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: December  31,
2009




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
                  or
      Organization)
                
                (I.R.S.
      Employer Identification
No.)





700
YARRAMAN ROAD, WYBONG


UPPER
HUNTER VALLEY


NEW SOUTH WALES, AUSTRALIA
2333


(Address
of Principal Executive


Offices)




(+61) 2
6547-8118


(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 o




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 o
            
            Accelerated filer oNon-accelerated filer o (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 o No þ




The
aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant on May 26, 2010 was $39,000,014 based on the average closing
bid and ask price of $0.50 for such common stock as of May 26,
2010.





As of May
26, 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 DECEMBER 31, 2009




Contents





PART I – FINANCIAL
    INFORMATIONItem 1. Financial Statements
                                    
                                    4Item 2. Management’s Discussion and Analysis of
      Financial Condition and Results of Operation
                                    
                                    13Item 3. Quantitative and Qualitative Disclosures
      About Market Risk
                                    
                                    16Item 4T. Controls and Procedures
                                    
                                    16PART II – OTHER INFORMATIONItem 1. Legal Proceedings
                                    
                                    18Item 2. Unregistered Sales of Equity Securities
      and Use of Proceeds
                                    
                                    18Item 3. Defaults Upon Senior
      Securities
                                    
                                    18Item 5. Other Information
                                    
                                    18Item 6. Exhibits
                                    
                                    18


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-K 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


4


GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December
      31,
                
                
                June
      30,2009
                
                
                2009ASSETSCurrent
      AssetsCash
                
                $
                197,242
                
                
                $
                -Accounts
      receivable, net
                
                
                1,735,723
                
                
                
                760,313Due
      from related parties
                
                
                661,156
                
                
                
                -Inventory
                
                
                7,598,712
                
                
                
                3,362,528Other
      receivables
                
                
                1,265,877
                
                
                
                -Other
      assets
                
                
                803,334
                
                
                
                190,961Total
      Current Assets
                
                
                12,262,043
                
                
                
                4,313,802Property,
      plant and equipment, net
                
                
                3,861,410
                
                
                
                3,528,013Intangible
      assets
                
                
                43,913,139
                
                
                
                19,459,248$
                60,036,592
                
                
                $
                27,301,063LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
                
                $
                4,260,467
                
                
                $
                1,929,055Loan
      payable
                
                
                58,536
                
                
                
                13,095Line
      of credit
                
                
                648,934
                
                
                
                -Deferred
      revenue
                
                
                45,663
                
                
                
                -Cash
      deficit
                
                
                -
                
                
                
                38,816Capital
      lease, current portion
                
                
                15,735
                
                
                
                42,539Due
      to related party
                
                
                8,058,902
                
                
                
                3,396,616Total
      Current Liabilities
                
                
                13,088,238
                
                
                
                5,420,122Long
      Term Liabilities:Convertible
      notes payable
                
                
                607,500
                
                
                
                -Long-term
      debt
                
                
                5,271,363
                
                
                
                4,627,379Total
      Long Term Liabilities
                
                
                5,878,863
                
                
                
                4,627,379Total
      Liabilities
                
                
                18,967,101
                
                
                
                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 88,497,213 and
      39,390,476 shares issued and outstanding respectively
                
                
                88,497
                
                
                
                39,390Additional
      paid in capital
                
                
                57,429,324
                
                
                
                30,851,807Subscription
      receivable
                
                
                (55,000
                )
                
                
                (66,000
                )Shares
      to be issued
                
                
                10,455
                
                
                
                -Other
      comprehensive income
                
                
                (1,025,487
                )
                
                
                (456,752
                )Accumulated
      deficit
                
                
                (15,378,739
                )
                
                
                (13,114,938
                )Total
      Stockholder's Equity
                
                
                41,069,491
                
                
                
