially from results anticipated in these
      forward-looking statements. All forward-looking statements included in this
      document are based on information available to the Company on the date hereof,
      and the Company assumes no obligation to update any such forward-looking
      statements.




**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**




Our
      discussion and analysis is based upon our consolidated financial statements,
      which have been prepared in accordance with accounting principles generally
      accepted in the United States. The preparation of these financial statements
      requires us to make estimates and judgments that affect the reported amounts
      of
      assets, liabilities, revenues and expenses, and related disclosure of contingent
      assets and liabilities. On an on-going basis, we evaluate our estimates,
      including those related to accounts receivable reserves, provisions for
      impairment losses of affiliated companies and other intangible assets, income
      taxes and contingencies. We base our estimates on historical experience and
      on
      various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions.




We
      believe the following critical accounting policies reflect our more significant
      estimates and assumptions used in the preparation of our consolidated financial
      statements:




ALLOWANCE
      FOR DOUBTFUL ACCOUNTS - We evaluate the collectibility of our trade receivables
      based on a combination of factors. We regularly analyze our significant customer
      accounts, and, when we become aware of a specific customer’s inability to meet
      its financial obligations to us, such as in the case of bankruptcy filings
      or
      deterioration in the customer’s operating results or financial position, we
      record a specific reserve for bad debt to reduce the related receivable to
      the
      amount we reasonably believe is collectible. The allowances are calculated
      based
      on detailed review of certain individual customer accounts, historical rates
      and
      an estimation of the overall economic conditions affecting our customer base.
      We
      review a customer’s credit history before extending credit. If the financial
      condition of our customers were to deteriorate, resulting in an impairment
      of
      their ability to make payments, additional allowances may be required.




INVENTORY
      - The
      annual crop and production costs relating thereto are recognized as
      work-in-process inventories. Such costs are accumulated with related direct
      and
      indirect harvest, wine processing and production costs, and are transferred
      to
      finished goods inventories when the wine is produced, bottled, and ready for
      sale. The cost of finished goods is recognized as cost of sales when the wine
      product is sold. Inventories are stated at the lower of first-in, first-out
      (“FIFO”) cost or market by variety. In accordance with general practices in the
      wine industry, wine inventories are generally included in current assets in
      the
      accompanying balance sheet, although a portion of such inventories may be aged
      for more than one year.




26




REVENUE
      RECOGNITION - The
      Company recognizes revenue when the product is shipped and title passes to
      the
      customer. The Company's standard terms are 'FOB' shipping point, with no
      customer acceptance provisions. No products are sold on consignment. Credit
      sales are recorded as trade accounts receivable and no collateral is required.
      Revenue from items sold through the Company's retail location is recognized
      at
      the time of sale. 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. Revenues are
      recognized net of the amount of goods and services tax (GST) payable to the
      Australian taxing authority.




The
      company also receives processing revenue which represents fees charged in
      connection with contracts to process fruit for other winemaking companies.
      It is
      recognized when the service is provided to the customer.




CONTINGENCIES
      - We may be subject to certain asserted and unasserted claims encountered in
      the
      normal course of business. It is our belief that the resolution of these matters
      will not have a material adverse effect on our financial position or results
      of
      operations, however, we cannot provide assurance that damages that result in
      a
      material adverse effect on our financial position or results of operations
      will
      not be imposed in these matters. We account for contingent liabilities when
      it
      is probable that future expenditures will be made and such expenditures can
      be
      reasonably estimated.




LONG-LIVED
      ASSETS - We periodically assesses the need to record impairment losses on
      long-lived assets, such as property, plant and equipment and purchased
      intangible assets, used in operations and its investments when indicators of
      impairment are present indicating the carrying value may not be recoverable.
      An
      impairment loss is recognized when estimated undiscounted future cash flows
      expected to result from the use of the asset plus net proceeds expected from
      disposition of the asset (if any) are less than the carrying value of the asset.
      When an impairment is identified, the carrying amount of the asset is reduced
      to
      its estimated fair value. All goodwill will no longer be amortized and potential
      impairment of purchased intangible assets with indefinite useful lives will
      be
      evaluated using the specific guidance provided by SFAS No. 142 and SFAS No.
      144,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” This
      impairment analysis will be performed at least annually. For investments in
      affiliated companies that are not majority-owned or controlled, indicators
      or
      value generally include revenue growth, operating results, cash flows and other
      measures. Management then determines whether there has been a permanent
      impairment of value based upon events and circumstances that have occurred
      since
      acquisition. It is reasonably possible that the impairment factors evaluated
      by
      management will change in subsequent periods, given that the Company operates
      in
      a volatile environment. This could result in material impairment charges in
      future periods.




