UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549





FORM 10-Q





þ
            QUARTERLY REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934


For the quarterly period ended:March
 31, 2010





o
            TRANSITION REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the transition period from:to





Commission
File No.: : 000-28865





GLOBAL BEVERAGES,
INC.


(Exact
name of registrant as specific in its charter)





Nevada
                  
                  88-0373061(State
      or Other Jurisdiction of Incorporation
                  
                  (I.R.S.
      Employer Identification No.)or
      Organization)





700
      YARRAMAN ROAD, WYBONGUPPER
      HUNTER VALLEYNEW
      SOUTH WALES, AUSTRALIA 2333(Address
      of Principal Executive Offices)





(+61)
      2 6547-8118(Registrant's
      Telephone Number,
                    Including
      Area Code)





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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 þ No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  ̈
Yes    ̈
No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “small
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):





Large
      accelerated filer  ̈
                
                Accelerated
      filer  ̈Non-accelerated
      filer  ̈
      (Do not check if a smaller reporting company)
                
                Smaller
      reporting company þ





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).


Yes  ̈ No
þ





The
aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant on August 30, 2010 was $44,984,590 based on the average
closing bid and ask price of $0.50 for such common stock as of August 30,
2010.





As of
August 30, 2010, there were 89,969,180 shares of the registrant’s common stock
outstanding.








GLOBAL
BEVERAGES, INC.


REPORT
ON FORM 10-Q


FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2009




Contents





PART
      I – FINANCIAL INFORMATIONItem
      1. Financial Statements.
                  
                  F-1Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operation.
                  
                  4Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
                  
                  7Item
      4T. Controls and Procedures.
                  
                  7PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
                  
                  9Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds
                  
                  9Item
      3. Defaults Upon Senior Securities
                  
                  9Item
      5. Other Information
                  
                  9Item
      6. Exhibits
                  
                  9


2


FORWARD-LOOKING
STATEMENTS




Some of
the statements in this Quarterly Report on Form 10-Q are forward-looking
statements.  These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance, or achievements expressed or implied
by forward-looking statements.




In some
cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative
of these terms or other comparable terminology.  You should read
statements that contain these words carefully, because they discuss our
expectations about our future operating results or our future financial
condition or state other “forward-looking” information.  There may be
events in the future that we are not able to accurately predict or
control.  You should be aware that the occurrence of any of the events
described in this Quarterly Report could substantially harm our business,
results of operations and financial condition, and that upon the occurrence of
any of these events, the trading price of our securities could decline and you
could lose all or part of your investment.  Although we believe that
the expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, growth rates, levels of activity, performance
or achievements.  We are under no duty to update any of the
forward-looking statements after the date of this Quarterly Report to conform
these statements to actual results.




Although
we believe that the expectations reflected in these forward-looking statements
are based on reasonable assumptions, there are a number of risks and
uncertainties that could cause actual results to differ materially from such
forward-looking statements. These factors include among others:




·
            The risks associated with the
      production and sale of
wines;





·
            Our ability to raise capital to
      fund capital expenditures;





·
            Grape and other fruit price
      volatility;





·
            Our ability to find and retain
      skilled personnel;





·
            Regulatory developments;
      and





·
            General economic
      conditions.





On
December 17, 2009, we changed our corporate name from Yarraman Winery, Inc. to
Global Beverages, Inc.  All references in this Form 10-Q to the
“Company,” “Global Beverages,” “Yarraman,” “we,” “us” or “our” are to Global
Beverages, Inc. and its subsidiary, Yarraman Estate Pty
Limited.  Except as otherwise noted, all references to “$” shall mean
United States dollars.


3




PART
I


FINANCIAL
INFORMATION




Item
1 – Financial Statements


GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 
 March
      31,
                                            
                                            
                                            June
      30,2010
                                            
                                            
                                            2009(Unaudited)
                                            
                                            
                                            (Audited)(As
      Restated)ASSETSCurrent
      AssetsCash
                                            
                                            $
                                            401,147
                                            
                                            
                                            $
                                            -Accounts
      receivable, net
                                            
                                            
                                            2,216,077
                                            
                                            
                                            
                                            760,313Due
      from related parties
                                            
                                            
                                            631,252
                                            
                                            
                                            
                                            -Inventory
                                            
                                            
                                            5,486,586
                                            
                                            
                                            
                                            3,362,528Other
      receivables
                                            
                                            
                                            1,160,854
                                            
                                            
                                            
                                            -Other
      assets
                                            
                                            
                                            1,393,388
                                            
                                            
                                            
                                            824,741Total
      Current Assets
                                            
                                            
                                            11,289,304
                                            
                                            
                                            
                                            4,947,582Property,
      plant and equipment, net
                                            
                                            
                                            3,909,939
                                            
                                            
                                            
                                            3,528,013Intangible
      assets
                                            
                                            
                                            26,809,352
                                            
                                            
                                            
                                            1,911,943$
                                            42,008,595
                                            
                                            
                                            $
                                            10,387,538LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
                                            
                                            $
                                            4,201,017
                                            
                                            
                                            $
                                            1,929,056Loan
      payable
                                            
                                            
                                            92,669
                                            
                                            
                                            
                                            13,095Line
      of credit
                                            
                                            
                                            620,990
                                            
                                            
                                            
                                            -Convertible
      notes payable, net
                                            
                                            
                                            431,780
                                            
                                            
                                            
                                            -Deferred
      revenue
                                            
                                            
                                            6,512
                                            
                                            
                                            
                                            -Cash
      deficit
                                            
                                            
                                            -
                                            
                                            
                                            
                                            38,816Capital
      lease
                                            
                                            
                                            7,393
                                            
                                            
                                            
                                            42,539Shares
      to be issued
                                            
                                            
                                            8,983
                                            
                                            
                                            
                                            -Due
      to related parties
                                            
                                            
                                            6,478,869
                                            
                                            
                                            
                                            3,396,616Total
      Current Liabilities
                                            
                                            
                                            11,898,213
                                            
                                            
                                            
                                            5,420,122Long
      Term Liabilities:Long-term
      debt
                                            
                                            
                                            5,519,661
                                            
                                            
                                            