                17,253,562$
                60,036,592
                
                
                $
                27,301,063





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


5


GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





For
      the three months ended
                    
                    
                    For
      the six months endedDecember 31,
                    
                    
                    December 31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Sales,
      net
                    
                    $
                    1,994,762
                    
                    
                    $
                    478,367
                    
                    
                    $
                    5,164,082
                    
                    
                    $
                    1,087,513Cost
      of sales
                    
                    
                    1,653,650
                    
                    
                    
                    652,996
                    
                    
                    
                    4,297,728
                    
                    
                    
                    1,095,680Gross
      profit (loss)
                    
                    
                    341,112
                    
                    
                    
                    (174,629
                    )
                    
                    
                    866,354
                    
                    
                    
                    (8,167
                    )-Selling,
      general and administrative expenses
                    
                    
                    835,565
                    
                    
                    
                    367,376
                    
                    
                    
                    1,287,704
                    
                    
                    
                    719,823Total
      operating expenses
                    
                    
                    835,565
                    
                    
                    
                    367,376
                    
                    
                    
                    1,287,704
                    
                    
                    
                    719,823-Income
      (Loss) from operations
                    
                    
                    (494,453
                    )
                    
                    
                    (542,005
                    )
                    
                    
                    (421,350
                    )
                    
                    
                    (727,990
                    )Other
      (Income) ExpenseInterest
      income
                    
                    
                    (33
                    )
                    
                    
                    (326
                    )
                    
                    
                    (33
                    )
                    
                    
                    (3,121
                    )Interest
      expense
                    
                    
                    407,053
                    
                    
                    
                    113,196
                    
                    
                    
                    612,263
                    
                    
                    
                    277,685Acquisition
      costs
                    
                    
                    77,130
                    
                    
                    
                    -
                    
                    
                    
                    141,116
                    
                    
                    
                    -Other
      (income) expenses net
                    
                    
                    (8,041
                    )
                    
                    
                    (3,397
                    )
                    
                    
                    (10,939
                    )
                    
                    
                    (8,522
                    )Amortization
      of intangible
                    
                    
                    562,608
                    
                    
                    
                    -
                    
                    
                    
                    1,125,216
                    
                    
                    
                    -Bad
      debt
                    
                    
                    (15,104
                    )
                    
                    
                    -
                    
                    
                    
                    23,467
                    
                    
                    
                    -Gain
      on sale of fixed asset
                    
                    
                    -
                    
                    
                    
                    (607
                    )
                    
                    
                    -
                    
                    
                    
                    (1,928
                    )Transaction
      gain (loss) on foreign currency
                    
                    
                    64
                    
                    
                    
                    22,625
                    
                    
                    
                    (48,639
                    )
                    
                    
                    22,675Total
      Other (Income) Expense
                    
                    
                    1,023,677
                    
                    
                    
                    131,491
                    
                    
                    
                    1,842,450
                    
                    
                    
                    286,789Loss
      before income taxes
                    
                    
                    (1,518,131
                    )
                    
                    
                    (673,496
                    )
                    
                    
                    (2,263,800
                    )
                    
                    
                    (1,014,779
                    )Provision
      for income taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    
                    (1,518,131
                    )
                    
                    
                    (673,496
                    )
                    
                    
                    (2,263,800
                    )
                    
                    
                    (1,014,779
                    )Other
      comprehensive income (loss)Foreign
      currency translation
                    
                    
                    (195,074
                    )
                    
                    
                    (33,279
                    )
                    
                    
                    (738,259
                    )
                    
                    
                    (935
                    )Comprehensive
      income (loss)
                    
                    $
                    (1,713,205
                    )
                    
                    $
                    (706,775
                    )
                    
                    $
                    (3,002,059
                    )
                    
                    $
                    (1,015,714
                    )Net
      loss per share:Basic
      & diluted
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.03
                    )Weighted
      average number of shares outstanding:Basic
      & diluted
                    
                    
                    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.