**NATURE
      OF THE OPERATIONS OF THE COMPANY**




**Background** .





We
      were
      incorporated as a Nevada corporation on January 1, 1997 under the name Dazzling
      Investments, Inc. At the time of our formation, we intended to sell jewelry
      on
      the Internet, consisting of cubic zirconium stones mounted in various settings.
      As at December 31, 1996, all funds raised by the sale of shares of $.001 par
      value common stock in order to fulfill our initial objective had been expended
      and we, thereafter, become dormant.




27




From
      January 1, 1997 until December 22, 2005, we were in the developmental stage
      and
      had no operations and could therefore be defined as a “shell” Company, an entity
      which is generally described as having no or nominal operations and with no
      or
      nominal assets or assets consisting solely of cash and cash
      equivalents.





On
      October 7, 2005, we caused to be formed a corporation under the laws of the
      State of Nevada called Yarraman Winery, Inc. and acquired one hundred shares
      of
      its common stock for cash. As such, Yarraman Winery, Inc. (“Merger Sub”) became
      our wholly-owned subsidiary.




On
      December 6, 2005, Merger Sub was merged with and into us. As a result of the
      merger, our corporate name was changed to “Yarraman Winery, Inc.” Prior to the
      merger, Merger Sub had no liabilities and nominal assets and, as a result of
      the
      merger the separate existence of Merger Sub had ceased. We were the surviving
      corporation in the merger and, except for the name change provided for in the
      Agreement and Plan of Merger, there was no change in our directors, officers,
      capital structure or business.





On
      December 22, 2005, we entered into a Share Exchange Agreement with Yarraman
      Estate Pty Limited (“Yarraman Australia”), the shareholders of Yarraman
      Australia, Delta Dawn Pty Limited (the “Trustee” or “Delta Dawn”) , as trustee
      of the Yarraman Road Trust (the “Trust”) and our shareholders, pursuant to which
      we acquired all of the issued and outstanding shares of stock of Yarraman
      Australia in exchange for the issuance in the aggregate of 15,000,000 of our
      shares (the “Shares”) to the Trustee. Yarraman Australia became
      our wholly-owned subsidiary and, upon the issuance of the Shares, the Trustee
      owned 60% of the Shares. Through our wholly-owned subsidiary, Yarraman
      Australia, we operate our primary business, which consists of the operation
      of
      vineyards and wine production in Australia and distribution of our wine products
      in Australia, United States, Canada, New Zealand, Hong Kong and throughout
      Europe.





**Overview** .




We
      produce and sell premium (up to US$14), super-premium (up to US$20) and
      ultra-premium (over US$20) wines. Our wines are made at our state-of-the-art
      winery in New South Wales, Australia, where grapes are crushed, fermented and
      made into wine or blended with wines purchased from other vineyards for
      production of varietals. Wines are sold both in Australia and internationally,
      principally under our “Yarraman” label. The vineyards from which we produce our
      wines are located on land in two regions in the State of New South Wales,
      Australia - the Upper Hunter Valley and Gundagai. Prior to the restructuring
      described above, Yarraman Australia conducted business as Delta
      Dawn.





Opened
      in
      1967 on the Upper Hunter Wybong property, our winery currently has a 2,300
      ton
      processing facility with the capacity to yield 160,000 cases. The winery
      utilizes current technology in its harvesting, production and packaging of
      its
      products. Over US$7.7 million (AU$10.3 million) has been spent since 1994 on
      capital improvements to the winery and vineyard.