                                            4,627,379Total
      Long Term Liabilities
                                            
                                            
                                            5,519,661
                                            
                                            
                                            
                                            4,627,379Total
      Liabilities
                                            
                                            
                                            17,417,874
                                            
                                            
                                            
                                            10,047,501Stockholder's
      EquityPreferred
      stock, Series A, $.001 par value, 381,600 shares authorized 381,600 shares
      issued and outstanding
                                            
                                            
                                            386
                                            
                                            
                                            
                                            -Preferred
      stock, Series B, $.001 par value, 55,000 shares authorized 55,000 shares
      issued and outstanding
                                            
                                            
                                            55
                                            
                                            
                                            
                                            55Common
      stock, $.001 par value, 90,000,000 shares authorized 89,969,180 and
      39,390,476 shares issued and outstanding respectively
                                            
                                            
                                            89,969
                                            
                                            
                                            
                                            39,390Additional
      paid in capital
                                            
                                            
                                            40,641,519
                                            
                                            
                                            
                                            13,938,282Statutory
      reserve
                                            
                                            
                                            41,466
                                            
                                            
                                            
                                            -Subscription
      receivable
                                            
                                            
                                            (49,500
                                            )
                                            
                                            
                                            (66,000
                                            )Other
      comprehensive income
                                            
                                            
                                            (874,121
                                            )
                                            
                                            
                                            (456,752
                                            )Accumulated
      deficit
                                            
                                            
                                            (15,259,053
                                            )
                                            
                                            
                                            (13,114,938
                                            )Total
      Stockholder's Equity
                                            
                                            
                                            24,590,721
                                            
                                            
                                            
                                            340,037$
                                            42,008,595
                                            
                                            
                                            $
                                            10,387,538
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
  F-1
 
 GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 For
      the three months ended
                                                      
                                                      
                                                      For
      the nine months endedMarch
      31,
                                                      
                                                      
                                                      March
      31,2010
                                                      
                                                      
                                                      2009
                                                      
                                                      
                                                      2010
                                                      
                                                      
                                                      2009Sales,
      net
                                                      
                                                      $
                                                      4,253,194
                                                      
                                                      
                                                      $
                                                      814,488
                                                      
                                                      
                                                      $
                                                      9,417,276
                                                      
                                                      
                                                      $
                                                      1,902,001Cost
      of sales
                                                      
                                                      
                                                      3,478,449
                                                      
                                                      
                                                      
                                                      389,087
                                                      
                                                      
                                                      
                                                      7,776,177
                                                      
                                                      
                                                      
                                                      1,484,767Gross
      profit
                                                      
                                                      
                                                      774,745
                                                      
                                                      
                                                      
                                                      425,401
                                                      
                                                      
                                                      
                                                      1,641,099
                                                      
                                                      
                                                      
                                                      417,234Operating
      ExpensesSelling,
      general and administrative expenses
                                                      
                                                      
                                                      885,640
                                                      
                                                      
                                                      
                                                      239,302
                                                      
                                                      
                                                      
                                                      2,173,345
                                                      
                                                      
                                                      
                                                      959,125Amortization
      of intangibles
                                                      
                                                      
                                                      234,739
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      677,659
                                                      
                                                      
                                                      
                                                      -Bad
      debt
                                                      
                                                      
                                                      18,368
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      41,835
                                                      
                                                      
                                                      
                                                      -Total
      operating expenses
                                                      
                                                      
                                                      1,138,747
                                                      
                                                      
                                                      
                                                      239,302
                                                      
                                                      
                                                      
                                                      2,892,839
                                                      
                                                      
                                                      
                                                      959,125Income
      (Loss) from operations
                                                      
                                                      
                                                      (364,002
                                                      )
                                                      
                                                      
                                                      186,099
                                                      
                                                      
                                                      
                                                      (1,251,740
                                                      )
                                                      
                                                      
                                                      (541,891
                                                      )Other
      (Income) ExpenseInterest
      income
                                                      
                                                      
                                                      (3
                                                      )
                                                      
                                                      
                                                      (455
                                                      )
                                                      
                                                      
                                                      (36
                                                      )
                                                      
                                                      
                                                      (3,576
                                                      )Interest
      expense
                                                      
                                                      
                                                      256,592
                                                      
                                                      
                                                      
                                                      133,758
                                                      
                                                      
                                                      
                                                      868,855
                                                      
                                                      
                                                      
                                                      411,443Acquisition
      costs
                                                      
                                                      
                                                      (261,870
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (120,754
                                                      )
                                                      
                                                      
                                                      -Other
      (income) expenses net
                                                      
                                                      
                                                      (3,886
                                                      )
                                                      
                                                      
                                                      (2,442
                                                      )
                                                      
                                                      
                                                      (15,252
                                                      )
                                                      
                                                      
                                                      (10,964
                                                      )Gain
      on sale of fixed asset
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      95
                                                      
                                                      
                                                      
                                                      427
                                                      
                                                      
                                                      
                                                      (1,833
                                                      )Transaction
      gain (loss) on foreign currency
                                                      
                                                      
                                                      3,060
                                                      
                                                      
                                                      
                                                      (1,413
                                                      )
                                                      
                                                      
                                                      (45,579
                                                      )
                                                      
                                                      
                                                      21,265Total
      Other (Income) Expense
                                                      
                                                      
                                                      (6,107
                                                      )
                                                      
                                                      
                                                      129,543
                                                      
                                                      
                                                      
                                                      687,661
                                                      
                                                      
                                                      
                                                      416,335Income
      (Loss) before income taxes
                                                      
                                                      
                                                      (357,895
                                                      )
                                                      
                                                      
                                                      56,556
                                                      
                                                      
                                                      
                                                      (1,939,401
                                                      )
                                                      
                                                      
                                                      (958,226
                                                      )Provision
      for income taxes
                                                      
                                                      
                                                      204,714
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      204,714
                                                      
                                                      
                                                      
                                                      -Net
      Income (loss)
                                                      
                                                      
                                                      (562,609
                                                      )
                                                      
                                                      
                                                      56,556
                                                      
                                                      
                                                      
