**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




x
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d)
                OF**
              **THE
                SECURITIES EXCHANGE ACT OF
                1934**For
                the Fiscal Year Ended: June 30,
                2006o
            **TRANSITION
                REPORT UNDER SECTION 13 OR
                15(d) OF**
              **THE
                SECURITIES EXCHANGE ACT OF 1934**For
                the Transition Period From __________ to
                __________Commission
                File No. 000-29531YARRAMAN
                WINERY, INC.(Name
                of small business issuer in its
                charter)




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




700
                YARRAMAN ROAD
              WYBONG
              UPPER
                HUNTER VALLEY
              NEW
                SOUTH WALES, AUSTRALIA 2333
              **(Address
                of Principal Executive
                Offices)**




**(61)
      2 6547-8118**


(Issuer’s
      Telephone Number)




Securities
      registered pursuant to Section 12(b) of the Act: None




Securities
      registered pursuant to Section 12(g) of the Act:




$0.001
                Common Stock(Title
                of
                Class)






Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15 (d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. o




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




State
      the
      issuer’s revenues for the June 30, 2006 fiscal year: $1,830,151.




The
      average bid and asked price of the shares of common stock held by non-affiliates
      of the issuer, as of the last 60 days was $2.35 and $2.35,
      respectively.




As
      of
      June 30, 2006, there were 25,000,000 shares of the issuer’s common stock, $.001
      par value, outstanding.




Traditional
      Small Business Disclosure Format (check one): Yes o No x.









**TABLE
      OF CONTENTS**





PagePART
                I
            
            3Item
                1.
            Description
                of Business.
            3Item
                2.
            Description
                of Property.
            11Item
                3.
            Legal
                Proceedings.
            12Item
                4.
            Submission
                of Matters to Vote of Security Holders.
            12PART
                II
            
            13Item
                5.
            Market
                for Common Equity and Related Stockholder Matters.
            13Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation.
            14Item
                7.
            Financial
                Statements.
            23Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure.
            23Item
                8A.
            Controls
                and Procedures..
            24Item
                8B.
            Other
                Information.
            24PART
                III
            
            25Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act.
            25Item
                10.
            Executive
                Compensation.
            28Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.
            30Item
                12.
            Certain
                Relationships and Related Transactions.
            32Item
                13.
            Exhibits.
            33Item
                14.
            Principal
                Accountant Fees and Services.
            35









**PART
      I**




**Item
      1.** **Description
      of Business.**





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





**Background** .





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




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





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





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





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




3




**Overview** .




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





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





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




**Product
      Overview** **.**





The
      Company offers a variety of wine for sale to retail customers. The product
      line
      consists of:





***Classic
      Hunter***





Under
      the
      Classic Hunter label, we produce and sell the following wines in 750ml bottles:
      Shiraz, Chardonnay, Merlot and Semillon. The Shiraz is the Company’s largest
      selling varietal in this range and has become the product most associated with
      the “Yarraman Classic Hunter” label. The wines sell for approximately US$20 per
      bottle.





These
      wines have received 24 awards and medals in the last two years from
      international and Australian wine shows including the International Wine and
      Food Society, the Hunter Valley Show, the Royal Adelaide Show, the Sydney Royal
      Wine Show and the Melbourne Wine Show.





***Black
      Cypress***




Under
      the
      Black Cypress label, we currently produce and sell the following types of wines
      in 750ml bottles: Shiraz, Cabernet Merlot, Shiraz Rose, Chardonnay, Verdelho,
      Gewurztraminer and Chambourcin. The wines sell for approximately US$12 to US$15
      per bottle.





These
      wines have received 35 awards and medals in the last three years from
      international and Australian wine shows including New World Wine Awards (NZ),
      the Winestate Shiraz Challenge, the International Food and Wine Society, the
      Hunter Valley Show, the Royal Adelaide Show, the Sydney Royal Wine Show and
      the
      Melbourne Wine Show.




4




***Red
      Horse Range***




In
      May
      2006, the Company exported its first shipment of wines to its new distributor,
      Robert Whale Selections, in the United States. This range of wines comprises
      Shiraz Cabernet, Caberenet Merlot, Chardonnay and Semillon Verdelho and will
      retail for approximately US$10 per bottle.





***Banjo
      Collection***





Under
      the
      Banjo Collection label, we produce and sell the following types of wines in
      750ml bottles: Cabernet Merlot, Chardonnay Semillon and Shiraz Merlot. The
      suggested retail price for these wines is approximately US$12 to US$15 per
      bottle. The Cabernet Merlot is the Banjo range’s largest selling variety and has
      become the product most associated with the “Yarraman” label in the Banjo
      range.





The
      Banjo
      Collection is an “export only” range that combines fruit sourced from the
      Company’s vineyards in the Upper Hunter Valley and Gundagai regions. These wines
      have received 5 awards since release in 2003 in the Sydney International Wine
      Competition, the International Wine and Food Society and the New World Wine
      Awards (NZ).