The
      Wirrilla Vineyard is located over two blocks of land comprising the Wirrilla
      Homestead and Wirrilla Point Block, with 470 acres under vines. The Wirrilla
      Vineyard produces wines including Sauvignon Blanc, Semillon, Verdelho,
      Chardonnay, Merlot, Cabernet Sauvignon and Shiraz. The wines produced from
      this
      vineyard are used in our premium range of wines.




***Export
      Wine Sales***





In
      2005,
      Australian exports grew 9.1% to a record 701 million liters. Although the
      average price per liter declined 6.8% to AU$3.98, representing the third
      consecutive financial year the average price for Australian wine exports has
      declined, the overall dollar value of these exports grew by 1.8% to AU$2.793
      billion.




28





During
      2003, the Australian dollar began to strengthen against the US Dollar, the
      Euro
      and the Pound Sterling. As a result, we saw a decline in revenue per liter
      (in
      Australian dollar terms) for sales in those export markets. Despite this, the
      increase in international red wine sales including sales to the United States
      continue to be major drivers of growth for Australian wineries. Red wine
      continues to have a higher margin of sales over white wine comprising 50% of
      the
      total Australian wine exports. The United States, which grew by 13% in 2005,
      has
      had the strongest export growth for all Australian wines. However, the United
      Kingdom, which consists of 41% of the total market, remains Australia’s largest
      overseas market by volume. Despite the disparity in size, the United States
      market supports higher sales margins per gallon and correspondingly was the
      largest market by value. Currently, the Company ships approximately 7000 cases
      per year to the United States, less than 1% of the total market.




With
      continuing investment and development in its brands, the Company plans to
      capitalize on consumer demand in the primary export markets of the United
      States, Canada, United Kingdom, Ireland and Asia. We have also explored certain
      parts of Central Europe and China as being areas in which, with carefully
      selected chosen partners, it can develop branded and non-branded wine
      distribution.





Our
      wines
      are distributed by independent companies in the following
      countries:


-   
                  Australia
              -  
                   Canada-   
                  USA
              -   
                  Poland-   
                  Denmark
              -   
                  Singapore-   
                  Switzerland
              -   
                  Germany-   
                  Hong Kong
              -   
                  United Kingdom-   
                  Ireland
              -   
                  Malaysia-   
                  New Zealand




We
      export
      approximately 35% of our annual volume production whereas most competitors
      in
      the region export approximately 14% of its volume production. The
      grape
      production for a particular year will be reflected in sales revenue in
      approximately two years due to the fact that we record product from upon
      bottling and sales following the ageing time necessary in winemaking .





The
      Company appoints agents or distributors in export markets to facilitate
      importation of wines to the desired markets. Agents or distributors provide
      sales representation and facilitate or directly distribute wines within their
      designated regions.




All
      markets, with the exception of the United States and Canada, purchase “Yarraman”
branded wines in Australian dollars with shipping from Australia paid for by
      and
      at the risk of the purchaser. These wines are then sold wholesale. Singapore
      and
      Hong Kong distributors also engage in retail sales.





Our
      Canadian distributor acts as a commissioned agent facilitating the importation
      wines into the Canadian provinces and provides sales representation in
      government controlled and privatized markets. Exports to Canada are also shipped
      from Australia at the purchaser’s risk and cost, although such sales are made in
      Canadian dollars.





In
      February 2006, we finalized a distribution agreement with Robert Whale Imports
      to act as the sole importer of our new range of wines expected to be released
      in
      June 2006 and shipped to California.





**Seasonal
      And Quarterly Results**





The
      Company has historically experienced and expects to continue experiencing
      seasonal fluctuations in its revenues and net income. Sales volumes increase
      progressively beginning in the fourth quarter through to the second quarter
      with
      declines in the first six weeks of the third quarter for the domestic market.
      In
      the export market the Company has traditionally seen increases in orders in
      the
      third quarter progressively increasing to the second quarter of the following
      financial year due to substantial lead times to meet seasonal sales
      requirements.