                                                      (2,144,115
                                                      )
                                                      
                                                      
                                                      (958,226
                                                      )Other
      comprehensive income (loss)Foreign
      currency translation
                                                      
                                                      
                                                      320,890
                                                      
                                                      
                                                      
                                                      (89,006
                                                      )
                                                      
                                                      
                                                      (417,369
                                                      )
                                                      
                                                      
                                                      (89,941
                                                      )Comprehensive
      income (loss)
                                                      
                                                      $
                                                      (241,719
                                                      )
                                                      
                                                      $
                                                      (32,450
                                                      )
                                                      
                                                      $
                                                      (2,561,484
                                                      )
                                                      
                                                      $
                                                      (1,048,167
                                                      )Net
      income (loss) per share:Basic
                                                      
                                                      $
                                                      (0.006
                                                      )
                                                      
                                                      $
                                                      0.001
                                                      
                                                      
                                                      $
                                                      (0.02
                                                      )
                                                      
                                                      $
                                                      (0.03
                                                      )Diluted
                                                      
                                                      $
                                                      (0.006
                                                      )
                                                      
                                                      $
                                                      0.001
                                                      
                                                      
                                                      $
                                                      (0.02
                                                      )
                                                      
                                                      $
                                                      (0.03
                                                      )Weighted
      average number of shares outstanding:Basic
                                                      
                                                      
                                                      88,497,213
                                                      
                                                      
                                                      
                                                      38,000,000
                                                      
                                                      
                                                      
                                                      88,497,213
                                                      
                                                      
                                                      
                                                      38,000,000Diluted
                                                      
                                                      
                                                      88,497,213
                                                      
                                                      
                                                      
                                                      38,000,000
                                                      
                                                      
                                                      
                                                      88,497,213
                                                      
                                                      
                                                      
                                                      38,000,000
 
 Weighted
average of dilutive securities has not been calculated since the effect of
dilutive securities is anti-dilutive
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
  F-2
 
 GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR THE
NINE MONTH PERIODS ENDED MARCH 31, 2010 AND 2009
 
 2010
                                              
                                              
                                              2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
                                              
                                              $
                                              (2,144,115
                                              )
                                              
                                              $
                                              (958,226
                                              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Bad
      debt
                                              
                                              
                                              41,835
                                              
                                              
                                              
                                              -Depreciation
      and amortization
                                              
                                              
                                              822,334
                                              
                                              
                                              
                                              188,018Salary
      exchange for stock payment
                                              
                                              
                                              16,500
                                              
                                              
                                              
                                              16,500(Increase)
      / decrease in assets:Accounts
      receivables
                                              
                                              
                                              (827,065
                                              )
                                              
                                              
                                              636,069Inventory
                                              
                                              
                                              (996,669
                                              )
                                              
                                              
                                              (501,764
                                              )Other
      receivables
                                              
                                              
                                              (595,812
                                              )
                                              
                                              
                                              20,729Deposits
      and prepaid expenses
                                              
                                              
                                              33,956Other
      assets
                                              
                                              
                                              (81,581
                                              )
                                              
                                              
                                              (194,842
                                              )Increase
      in liabilities:Accounts
      payable and accrued expenses
                                              
                                              
                                              1,741,267
                                              
                                              
                                              
                                              162,165Income
      tax payable
                                              
                                              
                                              203,724
                                              
                                              
                                              
                                              -Deferred
      revenue
                                              
                                              
                                              (7,952
                                              )
                                              
                                              
                                              -Total
      Adjustments
                                              
                                              
                                              350,537
                                              
                                              
                                              
                                              326,875Net
      cash used in operations
                                              
                                              
                                              (1,793,578
                                              )
                                              
                                              
                                              (631,351
                                              )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of subsidiaries, net of cash acquired
                                              
                                              
                                              147,380
                                              
                                              
                                              
                                              -Acquisition
      of property and equipment
                                              
                                              
                                              (21,699
                                              )
                                              
                                              
                                              (20,020
                                              )Acquisition
      of intangible
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (267
                                              )Net
      cash provided by (used in) investing activities
                                              
                                              
                                              125,681
                                              
                                              
                                              
                                              (20,287
                                              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from long-term debt
                                              
                                              
                                              297,603
                                              
                                              
                                              
                                              -Proceeds
      from loan payable
                                              
                                              
                                              607,500
                                              
                                              
                                              
                                              -Procceds
      (payment) from line of credit
                                              
                                              
                                              74,162
                                              
                                              
                                              
                                              -Cash
      deficit financing
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (2,960
                                              )Capital
      lease payments
                                              
                                              
                                              (39,497
                                              )
                                              
                                              
                                              (68,824
                                              )Receivable
      from related party
                                              
                                              
                                              254,483
                                              
                                              
                                              
                                              -Payable
      to related party
                                              
                                              
                                              274,450
                                              
                                              
                                              
                                              -Loans
      payable - related party
                                              
                                              
                                              720,874
                                              
                                              
                                              
                                              1,380,308Net
      cash provided by financing activities
                                              
                                              
                                              2,189,575
                                              
                                              
                                              
                                              1,308,524Effect
      of exchange rate changes on cash and cash equivalents
                                              
                                              
                                              (81,715
                                              )
                                              
                                              
                                              (656,886
                                              )Net
      increase in cash and cash equivalents
                                              
                                              
                                              439,963
                                              
                                              
                                              
                                              -Cash
      and cash equivalents, beginning balance
                                              
                                              
                                              (38,816
                                              )
                                              
                                              
                                              -Cash
      and cash equivalents, ending balance
                                              
                                              $
                                              401,147
                                              
                                              
                                              $
                                              -SUPPLEMENTAL
      DISCLOSURES:Cash
      paid for:Income
      tax payments
                                              