***The
      Bolter***





The
      Bolter collection is a new range of wines which was released in November 2005
      targeting domestic and international markets. These wines are currently
      distributed by broad range liquor wholesalers in Australia. The first orders
      have been received for distribution in the United States and shipped in May
      2006.. The suggested retail prices for these wines is approximately $8 to
      $10.





The
      Bolter/Red Horse range sells the following types of wines in 750 ml bottles:
      Shiraz, Cabernet Merlot, Semillon Sauvignon Blanc, Verdelho, Chardonnay,
      Semillon Verdelho, and Shiraz Cabernet





**The
      Market.**





***Overview***





According
      to data published by the Australian Bureau of Statistics (ABS) 2005 marked
      record records in harvest, production and sales in Australia, with an annual
      crush of 1.92 million tons. It is estimated that there were 166.665 hectares
      cultivated for wine, drying and table grapes in Australia, representing an
      increase of 1.5% over 2004.





***Domestic
      Wine Sales***





According
      to data published by the Australian Grape Grower and Winemaker, Australian
      table
      wine accounted for 81% of domestic sales of wine in Australia, or US$313 million
      (AU$417 million) in 2005, and is expected to rise to US$331 million (AU$441
      million) by 2007. The per capita consumption of wine in Australia has increased
      after remaining largely unchanged in recent years. Domestic sales of
      Australian-produced wine increased by 3% in 2005 to a record level of 430ML.
      White wines account for 48.7% of all domestic table wines. Red wine sales
      account for 36.2% of the market with the balance split between fortified and
      sparkling wines. Yarraman Australia’s sales account for less than 1% of the
      domestic market.




The
      Company previously had a system of self distribution, employing three full-time
      sales representatives. To augment this, in 2006 we engaged a distributor to
      distribute our wines nationally to restaurant and wholesale accounts in
      Australia. At the same time, the Company reduced its selling costs by allocating
      its sales representatives to the distributor as Brand Ambassadors and allocating
      a portion of the costs associated with the Brand Ambassadors to the distributors
      The Company has a central distribution depot in Sydney which services same
      or
      next day delivery in Sydney and New South Wales. We believe the previous program
      of self-representation now coupled with a national distributor has allowed
      our
      relatively new wines to gain a strong presence in the New South Wales market
      with approximately US$831,000 (AU$1.06 million) in domestic sales during the
      2006 fiscal year, a 9.1% increase from the prior period due to new restaurant,
      retail and wholesale accounts that were established.




5




In
      addition, we market and sell our wines through retail outlets in New South
      Wales, through mailing lists, and through distributors and wine brokers who
      sell
      in specific targeted areas outside of the state of New South Wales. As we have
      increased production volumes and achieved wider brand recognition, sales to
      other domestic markets have increased both in terms of absolute dollars and
      as a
      percentage of total Company sales.




In
      connection with its ongoing transition to a national network of affiliated
      wholesalers, the Company has agreements with wholesalers (including Independent
      Liquor Group, Australian Liquor Marketers and Hotel Liquor Wholesalers) under
      which its products are distributed in certain states.




On
      February 13, 2006, we signed an amended sponsorship agreement with Luna Park,
      a
      premier tourist attraction and functions center in Sydney, pursuant to which
      we
      will be the exclusive provider of wine at their location for a period of five
      years.





***Export
      Wine Sales***





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




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




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





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






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




6




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





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




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





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





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





**Seasonal
      And Quarterly Results**





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





**Recent
      Developments**





In
      early
      April 2006, we completed the 2006 harvest. The total tonnage of grapes processed
      during the harvest was approximately 1,026 tons which is expected to result
      in
      approximately 720,000 liters of wine. As of May 1, 2006, the winery had 1.5
      million liters of wine in tank and barrel., Both 2005 and 2006 vintages produced
      good quality wines, despite extreme heat conditions with a protracted period
      of
      above average temperatures during the 2006 harvest period, that will meet both
      domestic and export market expectations into 2007. As a result we have elected
      not to crop our vineyards in 2007. This will enable us to reduce inventory
      of
      both packaged and bulk wines over the next two years and we estimate the
      operating and production cost savings to be $1.03 million (AU$1.4 million)
      over
      the next twelve months. While the Company intends to expand its export markets
      particularly into Asia any shortages of varietals can be sourced competitively
      on the bulk wine market in Australia.





In
      July
      2006, we appointed a new Australian distributor, Domaine Wine Shippers, with
      representation in all states of Australia. Domain Wine Shippers has operated
      for
      27 years representing premium vineyards from across Australia, New Zealand
      and
      France.





In
      April
      2006, we appointed Universal Wine and Spirits (Asia) as our agents for Asia
      Universal is managed by Mr. Freddie Choong who has worked for 25 years in Asia
      with Southcorp and Allied Domecq.




7




In
      May
      2006, the Company exported its first shipment of wines to its new distributor,
      Robert Whale Selections, in the United States .