6


GLOBAL
BEVERAGES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR THE
SIX MONTH PERIODS ENDED DECEMBER 31, 2009 AND 2008





2009
                          
                          
                          2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
                          
                          $
                          (2,263,800
                          )
                          
                          $
                          (1,014,779
                          )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Bad
      debt
                          
                          
                          23,467
                          
                          
                          
                          -Depreciation
      and amortization
                          
                          
                          1,206,768
                          
                          
                          
                          134,499Salary
      forgiven for stock payment
                          
                          
                          11,000
                          
                          
                          
                          11,000(Increase)
      / decrease in assets:Accounts
      receivables
                          
                          
                          (390,044
                          )
                          
                          
                          (168,359
                          )Inventory
                          
                          
                          (3,219,509
                          )
                          
                          
                          402,654Other
      receivables
                          
                          
                          (670,583
                          )
                          
                          
                          (35,121
                          )Deposits
      and prepaid expenses
                          
                          
                          31,003
                          
                          
                          
                          -Other
      assets
                          
                          
                          (112,584
                          )
                          
                          
                          (41,091
                          )Increase
      in liabilities:Accounts
      payable and accrued expenses
                          
                          
                          1,950,734
                          
                          
                          
                          31,069Income
      tax payable
                          
                          
                          71,305
                          
                          
                          
                          -Deferred
      revenue
                          
                          
                          31,199
                          
                          
                          
                          -Total
      Adjustments
                          
                          
                          (1,067,244
                          )
                          
                          
                          334,651Net
      cash used in operations
                          
                          
                          (3,331,044
                          )
                          
                          
                          (680,128
                          )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of subsidiaries, net of cash acquired
                          
                          
                          147,380
                          
                          
                          
                          -Acquisition
      of property and equipment
                          
                          
                          (21,697
                          )
                          
                          
                          (20,231
                          )Acquisition
      of intangible
                          
                          
                          -
                          
                          
                          
                          (270
                          )Net
      cash provided by (used in) investing activities
                          
                          
                          125,683
                          
                          
                          
                          (20,501
                          )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from long-term debt
                          
                          
                          175,704
                          
                          
                          
                          115,406Proceeds
      from loan payable
                          
                          
                          607,500
                          
                          
                          
                          -Procceds
      (payment) from line of credit
                          
                          
                          107,533
                          
                          
                          
                          -Cash
      deficit financing
                          
                          
                          -
                          
                          
                          
                          (1,769
                          )Capital
      lease payments
                          
                          
                          (30,671
                          )
                          
                          
                          (55,496
                          )Receivable
      from related party
                          
                          
                          451,619
                          
                          
                          
                          -Payable
      to related party
                          
                          
                          2,293,915
                          
                          
                          
                          -Loans
      payable - related party
                          
                          
                          85,141
                          
                          
                          
                          308,777Net
      cash provided by (used in) financing activities
                          
                          
                          3,690,742
                          
                          
                          
                          366,918Effect
      of exchange rate changes on cash and cash equivalents
                          
                          
                          (249,324
                          )
                          
                          
                          333,711Net
      increase in cash and cash equivalents
                          
                          
                          236,057
                          
                          
                          
                          -Cash
      and cash equivalents, beginning balance
                          
                          
                          (38,816
                          )
                          
                          
                          -Cash
      and cash equivalents, ending balance
                          
                          $
                          197,241
                          
                          
                          $
                          -SUPPLEMENTAL
      DISCLOSURES:Cash
      paid for:Income
      tax payments
                          
                          $
                          -
                          
                          
                          $
                          -Interest
      payments
                          
                          $
                          311,560
                          
                          
                          $
                          218,426





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


7


Global
Beverages, Inc.


Notes
to Condensed Consolidated Financial Statements


December
31, 2009





NOTE 1 -
NATURE OF OPERATIONS
AND BASIS OF PRESENTATION




Our
Condensed Consolidated Balance Sheet as of December 31, 2009, the Condensed
Consolidated Statements of Income and Comprehensive Income for the three and six
months ended December 31, 2009 and 2008, and the Condensed Consolidated
Statements of Cash Flows for the six months ended December 31, 2009 and 2008
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. In our opinion,
these financial statements include all normal and recurring adjustments
necessary for a fair presentation. The results for the three months are not
necessarily indicative of the results expected for the full year.