                                              $
                                              990
                                              
                                              
                                              $
                                              -Interest
      payments
                                              
                                              $
                                              853,850
                                              
                                              
                                              $
                                              310,679
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
  F-3
  Global
Beverages, Inc.
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 NOTE 1 -
NATURE OF OPERATIONS
AND BASIS OF PRESENTATION
  Our
Condensed Consolidated Balance Sheet as of March 31, 2010, the Condensed
Consolidated Statements of Operations and Comprehensive Income for the three and
nine months ended March 31, 2010 and 2009, and the Condensed Consolidated
Statements of Cash Flows for the nine months ended March 31, 2010 and 2009 have
not been audited. These statements have been prepared on a basis that is
substantially consistent with the accounting principles applied in our Annual
Report on Form 10-K for the fiscal year ended June 30, 2009, which was filed on
April 9, 2010. In our opinion, these financial statements include all normal and
recurring adjustments necessary for a fair presentation. The results for the
nine months are not necessarily indicative of the results expected for the full
year.
  The
following information is unaudited. This report should be read in conjunction
with our Annual Report on Form 10-K for the fiscal year ended June 30, 2009.The
following is a list of our subsidiaries:
  Yarraman
Estate, Pty., Ltd., Australia
  Global
Beverages Hong Kong, Ltd., Hong Kong
  Asia
Distributions Solutions Limited, Cayman Islands, and its subsidiaries (“ADSL” or “Asia
Distributions Solutions”):
  ·
              Vitality
      Development holdings Limited – British Virgin
  Islands
 ·
              Vitality
      Tianjin Beverage Co Ltd – People’s Republic of
  China
 ·
              Highland
      Mist Holdings Ltd – British Virgin
Islands
 ·
              Tropical
      Splendor International Ltd – British Virgin
  Islands
 ·
              Chendu
      Gao Li Yuan – People’s Republic of
China
 ·
              TBC
      Shanghai Ltd – People’s Republic of
China
 ·
              Global
      Beverages Asia Limited - Hong Kong
 ·
              Global
      Beverages China Co Ltd – People’s Republic of
  China
 ·
              Shanghai
      Runke Trading Co Ltd – People’s Republic of
  China
 ·
              Panda
      Express China Limited – British Virgin
Islands
 ·
              Panda
      Xpress International Co Pte Ltd -
Singapore
  F-4
  Note 2 –
SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of
Presentation going concern
 
 At
March 31, 2010 the Company has a working capital deficiency of
$700,250. For the three months ended March 31, 2010, the Company had a loss
from operations of $364,002 of which $258,607 was from non-cash items. For
the nine months ended March 31, 2010, the reported loss from operations was
$1,251,740 including non-cash expenses of $880,669. Non-cash expenses consisted
of   $822,334 in amortization of intangibles and depreciation,
$41,835 in bad debts and $16,500 from non-cash share based
compensation.   These conditions taken in conjunction with the
Company’s history of operating losses raises doubt regarding the Company’s
ability to continue as a going concern. The Company’s ability to continue as a
going concern is highly dependent upon management’s ability to increase
operating cash flows, continued availability on its line of credit and the
ability to obtain alternative financing to fund capital requirements and/or debt
repayments coming due in the next twelve months. The accompanying financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.
 
 Principles
of consolidation:
 
 The
consolidated financial statements included the accounts of the Company and all
of its subsidiaries in which a controlling interest is maintained. All
significant inter-company accounts and transactions have been eliminated in
consolidation. For those consolidated subsidiaries where Company ownership is
less than 100%, the outside stockholders' interests are shown as minority
interests. Investments in affiliates over which the Company has significant
influence but not a controlling interest are carried on the equity
basis.
 
 Use of
estimates:
 
 The
preparation of these financial statements in accordance with accounting
principles generally accepted in the United States (US GAAP) requires management
to make estimates and assumptions that affect the reported amounts in the
financial statements and accompanying notes. These estimates form the basis for
judgments made about the carrying values of assets and liabilities that are not
readily apparent from other sources. Estimates and judgments are based on
historical experience and on various other assumptions that the Company believes
are reasonable under the circumstances. However, future events are subject to
change and the best estimates and judgments routinely require adjustment. US
GAAP requires estimates and judgments in several areas, including those related
to impairment of goodwill and equity investments, revenue recognition,
recoverability of inventory and receivables, the useful lives long lived assets
such as property and equipment, the future realization of deferred income tax
benefits and the recording of various accruals. The ultimate outcome and actual
results could differ from the estimates and assumptions used.
 
 F-5
  Note 3 -
INVENTORIES
  March
      31
                          
                          
                          June
      30,2010
                          
                          
                          2009Work
      in progress
                          
                          $
                          1,623,094
                          
                          
                          $
                          354,350Bulk
      wine and cider
                          
                          
                          2,100,826
                          
                          
                          
                          2,249,660Finished
      goods
                          
                          
                          1,574,972
                          
                          
                          
                          635,814Winemaking
      and packaging materials
                          
                          
                          187,694
                          
                          
                          
                          122,704Total
                          
                          $
                          5,486,586
                          
                          
                          $
                          3,362,528
  Note 4 –
INTANGIBLE ASSETS AND GOODWILL
  Intangible
assets that have finite useful lives are amortized over their estimated useful
lives. The latest impairment assessment of goodwill and indefinite lived
intangible assets was completed in the fiscal fourth quarter of 2009. Future
impairment tests for goodwill and indefinite lived intangible assets will be
performed annually in the fiscal fourth quarter of each year, or sooner, if
warranted. Allocations of the purchase price for the acquisition of ADSL has
been completed on a preliminary basis subject to year end
valuation.
  March
      31
                                  
                                  
                                  June
      30,2010
                                  
                                  
                                  2009Non
      amortizable intangibles
                                  
                                  $
                                  1,691,029
                                  
                                  
                                  $
                                  209,248Amortizable
      intangibles
                                  
                                  
                                  20,546,724
                                  
                                  
                                  
                                  1,702,695Accumulated
      amortization
                                  
                                  
                                  (677,659
                                  )
                                  
                                  
                                  -Net
      amortizable intangibles
                                  
                                  
                                  19,869,065
                                  
                                  
                                  
                                  1,702,695Total
      intangibles
                                  
                                  $
                                  21,560,094
                                  
                                  
                                  $
                                  1,911,943Goodwill
                                  
                                  $
                                  5,249,258
                                  
                                  
                                  $
                                  -Intangibles
      and Goodwill
                                  
                                  $
                                  26,809,352
                                  
                                  
                                  $
                                  1,911,943
  Note 5 –
RESTATEMENT
 
 The
accompanying consolidated balance sheet, for the year ended June 30, 2009 has
been restated to correct an error related to the improper accounting method used
to record the Sale Agreement with Yarraman Road Trust on May 26, 2009. We are
required to account for this transaction in accordance with SAB 48 “the transfer
of Nonmonetary assets by Promoters or Shareholders”, which requires the assets
exchanged for the Series B Preferred stock to be valued at the carrying value of
the holder. Accordingly we have reduced Intangible assets by $16,913,525 and
Additional Paid in Capital by the same amount.
 