The
      quality of our wines continued to attract national attention including
      recommendations from the Wine State Magazine and Kemeny’s, a major Sydney based
      retailer. We have continued to achieve further recognition of our wines by
      winning 8 medals including a gold for our Black Cypress Shiraz at the
      prestigious Hunter Valley Wine Show held in August 2006.





On
      September 1, 2006, we announced that Andrew Lyon had submitted his resignation
      as our Chief Executive Officer and President, and that we had appointed Wayne
      Rockall as our Chief Executive Officer to replace Mr. Lyon.




**Research
      and Development.**





**The
      Research and Development Component of the Company focuses on the following
      four
      areas:**





*Fermentation*





The
      Company is engaged in research and development in a number of areas, including
      implementing fermentation practices using yeast strains specific for different
      varieties of wine. We have completed extensive research and development with
      micro-oxygenation of wines. This system ultimately enables the acceleration
      of
      red wine production, achieving premium wine styles within a shorter time frame.
      Management believes that this technology will enable our red wine to ship to
      the
      market sooner.





*Barrels
      and Oak Alternatives*





After
      extensive oak barrel trials during the past three years, all French and American
      oak barrels are now being custom made by a select group of cooperages to match
      the exact requirements for our wine styles. These barrels provide oak characters
      to the Company’s products and integrates the oak characters into its super and
      ultra-premium wines. We first ordered these new barrels in November 2005. In
      addition the Company has successfully completed extensive trials with oak
      alternatives and has implemented these practices in its wine making process
      for
      premium wines.





*Viticulture*




Viticulture
      practices are constantly being reviewed at both vineyards. In 2005, we began
      to
      implement “Bio-Dynamic” sustainable farming practices which results in less use
      of chemicals, fungicides, herbicides and pesticides while enhancing grape
      quality and yields.





*Packaging*


The
      Company has also researched technologies and advances that it may use in its
      packaging and bottling, including alternative packaging formats which are in
      advanced developmental stages. These new technologies have not been released
      to
      the market.





**Suppliers.**





The
      Company uses materials and supplies, such as glass bottles, closures, labels,
      boxes and chemicals, that are currently obtained from a number of long standing
      suppliers. The supplies are purchased for specific needs and there are no
      long-term supplier agreements. Management monitors supply costs to maintain
      cost
      effectiveness. Bottling of the wines is performed by a third party in the town
      of Pokolbin that management believes offers product quality and prompt service,
      thus minimizing holding times for finished goods as the Company has begun to
      implement just-in-time bottling and packaging for premium wine
      exports.




8




**Competition.**





The
      2005 **** The
      Australian Wine Industry Directory **** lists
      1,045 wine producers that export wine, about half of all producers. Two
      companies, Southcorp and Hardy Wine Company, account for 41% of all exports
      by
      volume while the top 20 exporters account for 87%. The remaining 1,025 exporters
      compete for 13% of the exports by volume. The United Kingdom maintained its
      position as Australia’s leading overseas wine market followed by the United
      States.





The
      wine
      industry is highly competitive. Within the wine industry, management believes
      that its principal competitors include wineries in the Hunter Valley, Victoria
      and South Australia, which produce premium, super premium, and ultra premium
      wines. Wine production in Australia is dominated by large wineries that have
      significantly greater financial, production, distribution and marketing
      resources than the Company. Currently, no Hunter Valley winery dominates the
      New
      South Wales wine market. Several Hunter Valley wineries, however, are older
      and
      better established and have greater label recognition than the Company.





According
      to data published by the Australian Wine and Brandy Corporation, a pproximately
      70% of all Hunter Valley grapes come from the Upper Hunter Valley. New South
      Wales accounts for 32% of the Australian grape crush and the Hunter Valley
      as a
      region accounts for 11% of total grape crush for New South Wales, Australia.
      Upper Hunter Valley wineries with which we compete include Rosemount, Giant
      Creek, Arrowfield, Lindemans, Tyrells, Tullochs, Roxborgh. All major wineries,
      including the Company, export to the United States, Canada, the European Union,
      United Kingdom and throughout Asia.





Management
      believes that the principal competitive factors in the premium, super premium,
      and ultra premium segment of the wine industry are product quality, price,
      label
      recognition, and product supply. Management believes that its forecasted
      production level of 230,000 gallons (160,000 cases) per year, based on the
      grape
      supply from the harvest in 2006 will give it competitive advantages over other
      Hunter Valley wineries in areas such as marketing, distribution arrangements
      and
      grape purchasing. The current production level of many Hunter Valley wineries
      is
      generally smaller than the projected production level of the Company. Management
      believes that the Company competes favorably with respect to each of these
      factors. The Company’s wines have received positive reviews of its wines and
      believes its prices are competitive with other Hunter Valley and Australian
      wineries.




Larger
      scale production is necessary to satisfy retailers' and on-premise demand.
      Management believes that its current level of production is adequate to meet
      that demand through August 2008. The current production level of many Hunter
      Valley wineries is smaller than the production level of the companies
      winery.