Our
significant interim accounting policies include the addition of overhead costs
to our work in process inventory and the recognition of income taxes using an
estimated annual effective tax rate. In addition the income and expenses from
acquisitions are included from the date of acquisition forward.




The
following information is unaudited. All per share amounts assume dilution unless
otherwise noted, and are based on unrounded amounts. Certain reclassifications
were made to prior year amounts to conform to the 2009 presentation. 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 Systems Limited, Cayman Islands, and it’s
subsidiaries:




·
            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


8




During
the fiscal first quarter of 2010, the Company adopted The FASB Accounting Standards
Codification (ASC or Codification) and the Hierarchy of Generally Accepted
Accounting Principles (GAAP) which establishes the Codification as the
sole source for authoritative U.S. GAAP and will supersede all accounting
standards in U.S. GAAP, aside from those issued by the SEC. The adoption of the
Codification did not have an impact on the Company’s results of operations, cash
flows or financial position. Since the adoption of the Accounting Standards
Codification (ASC) the Company’s notes to the consolidated financial statements
will no longer make reference to Statement of Financial Accounting Standards
(SFAS) or other U.S. GAAP pronouncements.




The
Company also adopted, in accordance with U.S. GAAP, the standards on business
combinations and noncontrolling interests in Consolidated Financial Statements.
These statements aim to improve, simplify, and converge internationally, the
accounting for business combinations and the reporting of noncontrolling
interests in consolidated financial statements. These statements have a
significant impact on the manner in which the Company accounts for acquisitions
beginning in the fiscal year 2010. Significant changes include the
capitalization of in process research and development, expensing of acquisition
related restructuring actions and transaction related costs and the recognition
of contingent purchase price consideration at fair value at the acquisition
date. In addition, changes in accounting for deferred tax asset valuation
allowances and acquired income tax uncertainties after the measurement period
will be recognized in earnings rather than as an adjustment to the cost of
acquisition. This accounting treatment for taxes is applicable to acquisitions
that occurred prior and subsequent to the adoption of the standard. Operating
profit attributable to noncontrolling interests are reported in Other
(Income)Expense, net and the related tax impact to the Provision for Income
Taxes. Additionally, equity attributable to noncontrolling interests is recorded
in Other Non-Current Liabilities. The adoption of these standards did not have a
material impact on the Company’s results of operations, cash flows or financial
position.




Note 2 –
INCOME TAXES




The
worldwide effective income tax rates for the three months ended December 31,
2009 and 2008 were 0% and 0%, respectively. The effective rate was primarily due
to net operating losses during this period of time.




Note 3 -
INVENTORIES




December
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2009Work
      in progress
                  
                  $
                  1,508,624
                  
                  
                  $
                  354,350Bulk
      wine and cider
                  
                  
                  2,308,778
                  
                  
                  
                  2,249,660Finished
      goods
                  
                  
                  3,620,433
                  
                  
                  
                  635,814Winemaking
      and packaging materials
                  
                  
                  160,877
                  
                  
                  
                  122,703Total
                  
                  $
                  7,598,712
                  
                  
                  $
                  3,362,527




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.


9





December
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2009Non
      amortizable intangibles
                  
                  $
                  10,610,668
                  
                  
                  $
                  10,384,848Amortizable
      intangibles
                  
                  
                  29,178,484
                  
                  
                  
                  9,074,400Accumulated
      amortization
                  
                  
                  (1,125,216
                  )
                  
                  
                  -Net
      amortizable intangibles
                  
                  
                  28,053,268
                  
                  
                  
                  9,074,400Total
      intangibles
                  
                  $
                  38,663,936
                  
                  
                  $
                  19,459,248Goodwill
                  
                  $
                  5,249,203
                  
                  
                  $
                  -





Note 5 –
BUSINESS SEGMENTS





The
Company had two principal operating segments during the six months ended
December 31, 2009 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.