 F-6
  Note 6 –
CONVERTIBLE NOTES PAYABLE
  In the
fiscal second quarter of 2010 the Company entered in three convertible
promissory notes due from October 1, 2011-December 2, 2011, for net proceeds of
$607,500. The Notes are convertible into the Company’s common stock at prices
ranging from $0.38-$.40 per share. As a result of the issuance of all of these
Notes, the Company recorded a discount on the Convertible Debt of $160,099. The
discount was amortized to interest expense during the three and nine months
ended March 31, 2010 in the amount of $20,012 and $34,379,
respectively.
  Note 7 –
LONG TERM DEBT AND LINE OF CREDIT
 
 On
December 21, 2005, Yarraman Australia entered into a loan arrangement with a
financial institution located in Australia. As of March 31, 2010 and June 30,
2009 the total amount due under this facility, inclusive of interest, is
$5,519,661 and $4,627,379. This loan facility requires monthly interest payments
due on the 15th 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 was
originally due and payable on December 31, 2007. The loan is secured by certain
property, plant and equipment of the Company as well as a guaranteed by the
Yarraman Road Trust, a shareholder of the Company. This loan facility has been
extended through to August 30, 2011 by the lender.
  The
Company has a line of credit with a bank in London with interest from 2% plus
bank sterling base rate with various due dates.  The loans are personally
guaranteed by a director of the Company.  As of March 31, 2010, outstanding
balance was approximately $620,990.
  Note 8 –
RECEIVABLES AND PAYABLES TO RELATED PARTIES
  The
Company has various loans payable to a shareholder of the Company in the amount
of $3,662,599. These loans range in annual interest rate from 6.5% to
20%.
  The
Company has a loan payable to a shareholder of the Company in the amount of
$966,856, no interest, due on demand.
  The
Company has loan payable to a shareholder of the Company in the amount of
$1,849,414, no interest, due on demand.
  The
Company has $631,252 receivable from a shareholder of the Company related to
funds advanced to him by ADSL prior to being acquired by the Company. These
amounts are due on demand.
 
 Note 9 –
BUSINESS SEGMENTS
 
 The
Company had two principal operating segments during the nine months ended March
31, 2010 which were: winery and distribution. These operating segments were
determined based on the nature of the products offered. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision-maker in deciding how to allocate resources and in assessing
performance. The Company's chief executive officer and chief financial officer
have been identified as the chief operating decision makers. The Company’s chief
operating decision makers direct the allocation of resources to operating
segments based on the profitability, cash flows, and other measurement factors
of each respective segment.
  F-7
  The
Company evaluates performance based on several factors, of which the primary
financial measure is business segment income before taxes. The segments’
accounting policies are the same as those described in the summary of
significant accounting policies. The following table shows the operations of the
Company's reportable segments for the three months and nine months ended March
31, 2010. Prior to July 1, 2009 and the acquisition of ADSL the company operated
in one segment:
  9
      Months Ended
                                                            
                                                            
                                                            3
      Months EndedMarch
      31, 2010
                                                            
                                                            
                                                            March
      31, 2010Revenues
      from unaffiliated customers:Winery
                                                            
                                                            $
                                                            2,048,573
                                                            
                                                            
                                                            $
                                                            1,120,583Distribution
                                                            
                                                            
                                                            7,368,703
                                                            
                                                            
                                                            
                                                            3,132,611Consolidated
                                                            
                                                            $
                                                            9,417,276
                                                            
                                                            
                                                            $
                                                            4,253,194Operating
      income (loss):Winery
                                                            
                                                            $
                                                            (559,477
                                                            )
                                                            
                                                            $
                                                            (259,512
                                                            )Distribution
                                                            
                                                            
                                                            319,457
                                                            
                                                            
                                                            
                                                            164,801Corporation
      (1)
                                                            
                                                            
                                                            (1,011,720
                                                            )
                                                            
                                                            
                                                            (269,291
                                                            )Consolidated
                                                            
                                                            $
                                                            (1,251,740
                                                            )
                                                            
                                                            $
                                                            (364,002
                                                            )Net
      income (loss) before taxes:Winery
                                                            
                                                            $
                                                            (1,413,583
                                                            )
                                                            
                                                            $
                                                            (524,275
                                                            )Distribution
                                                            
                                                            
                                                            386,301
                                                            
                                                            
                                                            
                                                            248,183Corporation
      (1)
                                                            
                                                            
                                                            (912,119
                                                            )
                                                            
                                                            
                                                            (81,801
                                                            )Consolidated
                                                            
                                                            $
                                                            (1,939,401
                                                            )
                                                            
                                                            $
                                                            (357,893
                                                            )Net
      income (loss) :Winery
                                                            
                                                            $
                                                            (1,413,583
                                                            )
                                                            
                                                            $
                                                            (524,275
                                                            )Distribution
                                                            
                                                            
                                                            181,588
                                                            
                                                            
                                                            
                                                            43,469Corporation
      (1)
                                                            
                                                            
                                                            (912,120
                                                            )
                                                            
                                                            
                                                            (81,801
                                                            )Consolidated
                                                            
                                                            $
                                                            (2,144,115
                                                            )
                                                            
                                                            $
                                                            (562,607
                                                            )Identifiable
      assets: (2)Winery
                                                            
                                                            $
                                                            9,979,510
                                                            
                                                            
                                                            $Distribution
                                                            
                                                            
                                                            10,379,978Corporation
      (1)
                                                            