**Regulatory
      Matters** .





In
      nearly
      all the countries that the Company markets its wines, such as the United States,
      United Kingdom and Canada, there are statutory authorities which exercise
      varying degrees of market regulation. Management believes that the Company
      is
      substantially in compliance with all regulations.





***Australian
      Regulatory Board***





The
      Company’s quality control and distribution is regulated by the Australian Wine
      and Brandy Corporation. The Australian Wine and Brandy Corporation is the
      Australian Government authority responsible for the promotion and regulation
      of
      the Australian wine and brandy industry and the provision of wine sector
      information to wineries throughout Australia. It provides the regulatory role
      in
      quality control and its goal is to maintain the integrity of wines originating
      from Australian vineyards. It also has a role of providing industry-wide
      knowledge through published literature and market development. The Company’s
      business has been regulated by the Australian Wine and Brandy Corporation since
      its formation.




9




**Trademarks
      and Intellectual Property.**




All
      trademarks and intellectual property are licensed to the Company by Delta Dawn
      Pty Ltd. Delta Dawn advises that its material trademarks and intellectual
      property are protected in all material respects by the law of the governments
      which regulate the markets in which they are used.




**Environmental
      Matters.**




The
      Company believes that its operations are in substantial compliance with all
      applicable environmental requirements of Australia. With regard to its control
      of production and waste management, management believes the Company operates
      within all international standards.




**Insurance.**




We
      maintain liability insurance which, in the view of management, is adequate
      protection for any damages arising out of our activities. The amount of the
      liability insurance coverage is approximately $9.75 million (AU$13 million)
      for
      industrial special risk coverage, approximately $7.5 million (AU$10 million)
      for
      general liability coverage and $7.5 million (AU$10 million) for Directors and
      Officers liability insurance. The insurance is provided by outside insurance
      companies. Insurance is provided for physical loss or damage to assets owned
      by
      the Company, for business interruption and equipment breakdown, for loss due
      to
      employee fraud, computer crime, legal liability and directors and officers
      liability.





**Employees** **.**





As
      of
      June 30, 2006, the Company had 19 full-time employees. During May to July,
      the
      Company employs 20 additional part-time, seasonal employees for vine pruning.
      There are an additional 9 seasonal employees used during harvest in the winery.
      None of the employees are members of a union or labor organization. None of
      the
      employees have entered into employment contracts with Yarraman, Yarraman
      Australia or any affiliate of the entities.





In
      addition to our employees, we have appointed the following vineyard, winery
      and
      management team members.





***Winemaker***





**Chris
      Mennie** commenced his winemaking career in 1995 studying for his oenology degree at
      Charles Sturt University in Wagga, New South Wales, Australia. During this
      period, Mr. Mennie coupled his theoretical knowledge with practical experience
      working at Pfeiffer Wines, Rutherglen from 1997. He returned to the Hunter
      Valley to work at a winery at McWilliam's Mount Pleasant in 1999 and then joined
      Margan Family Winegrowers at Broke, as the Assistant Winemaker for four years.
      To augment his Australian winemaking experience, he traveled abroad and was
      appointed Winemaker to Chateau du Seuil in Bordeaux, France for two Vintages.
      In
      December 2003, Mr. Mennie returned to the region to head up the winemaking
      team
      at Yarraman Australia in the Upper Hunter Valley.




10




***Master
      of Wine***





To
      support the winemakers the Company has engaged the services of a consulting
      Master of Wine, The consultant is used to assist the winemakers in ensuring
      that
      the styles of wines produced by Yarraman Australia are consistent with market
      expectations.





**Rob
      Geddes MW** .
      Mr.
      Geddes’ company, Winestream Pty Ltd, is an Australian specialist in wine and
      food industry media relations and marketing. He has been a Master of Wine since
      1992 and an international wine show judge. Mr. Geddes consults to Yarraman
      on
      media relations, marketing and specific wine projects.





***Viticulturist***





**Steve
      Gell** is a
      consulting viticulturist to Yarraman Australia and a number of other Hunter
      Valley vineyards. Mr. Gell has been a senior lecturer at the Hunter Institute
      of
      Technology, Faculty of Viticulture and Wine since 1994. He specializes is
      viticulture and soil survey.





**Management
      Consultants.**





The
      Company has engaged the services of Mr. Warrick Duthy of Warrick Duthy
      Consulting to advise the Company on its global brand strategy, mergers and
      acquisitions primarily in Asia, China and Australia.





In
      February 2006, we entered into an exclusive agreement with Madison One Data
      Group Limited, a company based in Mill Neck, New York to seek out a U.S. company
      that may complement our Australian operations within the United States. Madison
      One plans to seek potential candidates to enter into agreements involving the
      Company including potential mergers, consolidations, recapitalizations, joint
      ventures, business combinations, exchange offers or the purchase or sale of
      securities or assets.