29




**RESULTS
      OF OPERATIONS**




The
      following table sets forth, for the periods indicated, certain operating
      information expressed as a percentage of revenue:




**Three
                Months ended September 30,****2006**
            
            **2005**Revenue
            
            $
            404,745
            
            
            100
            %
            $
            706,084
            
            
            100
            %Cost
                of Revenue
            
            
            (280,062
            )
            
            69
            %
            
            (639,963
            )
            
            91
            %Gross
                Profit
            
            
            124,683
            
            
            31
            %
            
            66,121
            
            
            9
            %Other
                Income (Expense)
            
            
            (153,040
            )
            
            (38
            %)
            
            2,964
            
            
            0
            %General
                and administrative expenses
            
            
            (553,526
            )
            
            137
            %
            
            (286,575
            )
            
            40
            %Income
                before income tax
            
            
            (581,883
            )
            
            (144
            )%
            
            (217,490
            )
            
            (31
            )%Income
                tax expenses
            
            
            0
            
            
            0
            %
            
            0
            
            
            0
            %**Net
                Income**
            
            
            ($581,883
            )
            
            (144
            )%
            
            ($217,490
            )
            
            (31
            )%




**THREE
      MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30,
      2005**




***REVENUE*** **.** Revenue
      was $404,745 in the three months ended September 30, 2006 compared to $706,084
      in the three months ended September 30, 2005. The decrease in revenue in the
      three-month period is primarily attributable to a non-recurring bottling
      contract performed in 2005 earning $492,400 which did not occur in the three
      months ended September 30, 2006. There was an increase in export sales of
      $71,688 (89%) in the three months ended September 30, 2006 compared to the
      same
      period in the previous year with domestic sales also increased by $114,846
      (88%)
      for the three month period in the current year. Total case sales of bottled
      wine
      for the three months ended September 30, 2006 were 9,304 compared to 4,099
      cases
      in the same period the previous year.




***COST
      OF REVENUE*** **.** Cost of
      revenue was $280,062 in the three months ended September 30, 2006 compared to
      $639,963 in the three months ended September 30, 2005. As a percentage of
      revenue, cost of revenue was 69% in the three months ended September 30, 2006
      compared to 91% in the three months ended September 30, 2005.This decrease
      in
      cost of revenue was mainly attributable to a change in our revenue mix with
      a
      significant amount of contract winemaking included in the three months ended
      September 30, 2005 which is a high cost, low-margin activity for us. There
      were
      no costs associated with contract winemaking in the current year. Gross profit
      was $124,683 in the three months ended September 30, 2006 compared to $66,121
      in
      the three months ended September 30, 2005. As a percentage of revenue, gross
      profit increased to 31% in the three months ended September 30, 2006 from 9%
      in
      the three months ended September 30, 2005 related to the items discussed above.




30





***OTHER
      INCOME (EXPENSE)*** **.** Other
      income (expense) was ($153,040) in the three months ended September 30, 2006
      compared to $2,964 in the three months ended September 30, 2005. The increase
      was primarily attributable to an increase in interest expense of $156,576,
      which
      is a result our assumption of an interest bearing loan following the asset
      purchase agreement with Delta Dawn on December 22, 2005. As a percentage of
      revenue, other expense increased to (38)% in the three months ended September
      30, 2006 from other income of 0% in the three months ended September 30, 2005
      .
      This increase was due to the reasons discussed above.




***SALES,
      GENERAL AND ADMINISTRATIVE EXPENSES*** **.**  Sales,
      general and administrative expenses were $553,526 in the three months ended
      September 30, 2006 compared to $286,575 in the three months ended September
      30,
      2005, an increase of $266,950. This increase was primarily attributable to
      an
      increase of $59,560 in depreciation and amortization expense associated with
      fixed assets acquired from the asset purchase agreement with Delta Dawn in
      December 2005. Lease expense of $99,368 relating to a lease paid to Delta Dawn
      for use of the Wirrilla vineyard entered into on January 1, 2006 also
      contributed to the increase in sales, general and administrative expenses in
      the
      three months ended September 30, 2006. As
      a
      percentage of revenue, sales, general and administrative expenses increased
      to
      137% in the three months ended September 30, 2006 from 40% in the three months
      ended September 30, 2005. This increase was due to the items as discussed above.