                                                            
                                                            21,649,108Consolidated
                                                            
                                                            $
                                                            42,008,596
                                                            
                                                            
                                                            $Depreciation
      and amortization: (3)Winery
                                                            
                                                            $
                                                            142,346
                                                            
                                                            
                                                            $
                                                            75,391Distribution
                                                            
                                                            
                                                            2,329
                                                            
                                                            
                                                            
                                                            751Corporation
      (1)
                                                            
                                                            
                                                            677,659
                                                            
                                                            
                                                            
                                                            234,739Consolidated
                                                            
                                                            $
                                                            822,334
                                                            
                                                            
                                                            $
                                                            310,881Capital
      expenditures: (3)Winery
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -Distribution
                                                            
                                                            
                                                            (21,699
                                                            )
                                                            
                                                            
                                                            -Corporation
      (1)
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -Consolidated
                                                            
                                                            $
                                                            (21,699
                                                            )
                                                            
                                                            $
                                                            -
  F-8
 
 (1).
Unallocated loss from Operating income (loss) and Net income (loss) before taxes
are primarily related to general corporate expenses.
 
 (2)Total
identifiable assets are the owned or allocated assets used by each business.
Corporate assets consist of cash and cash equivalents, unallocated fixed assets
of support divisions and common facilities, and certain other
assets.
 
 (3)
Capital expenditures and depreciation and amortization expense include items
attributable to the unallocated fixed assets of support divisions and common
facilities.
 
 Also,
because all of the Company’s sales are derived from the sales of products
outside of the United States, all long-lived assets are located outside the
United States.
  Note 10 –
ISSUANCE OF PREFERRED SHARES
  In
June 2009 the Company issued 55,000 shares of Series B Convertible
Preferred Stock (par value $.001 per share). Each preferred share is
immediately convertible into 1,000 shares of common stock upon the Company
increasing its number of authorized common shares.
  In the
first quarter of fiscal 2010 the Company issued 381,600 shares of Series A
Convertible Preferred Stock  (par value $.001 per share). Each preferred
share is immediately convertible into 10 shares of common stock at upon the
Company increasing its number of common shares authorized.
  Note 11 –
EARNINGS PER SHARE
  Earnings
per share are calculated in accordance with ASC 260. Net loss per share for all
periods presented has been stated to reflect the adoption of ASC 260. Basic net
loss per share is computed by dividing loss available to common shareholders by
the weighted average number of common shares outstanding during the period.
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. For the
three months and nine months ended March 31, 2010 and 2009 the
Company’s common stock equivalents have not been included for earning per share
calculations as they are anti-dilutive.
  Note 12 –
BUSINESS COMBINATION
  During
the fiscal first quarter of 2010, the Company acquired Asia Distributions
Solutions Limited, a Cayman limited liability company publicly traded in the
United Kingdom, with operations in China with specific focus in the beverage
industry, for a purchase price of $26,637,465 which purchase price was paid by
the Company through the issuance of an aggregate of 59,561,535 shares of
Common Stock, of which 8,982,831 shares have not yet been issued, and
381,600 shares of Series A Convertible Preferred
Stock.
  F-9
  The
transaction was accounted for under the purchase method of accounting. The
Company purchased $4,204,101 in assets and assumed $2,624,929 in liabilities and
recorded goodwill and other intangible assets of $25,058,293. This is a
preliminary purchase price allocation, which is subject to adjustment. The
measurement period for purchase price allocation ends as soon as information on
the facts and circumstances become available, but will not exceed 12 months.
Adjustment in the purchase price allocation may require a recasting of the
amounts allocated to goodwill retroactive to the period in which the acquisition
occurred.
  Note 13 –
BOARD RESOLUTION
  On
December 31, 2009 the Board of Directors passed a resolution to increase the
authorized share capital to 410,000,000 shares, of which 400,000,000 will
be common shares and 10,000,000 will be preferred shares. The Company expects
completion of this process in September 2010.
  Note 14 –
SUBSEQUENT EVENTS
 
 Pursuant
to Financial Accounting Standards Board Accounting Standards Codification
855-10, we have evaluated all events or transactions that occurred from April 1,
2010 through the filing with the SEC.
  On
August 26, 2010, the Company filed a Notice of Exempt Offering of Securities on
Form D for a proposed offering of securities pursuant to Rule 506 of Regulation
D. The securities referred to in the foregoing will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), and, unless so
registered, may not be offered or sold in the United States absent registration
or an applicable exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other applicable securities
laws. The foregoing disclosure shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. This notice is being provided pursuant to and in accordance with
Rule 135(c) under the Securities Act.
  F-10




Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operation.




Three Months Ended March 31, 2010
Compared to Three Months Ended March 31, 2009




Results of
Operations





The
following table sets forth, for the periods indicated, certain operating
information expressed as a percentage of revenue. All amounts in the following
presentation are in U.S. Dollars unless otherwise indicated.





For the three months endedMarch 31,2010
                
                
                2009Sales,
      net
                
                $
                4,253,194
                
                
                
                100
                %
                
                $
                814,488
                
                
                
                100
                %Cost
      of sales
                
                $
                3,478,449
                
                
                
                82
                %
                
                $
                389,087
                
                
                
                48
                %Gross
      profit (loss)
                
                $
                774,745
                
                
                
                18
                %
                
                $
                425,401
                
                
                
                52
                %Total
      operating expenses
                
                $
                1,138,747
                
                
                
                27
                %
                
                $
                239,302
                
                
                
                29
                %Other
      (income) expense
                
                $
                (6,107
                )
                
                
                0
                %
                
                $
                129,543
                
                
                
                16
                %Loss
      before income taxes
                
                $
                (357,895
                )
                
                
                -8
                %
                
                $
                56,556
                
                
                
                7
                %Provision
      for income taxes
                
                $
                204,714
                
                
                
                5
                %
                
                $
                -
                
                
                
                0
                %Net
      Income (loss)
                
                $
                (562,609
                )
                
                
                -13
                %
                
                $
                56,556
                
                
                
                7
                %




Revenue.
Revenue was $4,253,194 in the three months ended March 31, 2010 compared to
$814,488 in the three months ended March 31, 2009. The increase in revenues of
$3,438,706 or approximately 422% was primarily related to the inclusion of
revenues generated by the business units acquired in the Asia Distribution
Solutions transaction, and revenue generated from sale of grapes in the
Australian operations.