In
      addition, the Company has entered into a consultancy agreement with Delta Dawn
      to provide consulting services related to the wine industry. Delta Dawn has
      appointed Gary Blom to carry out the consulting services. Mr. Blom’s role will
      be to assist management along with Warrick Duthy and Madison One Data Group
      in
      their respective search for potential strategic relationships.




Significant
      Subsidiaries.





The
      Company’s only subsidiary is Yarraman Australia.




**Item
                2.**
            **Description
                of Property****.******





We
      own
      approximately 632 acres in the Upper Hunter Valley, New South Wales. The Upper
      Hunter Wybong vineyard has a total of approximately 632 acres, of which 187
      acres are under vine and approximately 13 acres are utilized for the winery.
      The
      land mostly comprises of black, sandy loam, alluvial soils along the creek
      frontage and adjacent slopes, rising to arable red loams with well drained
      plains and sandy slopes which extend to the sandstone ridges on the perimeter.
      The surplus acreage is used for pastures used primarily to produce mulch covers
      under the vines. Located on the property is the Wybong Creek, a perennial
      stream. Because of climate, soil and other grown conditions, the Upper Hunter
      Valley is ideally suited to growing superior quality Shiraz, Chardonnay, Merlot
      and Semillon wine grapes.




11




We
      have
      entered into a lease to use the “Wirrilla Vineyard,” located in the Gundagai
      region, which totals 1,312 acres located in a newly developed wine region in
      the
      southwest slopes of New South Wales. The lease is with Delta Dawn to whom we
      pay
      a monthly fee of approximately US$35,000 (AU$43,750) and have all rights to
      develop the land and utilize all fruit produced on the land. The lease expired
      June 30, 2006 and management intends to enter into an extension of the lease
      with Delta Dawn Pty Limited during the second six months of 2006 on the same
      terms and conditions.







**Item
                3.**
            **Legal
                Proceedings.**


We
        have
        entered into arbitration regarding one of our grape processing arrangements.
        A
        dispute has arisen regarding charges that were invoiced related to the storage
        of wine processed under the arrangement. The total amount in dispute is $225,000
        AUD, which is approximately $165,000 USD. This amount has been recorded in
        our
        income during the fiscal years ended June 30, 2006 and 2005 . No reserve
        has been accrued for this amount as we intend to vigorously defend our position
        and believe that we will prevail.




**Item
                4.**
            **Submission
                of Matters to Vote of Security Holders****.**




None.




12




**PART
      II**









**Item
                5.**
            **Market
                for Common Equity and Related Stockholder Matters****.**




Our
      Common Stock is listed on the Pink Sheets®, which is a centralized quotation
      service that collects and publishes market maker quotes for over-the-counter
      securities that is published by the Pink Sheets LLC, under the symbol “YRMN.PK”.
      The following sets forth, for the periods indicated, the high and low bid price
      for our Common Stock as reported in the Pink Sheets®. The Pink Sheets® is a
      limited, voluntary reporting service and may not include all transactions
      regarding our Common Stock. The quotations set forth below reflect inter-dealer
      prices, without retail mark-up, mark-down or commissions and may not represent
      actual transactions.





**Quarter
                Ending:**
            **High**
            **Low****2005**March
                31, 2005
            $1.25
            $1.00June
                30, 2005
            $1.25
            $1.25September
                30, 2005
            $1.25
            $1.25October
                1, 2005 through December 22, 2005 *
            $1.25
            $1.25December
                23, 2005 through December 31, 2005 *
            $1.25
            $1.25**2006**March
                31, 2006
            $2.00
            $1.00June
                30, 2006
            $2.00
            $2.00September
                30, 2006 (through September 20, 2006)
            $2.35
            $2.00




*
      Share
      Exchange closed on December 22, 2005, prior to this day, the Company was a
      non-operating shell company.




As
      of
      September 20, 2006 there were 16 shareholders of record.




We
      have
      not paid any stock dividends and cash dividends to date and have no plans to
      pay
      any stock or cash dividends in the immediate future.





Recent
      Sales of Unregistered Securities.





On
      December 22, 2005, we entered into a stock purchase agreement (the “Purchase
      Agreement”) with certain investors (the “Investors”) for the sale of an
      aggregate of 5,253,500 shares of common stock (the “Share Sale”) for aggregate
      gross proceeds in the form of promissory notes with an aggregate principal
      amount equal to $2,000,000 (the “Notes”). The Notes have a maturity of 300 days
      and principal is payable in approximately quarterly installments, with interest
      accruing on the original principal amount at the rate of prime plus 2.5%,
      payable at maturity.





In
      connection with the Share Exchange, we issued 1,250,000 shares of common stock
      (the “Millhouse Shares”) in exchange to MillhouseIAG Limited (“Millhouse”) as a
      finders fee.