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:


10





December
      31, 2009Revenues
      from unaffiliated customers:Winery
                      
                      $
                      908,965Distribution
                      
                      
                      4,213,668Consolidated
                      
                      $
                      5,122,633Operating
      income (loss):Winery
                      
                      $
                      (466,505
                      )Distribution
                      
                      
                      127,326Corporation
      (1)
                      
                      
                      (60,898
                      )Consolidated
                      
                      $
                      (400,077
                      )Net
      income (loss) before taxes:Winery
                      
                      $
                      (1,046,713
                      )Distribution
                      
                      
                      169,047Corporation
      (1)
                      
                      
                      (1,338,402
                      )Consolidated
                      
                      $
                      (2,216,068
                      )Net
      income (loss) :Winery
                      
                      $
                      (1,046,713
                      )Distribution
                      
                      
                      169,047Corporation
      (1)
                      
                      
                      (1,338,402
                      )Consolidated
                      
                      $
                      (2,216,068
                      )Identifiable
      assets:Winery
                      
                      $
                      9,251,631Distribution
                      
                      
                      12,426,432Corporation
      (1)
                      
                      
                      38,147,511Consolidated
                      
                      $
                      59,825,574Depreciation
      and amortization:Winery
                      
                      $
                      91,917Distribution
                      
                      
                      1,548Corporation
      (1)
                      
                      
                      1,109,814Consolidated
                      
                      $
                      1,203,279Capital
      expenditures:Winery
                      
                      $
                      -Distribution
                      
                      
                      (21,697
                      )Corporation
      (1)
                      
                      
                      -Consolidated
                      
                      $
                      (21,697
                      )





(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.


11




Note 6 –
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 ended December 31, 2009 and 2008 the Company’s common stock
equivalents have not been included for earning per share calculations as they
are anti-dilutive.




Note 7 –
BUSINESS COMBINATIONS




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. The purchase price for the
acquisition was allocated primarily to intangible assets (distribution system,
client lists, brand names), goodwill and net tangible assets.


12




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




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.





Three Months Ended Months Ended December 31,2009
                                  
                                  
                                  2008Sales,
      net
                                  
                                  $
                                  1,994,762
                                  
                                  
                                  
                                  100
                                  %
                                  
                                  $
                                  478,367
                                  
                                  
                                  
                                  100
                                  %Cost
      of sales
                                  
                                  $
                                  1,653,650
                                  
                                  
                                  
                                  83
                                  %
                                  
                                  $
                                  652,996
                                  
                                  
                                  
                                  137
                                  %Gross
      profit (loss)
                                  
                                  $
                                  341,112
                                  
                                  
                                  
                                  17
                                  %
                                  
                                  $
                                  (174,629
                                  )
                                  
                                  
                                  -37
                                  %Selling,
      general and administrative expenses
                                  
                                  $
                                  835,565
                                  
                                  
                                  
                                  42
                                  %
                                  
                                  $
                                  367,376
                                  
                                  
                                  
                                  77
                                  %Other
      (Income) Expense
                                  
                                  $
                                  1,023,677
                                  
                                  
                                  
                                  51
                                  %
                                  
                                  $
                                  131,491
                                  
                                  
                                  
                                  27
                                  %Loss
      before income taxes
                                  
                                  $
                                  (1,518,131
                                  )
                                  
                                  
                                  -76
                                  %
                                  
                                  $
                                  (673,496
                                  )
                                  
                                  
                                  -141
                                  %Provision
      for income taxes
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  0
                                  %
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  0
                                  %Net
      loss
                                  
                                  $
                                  (1,518,131
                                  )
                                  
                                  
                                  -76
                                  %
                                  
                                  $
                                  (673,496
                                  )
                                  
                                  
                                  -141
                                  %





Three
Months Ended December 31, 2009 Compared to Three Months Ended December 31,
2008




Revenue.
Revenue was $1,994,762 in the three months ended December 31, 2009 compared to
$478,367 in the three months ended December 31, 2008. The increase in revenues
of $1,516,395, or approximately 76%, was primarily related to the inclusion of
revenue generated by the business units acquired in the Asia Distribution
Solutions Limited transaction.