Cost of
Sales. Cost of revenue was $3,478,449 in the three months ended March 31,
2010 compared to $389,087 in the three months ended March 31, 2009, an increase
of $3,089,362. As a percentage of revenue, cost of revenue was 82% in the three
months ended March 31, 2010 compared to 48% in the three months ended March 31,
2009.  The increase in cost was primarily related to the following
items: the inclusion of the business units acquired in the Asia Distribution
Solutions transaction, and operating costs for the Jugiong vineyard in
Australia.




Gross
Profit. Gross profit was $774,745 in the three months ended March 31,
2010 compared to $425,401 in the three months ended March 31, 2009. As a
percentage of revenues, gross profit was 18% in the three months ended
March 31, 2010 and 52% in the three months ended March 31, 2009. The decrease in
gross profit as a percentage of revenues is primarily related to the following
items: the business units acquired in the Asia Distribution Solutions
transaction, which are currently selling predominantly lower margin local
product, along with the sale of grapes in the Australian operations, which
generates lower margins than sales of finished product.





Operating
Expenses. Operating expenses were $1,138,747 in the three months ended
March 31, 2010 compared to $239,302 in the three months ended March 31, 2009.
This is an increase of $899,445 or approximately 376% from the 2009 period to
the 2010 period.


4




As a
percentage of revenues, operating expenses were approximately 27% in the
three months ended March 31, 2010 compared to 29% in the three months ended
March 31, 2009.  The acquisition of Asia Distribution Solutions
created intangible assets that generated amortization
expense.  Amortization for the three months ended March 31, 2010 was
$234,739 compared to $0 in the three months ended March 31, 2009. Without the
amortization expense, operating expense decreased by 8%.





Other (Income)
Expense. Other income was $(6,107) in the three months ended March 31,
2010 compared to $129,543 in the three months ended March 31, 2009. The decrease
in other expense of $135,652 was primarily due to reduction in previously
recorded acquisition cost of Asia Distribution Solutions.




Net Income
(Loss). Our net loss was $(562,609) in the three months ended March 31,
2010 compared to a net income of $56,556 in the three months ended March 31,
2009. This increase in loss was primarily attributable to income tax of $204,714
and amortization expense of intangible assets of $234,739.




Nine
Months Ended March 31, 2010 Compared to Nine Months Ended March 31,
2009


Results of
Operations





The
following table sets forth, for the periods indicated, certain operating
information expressed as a percentage of revenue. All amounts in the following
presentation are in U.S. Dollars unless otherwise indicated.





For the nine
      months endedMarch
      31,2010
                  
                  
                  2009Sales,
      net
                  
                  $
                  9,417,276
                  
                  
                  
                  100
                  %
                  
                  $
                  1,902,001
                  
                  
                  
                  100
                  %Cost
      of sales
                  
                  $
                  7,776,177
                  
                  
                  
                  83
                  %
                  
                  $
                  1,484,767
                  
                  
                  
                  78
                  %Gross
      profit (loss)
                  
                  $
                  1,641,099
                  
                  
                  
                  17
                  %
                  
                  $
                  417,234
                  
                  
                  
                  22
                  %Total
      operating expenses
                  
                  $
                  2,892,839
                  
                  
                  
                  31
                  %
                  
                  $
                  959,125
                  
                  
                  
                  50
                  %Other
      (income) expense
                  
                  $
                  687,661
                  
                  
                  
                  7
                  %
                  
                  $
                  416,335
                  
                  
                  
                  22
                  %Loss
      before income taxes
                  
                  $
                  (1,939,401
                  )
                  
                  
                  -21
                  %
                  
                  $
                  (958,226
                  )
                  
                  
                  -50
                  %Provision
      for income taxes
                  
                  $
                  204,714
                  
                  
                  
                  2
                  %
                  
                  $
                  -
                  
                  
                  
                  0
                  %Net
      income (loss)
                  
                  $
                  (2,144,115
                  )
                  
                  
                  -23
                  %
                  
                  $
                  (958,226
                  )
                  
                  
                  -50
                  %




Revenue.
Revenue was $9,417,276 in the nine months ended March 31, 2010 compared to
$1,902,001 in the nine months ended March 31, 2009. The increase in revenues of
$7,515,275 or approximately 396%, was primarily related to the inclusion of
revenues generated by the business units acquired in the Asia Distribution
Solutions transaction, and revenue generated from sale of grapes in the
Australian operations.





Cost of
sales. Cost of revenue was $7,776,177in the nine months
ended March 31, 2010 compared to $1,484,767in the nine months ended
March 31, 2009, an increase of $6,291,410. As a percentage of revenue, cost of
revenue was 83% in the nine months ended March 31, 2010 compared to 78% in the
nine months ended March 31, 2009.  The increase in cost was primarily
related to the following items: the inclusion of the business units acquired in
the Asia Distribution Solutions transaction, and operating costs for the Jugiong
vineyard in Australia.





Gross Profit
(Loss). Gross profit was $1,641,099in the nine months ended
March 31, 2010 compared to $417,234 in the nine months ended March 31, 2009. As
a percentage of revenues, gross profit was 17% in the nine months ended
March 31, 2010 compared to 22% in the nine months ended March 31,
2009.  The decrease in gross profit as a percentage of revenues is
primarily related to the following items: the business units acquired in the
Asia Distribution Solutions transaction, which are currently selling
predominantly lower margin local product, along with the sale of grapes in the
Australian operations, which generates lower margins than sales of finished
product.


5





Operating
Expenses. Operating expenses were $2,892,839 in the nine months ended
March 31, 2010 compared to $959,125 in the nine months ended March 31, 2009.
This is an increase of $1,933,714 or approximately 202% from the 2009 period to
the 2010 period. The acquisition of Asia Distribution Solutions added
significant additional revenue with comparatively low additional Sales, General
and Administrative costs.