13




The
      Shares and the Millhouse Shares have not been and will not be registered under
      the Securities Act, and, if in the future the Investors or Millhouse decide
      to
      offer, resell, pledge or otherwise transfer the Shares, such Shares may be
      offered, resold, pledged or otherwise transferred only (A) pursuant to an
      effective registration statement filed under the Act, (B) to non-U.S. persons
      in
      an offshore transaction in accordance with Rule 904 and 905 of Regulation S
      under the Securities Act, or (C) pursuant to an exemption from registration
      under the Act provided by Rule 144. The net proceeds from the Share Sale and
      the
      Millhouse Share Purchase received upon repayment of the promissory notes by
      the
      investors will be used for working capital and general corporate
      purpos es.




**Item
                6.**
            ******Management’s
                Discussion and Analysis or Plan of Operation****.******




**OVERVIEW**




We
      produce and sell premium, super-premium and ultra-premium wines from our
      winemaking operations located outside of Sydney, Australia. Our revenues are
      generated by selling our wines through distributors located both inside and
      outside of Australia pursuant to agreements that generally obligate the
      distributor to use its commercially reasonable efforts to arrange for the
      purchase of our products by retail and wholesale venders of wines in our target
      markets. We recognize revenue upon the shipment of the relevant wine (whether
      bottled or in bulk form) to the purchaser under circumstances that give rise
      to
      a binding obligation on the part of the purchaser to make payment to us.




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




As
      a
      result of the share exchange, Yarraman Australia became our wholly-owned
      subsidiary and Delta Dawn acquired approximately 60% of our issued and
      outstanding stock. Contemporaneously, Yarraman Australia purchased certain
      assets relating to the Yarraman winery operations from Delta Dawn. In connection
      with these transactions, we entered into certain financing arrangements
      described in this Annual Report and began reporting as operating company in
      the
      United States. Due to the effect such transactions had on our financial
      condition and results of operations, the financial statements appearing herein
      for periods prior to such acquisition by reverse merger are not comparable
      in
      all respects to those for periods subsequent to those transactions.




**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.




**Twelve
                Months ended June 30, 2006****2006**
            
            **2005**Revenue
            
            $
            1,830,151
            
            
            100
            %
            $
            2,293,354
            
            
            100
            %Cost
                of Revenue
            
            $
            1,326,478
            
            
            72
            %
            $
            1,397,104
            
            
            61
            %Gross
                Profit
            
            $
            503,673
            
            
            28
            %
            $
            896,250
            
            
            39
            %Other
                Income
            
            
            ($193,659
            )
            
            (11
            %)
            $
            4,171
            
            
            (0
            )%General
                and administrative expenses
            
            $
            1,544,681
            
            
            84
            %
            $
            1,277,719
            
            
            56
            %Income
                before income tax
            
            
            ($1,234,667
            )
            
            (67
            )%
            
            ($377,298
            )
            
            (17
            )%Income
                tax expenses
            
            
            0
            
            
            0
            %
            
            0
            
            
            0
            %**Net
                Income**
            
            
            ($1,234,667
            )
            
            (67
            )%
            
            ($377,298
            )
            
            (17
            )%




14




**TWELVE
      MONTHS ENDED JUNE 30, 2006 COMPARED TO TWELVE MONTHS ENDED JUNE 30,
      2005**




***REVENUE*** **.** Revenue
      was $1,830,151 in the twelve months ended June 30, 2006 compared to $2,293,354
      in the twelve months ended June 30, 2005. The decrease in revenues of $463,203
      or 20.2%, was primarily related to the following items: (1) we had a reduction
      in our export sales of $110,332, or 21%, (2) we made bulk wines sales of
      $232,320 to United Kingdom in 2005 which did not occur in 2006 and (3) we had
      an
      increase in domestic sales of $58,363 or 9.1%. The increase in domestic sales
      we
      attribute to new restaurant, retail and wholesale accounts established during
      the year. The reduction in our export sales has resulted from fewer orders
      from
      the United States (21% decline), Canada (19% decline) and Ireland (58% decline)
      offset by an increase of 91% in sales to Asia. Management believes that sales
      to
      the United States and Canada were down significantly due to poor performance
      by
      our distributors and we are currently working towards improving market
      penetration in the United States by entering into agreements with new
      distributors and revising our product marketing strategies. Total bottled wine
      case sales for year ended June 30, 2006 were 23,434 compared to 19,140 cases
      in
      the same period in 2005. Export sales were 10,170 cases with domestic sales
      of
      13,264.The lower level of sales is a result of our having no bulk wine sales
      in
      2006 compared to 2005.




***COST
      OF REVENUE*** **.** Cost of
      revenue was $1,326,478 in the twelve months ended June 30, 2006 compared to
      $1,397,104 in the twelve months ended June 30, 2005. As a percentage of revenue,
      cost of revenue was 72% in the twelve months ended June 30, 2006 compared to
      61%
      in the twelve months ended June 30, 2005. The increase cost of revenue is
      primarily due to the change in our revenue mix with increased contract
      winemaking revenue which is a high cost, low-margin activity for us. Gross
      profit was $503,673 in the twelve months ended June 30, 2006 compared to
      $896,250 in the twelve months ended June 30, 2005. As a percentage of revenues,
      gross profit decreased to 28% in the twelve months ended June 30, 2006 from
      39%
      in the twelve months ended June 30, 2005 for the reasons discussed
      above.