Cost of
sales. Cost of sales was $1,653,650 in the three months ended December
31, 2009 compared to $652,996 in the three months ended December 31, 2008, an
increase of $1,000,654 which was primarily attributable to the inclusion of the
business units acquired in the Asia Distribution Solutions Limited transaction.
As a percentage of revenue, cost of revenue was 83% in the three months ended
December 31, 2009 compared to 137% in the three months ended December 31,
2008.




Gross Profit
(Loss). Gross profit was $341,112 in the three months ended December 31,
2009 compared to a gross loss of $174,629 in the three months ended December 31,
2008. As a percentage of revenues, gross profit was 17% in the three months
ended December 31, 2009 and (37)% in the three months ended December 31,
2008.





Sales, General
and Administrative Expenses. Sales, general and administrative expenses
were $835,565 in the three months ended December 31, 2009 compared to $367,376
in the three months ended December 31, 2008. This is an increase of $468,189, or
approximately 127%, from the 2008 period to the 2009 period and is primarily
attributable to the inclusion of the business units acquired in the Asia
Distribution Solutions Limited transaction.


13




As a
percentage of revenues, sales, general and administrative expenses decreased to
approximately 35% in the three months ended December 31, 2009 from 77% in the
three months ended December 31, 2008. The acquisition of Asia Distribution
Solutions Limited added significant revenue with comparatively low additional
sales, general and administration costs.





Other Income
(Expense). Other expense was $1,023,677 in the three months ended
December 31, 2009 compared to $131,491 in the three months ended December 31,
2008. The increase in other expense of $892,186 was primarily due to
amortization of intangible assets acquired and increased interest
expense.




Net Income
(Loss). Our net loss was $1,518,131 in the three months ended December
31, 2009 compared to a net loss of $673,496 in the three months ended December
31, 2008. This increase in loss was primarily attributable to an increase in our
other expenses as described above.





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.





Six Months Ended Months Ended December 31,2009
                                  
                                  
                                  2008Sales,
      net
                                  
                                  $
                                  5,164,082
                                  
                                  
                                  
                                  100
                                  %
                                  
                                  $
                                  1,087,513
                                  
                                  
                                  
                                  100
                                  %Cost
      of sales
                                  
                                  $
                                  4,297,728
                                  
                                  
                                  
                                  83
                                  %
                                  
                                  $
                                  1,095,680
                                  
                                  
                                  
                                  101
                                  %Gross
      profit (loss)
                                  
                                  $
                                  866,354
                                  
                                  
                                  
                                  17
                                  %
                                  
                                  $
                                  (8,167
                                  )
                                  
                                  
                                  -1
                                  %Selling,
      general and administrative expenses
                                  
                                  $
                                  1,287,704
                                  
                                  
                                  
                                  25
                                  %
                                  
                                  $
                                  719,823
                                  
                                  
                                  
                                  66
                                  %Other
      (Income) Expense
                                  
                                  $
                                  1,842,450
                                  
                                  
                                  
                                  36
                                  %
                                  
                                  $
                                  286,789
                                  
                                  
                                  
                                  26
                                  %Loss
      before income taxes
                                  
                                  $
                                  (2,263,800
                                  )
                                  
                                  
                                  -44
                                  %
                                  
                                  $
                                  (1,014,779
                                  )
                                  
                                  
                                  -93
                                  %Provision
      for income taxes
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  0
                                  %
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  0
                                  %Net
      loss
                                  
                                  $
                                  (2,263,800
                                  )
                                  
                                  
                                  -44
                                  %
                                  
                                  $
                                  (1,014,779
                                  )
                                  
                                  
                                  -93
                                  %





Six
Months Ended December 31, 2009 Compared to Six Months Ended December 31,
2008




Revenue.
Revenue was $5,164,082 in the six months ended December 31, 2009 compared to
$1,087,513 in the six months ended December 31, 2008. The increase in revenues
of $4,076,569, or approximately 79%, was primarily related to the inclusion of
revenue generated by the business units acquired in the Asia Distribution
Solutions Limited transaction.