As a percentage of revenues,
operating expenses were approximately 31% in the nine months ended March 31,
2010 compared to approximately 50% in the nine months ended March 31,
2009.




Amortization
for the nine months ended March 31, 2010 was $677,659 compared to $0 in the nine
months ended March 31, 2009.





Other (Income)
Expense. Other expense was $687,661 in the nine months ended March 31,
2010 compared to $416,335 in the nine months ended March 31, 2009. The increase
in other expense of $271,326 was primarily due to the increase in interest
expenses from $411,443 to $868,855 from loans.




Net Loss.
Our net loss was $2,144,115 in the nine months ended March 31, 2010 compared to
a net loss of $958,226 in the nine months ended March 31, 2009. This increase in
loss was primarily attributable to an increase in income tax of $204,714,
amortization of intangible assets of $677,659 and other expenses as described
above.





Liquidity
and Capital Resources




As of
March 31, 2010, we had $401,147 of cash and cash equivalents and $(700,250) of
working capital as of March 31, 2010.





During
the nine months ended March 31, 2010 and 2009, net cash used in operating
activities was $(1,793,578) and $(631,351), respectively. Net cash provided by
investing activities totaled $125,681 for the nine months ended March 31, 2010,
compared with $(20,287) for the same period ended March 31, 2009. Net cash
provided by financing activities totaled $2,189,575 for the nine months ended
March 31, 2010, compared to $1,308,524 for the same period ended March 31, 2009.
The net change in our cash balance was $439,963 and $0 for the nine ended March
31, 2010 and 2009, respectively.









Our
lack of liquidity could result in an interruption of our business and has led
our management to express doubt about our ability to continue as a going
concern as listed in our auditor’s report on our financial statements for the
year ended June 30, 2009.




The
Company is currently authorized to issue 90,000,000 shares of Common
Stock.  However, the Company has commitments to issue 152,680,585
shares of Common Stock.  This includes 3,816,000 shares of Common
Stock issuable upon conversion of the Series A Convertible Preferred Stock,
55,000,000 shares of Common Stock issued upon conversion of the Series B
Convertible Preferred Stock.
  On
December 31, 2009, the Board of Directors approved an amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of capital
stock to 410,000,000 shares, of which 400,000,000 shares are Common Stock and
10,000,000 shares are Preferred Stock 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.  On July 21, 2010, the holders of a
majority of the Company's outstanding voting securities approved the Articles of
Amendment which will become effective after the Company has given notice to the
remaining shareholders of the Company that the amendment is being
effectuated.
  On
August 26, 2010, the Company filed a Notice of Exempt Offering of Securities on
Form D for a proposed offering of securities pursuant to Rule 506 of Regulation
D. The securities referred to in the foregoing will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), and, unless so
registered, may not be offered or sold in the United States absent registration
or an applicable exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other applicable securities
laws. The foregoing disclosure shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. This notice is being provided pursuant to and in accordance with
Rule 135(c) under the Securities Act.


6


Item
3.  Quantitative and Qualitative Disclosures About Market
Risk




We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.




Item
4T.            Disclosure Controls and
Procedures





Evaluation
of Disclosure Controls and Procedures.





We
maintain "disclosure controls and procedures" as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934.  In designing and
evaluating our disclosure controls and procedures, our management recognized
that disclosure controls and procedures, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of disclosure controls and procedures are
met.  Additionally, in designing disclosure controls and procedures,
our management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible disclosure controls and
procedures.  The design of any disclosure controls and procedures is
also based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.





Our
management, including our Chief Executive Officer and our Chief Financial
Officer, have evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report.  Based
on such evaluation, and as discussed in greater detail below, our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of the period covered by this report, our disclosure controls and procedures
were not effective:





·
            to
      give reasonable assurance that the information required to be disclosed by
      us in reports that we file under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods
      specified in the Securities and Exchange Commission's rules and forms,
      and





·
            to
      ensure that information required to be disclosed in the reports that we
      file or submit under the Securities Exchange Act of 1934 is accumulated
      and communicated to our management, including our CEO and our Treasurer,
      to allow timely decisions regarding required
  disclosure.





Management's
Report on Internal Control Over Financial Reporting.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934.  Our internal control system was designed to
provide reasonable assurance to our management and the Board of Directors
regarding the preparation and fair presentation of published financial
statements.  Our internal control over financial reporting includes
those policies and procedures that:





·
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of our
      assets,


7





·
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorization of management and directors,
      and





·
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on our financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate.





Our
management assessed the effectiveness of our internal control over financial
reporting as of March 31, 2010.  In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") in Internal Control-Integrated
Framework.   Based on the assessment using those criteria, our
management concluded that the internal control over financial reporting was not
effective at March 31, 2010.





While
we have designed a system of internal controls to supplement our existing
controls, we have been unable to complete testing of these controls and
accordingly lack the documented evidence that we believe is necessary to support
an assessment that our internal control over financial reporting is
effective.  Without such testing, we cannot conclude that there are
any significant deficiencies or material weaknesses, nor can we appropriately
remediate any such deficiencies that might have been
detected.




8





This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Our management's report is not subject to attestation by
our registered public accounting firm.





Changes
in Internal Control over Financial Reporting.





There
have been no changes in our internal control over financial reporting during our
third fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





PART
II


OTHER
INFORMATION





Item 1.
Legal Proceedings





None.





Item 1A.
Risk Factors





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds





None.




Item 3.
Defaults Upon Senior Securities




None.





Item 5.
Other Information




None.





Item 6.
Exhibits




31.1+
            Chief
      Executive Officer's Certificate, pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.





31.2+
            Chief
      Financial Officer's Certificate, pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.





32.1+
            Chief
      Executive Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





32.2+
            Chief
      Financial Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





+ Filed
Herewith
  9




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





GLOBAL BEVERAGES, INC.Date:
      August 30, 2010
                      By:
                      /s/
      Ian LongIan
      Long, PresidentDate:
      August 30, 2010
                      By:
                      /s/
      Lawrence LichterLawrence
      Lichter, Chief Financial Officer
  10