***OTHER
      INCOME (EXPENSE)*** **.** Other
      income (expense) was $(193,659) in the twelve months ended June 30, 2006
      compared to $4,171 in the twelve months ended June 30, 2005. The increase in
      expense was primarily attributable to an increase of $239,467 in our interest
      expense, expenses relating to the reverse acquisition of $161,734, offset by
      a
      gain of $152,012 on settlement of a debt. The gain on settlement of debt was
      as
      a result of our adjusting the terms of one of our grape processing arrangements
      pursuant to which we had an obligation to provide 108,701 liters of 2005
      vintage, with a value of AU$578,289 (US$432,445), to a customer who hired us
      to
      process fruit it supplied into wine.  We were able to satisfy this
      obligation in full by providing the customer with 108,701 liters of 2004
      vintage, with a value of AU$375,018 (US$280,433).  The difference of
      $152,012 was recognized as a gain on the settlement of a debt because we view
      the obligation as a debt as neither the customer’s wine nor the related fruit is
      carried as part of our inventory.




15




As
      a
      result of the asset purchase agreement with Delta Dawn which closed on December
      22, 2005, we assumed an interest bearing loan which was not present in the
      same
      period the previous year. Interest paid in the twelve month period ended June
      30, 2006 was $241,914. As a percentage of revenue, other income and expense
      increased to (11%) for the twelve months ended June 30, 2006 compared to none
      for the twelve months ended June 30, 2005, the increase is because on the
      reasons discussed above.




***SALES,
      GENERAL AND ADMINISTRATIVE EXPENSES*** **.** Sales,
      general and administrative expenses were $1,544,681 in the twelve months ended
      June 30, 2006 compared to $1,277,719 in the twelve months ended June 30, 2005.
      This is an increase of $279,610, or 21.9% from the 2005 period to the 2006
      period. This
      increase was primarily attributable to an increase of $121,920 in salary and
      wages. Our total sales expenses increased because we hired additional sales
      representatives to assist in development of existing markets and exploration
      into new markets during the twelve months ended June 30, 2006. Sales wages
      increased by $64,014, or 52%. **** Also, **** during
      the twelve months ended June 30, 2006, our officer’s salaries increased as we
      hired new executive management who have experience with managing publicly
      traded, United States domiciled companies. Officers’ salary increased by $39,682
      or 30%.




Depreciation
      and amortization expense associated with fixed assets acquired from the asset
      purchase agreement with Delta Dawn also contributed to the higher sales, general
      and administrative expenses. Our depreciation expenses increased by $118,823,
      or
      122%.  As
      a
      percentage of revenues, sales, general and administrative expenses increased
      to
      84% in the twelve months ended June 30, 2006 from 56% in the twelve months
      ended
      June 30, 2005 due
      to the reasons as discussed above.




***NET
      INCOME (LOSS).*** **** Our
      net **** loss
      was
      $(1,234,667) in the twelve months ended June 30, 2006 compared to a net loss
      of
      $(377,298) in the twelve months ended June 30, 2005. This
      increase in loss was primarily attributable to the lower gross profit achieved
      in the current period due to changes in our product mix combined with the
      increase in sales, general and administrative costs and interest expense as
      outlined above.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      June 30, 2006, we had $110,438 of cash and cash equivalents and $4,537,003
      of
      working capital as compared to $43,723 and $528,236, respectively, at June
      30,
      2005. Cash
      flow
      from operations is expected to increase as a result of our expansion of
      distribution channels, particularly in the United States, and review of our
      market strategy.




We
      have
      entered into loan agreements with Delta Dawn, both of which are expected to
      provide funds to meet our immediate liquidity needs for the next six months..





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





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





In
      August
      2006, we entered into a bridge loan with a related party Whinners Pty Ltd,
      for
      an amount of AU$365,000 at a interest rate of 8.75% to be repaid in full on
      September 30, 2006.




16




Management
      has been exploring options to refinance its long term loan from Provident Bank,
      currently with an outstanding balance of $4,078,921. Any refinancing transaction
      will seek terms that provide a lower interest rate, which management believes
      will further increase the amount cash flow as a result of savings because of
      lower interest payments.




**INFLATION
      AND CHANGING PRICES**




Management
      believes our operations have not been and, in the foreseeable future, will
      not
      be adversely affected by inflation or changing prices .





**Risks
      Factors Related to Our Business.**





In
      addition to the other information in this annual report, the following factors
      should be considered carefully in evaluating the Company’s business and
      prospects. THE FOLLOWING MATTERS, AMONG OTHERS, MAY HAVE A MATERIAL ADVERSE
      EFFECT ON THE BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS
      OR
      PROSPECTS, FINANCIAL OR OTHERWISE, OF THE COMPANY. REFERENCE TO THIS CAUTIONARY
      STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL
      BE
      DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY
      CAUSE
      ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT
      OR STATEMENTS.