Cost of
sales. Cost of sales was $4,297,728 in the six months ended December 31,
2009 compared to $1,095,680 in the six months ended December 31, 2008, an
increase of $3,202,048 which was primarily attributable to the inclusion of the
business units acquired in the Asia Distribution Solutions Limited transaction.
As a percentage of revenue, cost of revenue was 83% in the six months ended
December 31, 2009 compared to 101% in the six months ended December 31,
2008.




Gross Profit
(Loss). Gross profit was $866,354 in the six months ended December 31,
2009 compared to a gross loss of $8,167 in the six months ended December 31,
2008. As a percentage of revenues, gross profit was 17% in the six months
ended December 31, 2009 and (1)% in the six months ended December 31, 2008 for
the reasons discussed above.


14





Sales, General
and Administrative Expenses. Sales, general and administrative expenses
were $1,287,704  in the six months ended December 31, 2009 compared to
$719,823 in the six months ended December 31, 2008. This is an increase of
$567,881, or approximately 79%, from the 2008 period to the 2009 period and is
primarily attributable to the inclusion of the business units acquired in the
Asia Distribution Solutions Limited transaction.




As a
percentage of revenues, sales, general and administrative expenses decreased to
approximately 25% in the six months ended December 31, 2009 from 66% in the six
months ended December 31, 2008.  The acquisition of Asia Distribution
Solutions added significant revenue with comparatively low additional sales,
general and administration costs.





Other Income
(Expense). Other expense was $1,842,450 in the six months ended December
31, 2009 compared to $286,789 in the six months ended December 31, 2008. The
increase in other expense of $1,555,66 was primarily due to amortization of
intangible assets acquired and increased interest expense.




Net Income
(Loss). Our net loss was $2,263,800 in the six months ended December 31,
2009 compared to a net loss of $1,014,779 in the six months ended December 31,
2008. This increase in loss was primarily attributable to an increase in our
other expenses as described above.





Liquidity
and Capital Resources




As of
December 31, 2009, we had $197,241 of cash and cash equivalents and negative
working capital of $826,195 as compared to $0 cash and cash
equivalents  and negative working capital of $1,106,320, respectively,
at December 31, 2008.





During
the six months ended December 31, 2009 and 2008, net cash used in operating
activities was $(3,331,044) and $(680,128), respectively. Net cash provided by
investing activities totaled $125,683 for the six months ended December 31,
2009, compared with net cash used in investing activities of $20,501 for the
same period ended December 31, 2008. Net cash provided by financing activities
totaled $3,690,742 for the six months ended December 31, 2009, compared to
$366,918 for the same period ended December 31, 2008. The net change in our cash
balance was ($38,816) and $0 for the six months ended December 31, 2009 and
2008, respectively.





Our lack
of liquidity could result in an interruption of our business and has led our
auditors to express doubt about our ability to continue as a going concern in
their report on our financial statements for the year ended June 30,
2009.  Our ability to fund our operations is dependent at the present
time on collections of our accounts receivable. We have experienced difficulties
in the recent past with collecting on our receivables. The failure of our
customers to timely pay accounts receivable could force us to curtail our
operations.


15


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,


16





·
            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 December 31, 2009.  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 December 31, 2009.





`While we
have designed a system of internal controls to supplement our existing controls
during our implementation of Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX
404"), which has not been fully implemented, 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.




Due to
the nature of these material weaknesses in our internal control over financial
reporting, there is more than a remote likelihood that misstatements which could
be material to our annual or interim financial statements could occur that would
not be prevented or detected.


17





This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Our management's report was not subject to attestation by
our registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us to provide only management's
report in this report.





Changes
in Internal Control over Financial Reporting.





There
have been no changes in our internal control over financial reporting during our
second 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.  18
  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


19





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:
      May 27, 2010
                          By:
                          /s/ Ian LongIan
      Long, PresidentDate:
      May 27, 2010
                          By:
                          /s/ Lawrence LichterLawrence
      Lichter, Chief Financial Officer




20