***NET
      INCOME (LOSS).*** Our
      net loss
      before income tax was $(581,883) in the three months ended September 30, 2006
      compared to a net loss of $(217,490) in the three months ended September 30,
      2005. This increase in loss was attributable to the decrease in our revenue,
      an
      increase in selling, general and administrative expenses attributable to
      increased depreciation and lease expense and an increase in our interest expense
      relating to new debt.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      September 30, 2006, we had $26,987 of cash and cash equivalents and $4,415,256
      of working capital as compared to $43,647 and $336,635, respectively, at
      September 30, 2005 .





On
      December 21, 2005, we entered into a long term loan with Delta Dawn with an
      initial principal balance of AU$1,612,666. According to the repayment terms,
      50%
      of the loan balance is first due after the first 25 months and the remaining
      balance is otherwise payable for 36 equal monthly installments thereafter.
      After
      the 36 months, the entire remaining balance becomes due and payable immediately.





An
      additional loan agreement was also signed on May 1, 2006 with Delta Dawn, with
      a
      principal amount of $656,000. This loan was provided to assist with our working
      capital requirements due to the low level of sales revenue generated during
      the
      period. On May 25, 2006, Delta Dawn loaned us an additional $10,950 to be paid
      according to the terms of the May 1, 2006 loan.





In
      August
      2006, we entered into a bridge loan with a related party Whinners Pty Limited,
      for an amount of $365,000 at a interest rate of 8.75% to be repaid in full
      on
      September 30, 2006. The repayment date was subsequently extended for a further
      month.




Management
      has been exploring options to refinance its long term loan from Provident Bank,
      currently with an outstanding balance of $4,207,230. Any refinancing transaction
      will seek terms that provide a lower interest rate, which management believes
      will further increase the amount cash flow as a result of savings because of
      lower interest payments.




Management
      has also been negotiating a debtor and trade finance facility with three
      different financial institutions to provide working capital required to fund
      expansion of its distribution markets. An offer has been received from one
      of
      these institutions and it is hoped a facility will be in place within the next
      month.




31




**ITEM
      3.** **CONTROLS
      AND PROCEDURES** ****




Evaluation
      of Disclosure on Controls and Procedures .





Under
      the
      supervision and with the participation of our management, including the
      principal executive officer and the principal accounting officer, we conducted
      an evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934, as of the end of the period covered by this
      report (the “Evaluation Date”). Based on this evaluation, our principal
      executive officer and principal accounting officer concluded as of the
      Evaluation Date that our disclosure controls and procedures were effective
      such
      that the material information required to be included in our Securities and
      Exchange Commission (“SEC”) reports is accumulated and communicated to
      management (including such officers) as appropriate to allow timely decisions
      regarding required disclosure and recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms relating to the
      Company, including our consolidated subsidiaries.





Changes
      in Internal Control Over Financial Reporting .




Additionally,
      there were no changes in our internal control over financial reporting that
      during the period covered by this Quarterly Report on Form 10-QSB has materially
      affected, or is reasonably likely to materially affect, our internal control
      over financial reporting.




32




**PART
      II -** **OTHER
      INFORMATION** ****




**ITEM
      1.** **LEGAL
      PROCEEDINGS.** ****




None.




**ITEM
      2.** **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**




None.




**ITEM
      3.** **DEFAULTS
      UPON SENIOR SECURITIES.**




None.




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




None.




**ITEM
      5.** **OTHER
      INFORMATION.**




None.




33




**ITEM
      6.** **EXHIBITS.** ****




**(a)**  **EXHIBITS**




The
      following exhibits are filed as part of this report:




**Exhibit
                Number**
            
            **Description**31.1
            
            Certification
                of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of
                the
                Securities Exchange Act of 1934, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Executive Officer and the Principal Financial Officer Pursuant
                to
                18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
                2002).





34




**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**YARRAMAN
              WINERY, INC.**Date: November
              12, 2006
            By:
            /s/ Wayne
              RockallWayne
              RockallChief
                Executive Officer


Date: November
                12, 2006
              By:
              /s/ John
                WellsJohn
                WellsChief
                  Financial Officer





35