We
      are
      subject to, among others, the following risks:





**RISKS
      ASSOCIATED WITH OUR BUSINESS.**




**Our
      business may be adversely effected by competition.**




The
      wine
      industry is highly competitive. Within the wine industry we believe that our
      principal competitors include wineries in the Hunter Valley, Victoria and South
      Australia, which produce premium, super premium and ultra premium wines. Wine
      production in Australia is dominated by large wineries that have significantly
      greater financial, production, distribution and marketing resources than us.
      Currently no Hunter Valley winery dominates the New South Wales wine market.
      Several Hunter Valley wineries, however are older and better established and
      have greater label recognition than we do. We believe that the principal
      competitive factors in the premium, super premium and ultra premium segment
      of
      the wine industry are product quality, price, label recognition and product
      supply. We believe that we compete favorably with respect to each of these
      factors, however larger scale production is necessary to satisfy retailers’ and
      on premise demand.




**An
      inability to respond quickly and effectively to new trends could adversely
      impact our competitive position** .




Any
      failure to maintain the superiority of our winemaking capabilities or to respond
      effectively to market changes in the wine industry could adversely affect our
      ability to retain existing business and secure new business. We will need to
      constantly seek out new products and develop new solutions to maintain in our
      existing quality. If we are unable to keep current with new trends, our
      competitors’ services, technologies or products may render us
      noncompetitive.




**Increases
      in staffing costs could adversely affect our business** .




Our
      business is labor intensive and we are dependent on the provision of services
      by
      highly qualified personnel. These resources are scarce and we may face
      competition for these services which could result in increased expenses for
      the
      business. These labor expenses constitute a significant component of our overall
      cost of doing business and increases in these expenses may adversely impact
      our
      business.




17




**Increases
      in distribution expenses and/or decreases in the effectiveness of our
      distributors could result in higher expenses with no corresponding increase
      in
      revenue.**




Our
      current business model is reliant upon distribution and changes to the costs
      associated with that distribution or a decrease in the effectiveness of those
      distributors could have a significant adverse impact on the revenue and/or
      profitability of our business.




**Increases
      in cost for grapes and other fruit could adversely affect our
      business** .




We
      may
      purchase grapes and fruit from other sources. Significant increases in the
      price
      of grapes or other fruit used to make our wine could increase the overall
      expense of the Company doing business and reduce its profitability.




**We
      are subject to risks associated with joint ventures and third party
      agreements.**




We
      have
      entered into a lease with Delta Dawn Pty Ltd., a related party, to use the
      “Wirrilla Vineyard”, located in the Gundagai region, which totals 1,312 acres
      located in a newly developed wine region in the southwest slopes of New South
      Wales. We pay a monthly fee of approx $35,000 and have all rights to develop
      land and utilize all fruit produced on the land. The lease expires June 30,
      2006
      and we intend to extend the lease with Delta Dawn during the second six months
      of 2006.




In
      addition, in January 2006 we entered into an agreement with Delta Dawn to
      provide consulting services related to the wine industry. Delta Dawn’s role will
      be to assist management in their search for potential strategic relationships
      to
      complement current operations and assist in the growing the
      business.





We
      may
      incur significant costs if issues or disputes arise in relation to those
      arrangements and joint ventures and our future operation, growth and expansion
      is dependent on the success of those arrangements **.**




**We
      may be subject to product liability claims which could negatively impact our
      profitability** .




We
      sell
      alcoholic beverages for consumption, which involves risks such as product
      contamination or spoilage, product tampering and other adulteration of
      products. We may be subject to liability if the consumption of any of our
      products causes injury, illness or death.  A significant product liability
      judgment against us may negatively impact our profitability for a period of
      time
      depending on product availability, competitive reaction and consumer
      attitudes.  Even if a product liability claim is unsuccessful or is not
      fully pursued, any negative publicity surrounding such assertion that products
      provided through our treatment programs caused illness or injury could adversely
      affect our reputation with existing and potential customers and including
      irreparable harm to our corporate and brand image.




**We
      have limited business liability insurance coverage** .




We
      have
      limited business liability insurance coverage for our operations. Any loss
      due
      to business disruption, litigation or natural disaster may exceed or may be
      excluded from the insurance coverage we have and could result in substantial
      expenses and a diversion of resources. We do not have liability insurance to
      cover any operations outside of Australia.




18




**We
      may experience negative results from our plans for
      expansion** .




We
      may,
      in the future, acquire other wineries and vineyards or expand our business
      beyond Australia. Entering into any expansion transaction entails many risks,
      any of which could have a negative impact on our business, including: (a)
      diversion of management’s attention from other business concerns; (b) failure to
      integrate the acquired company with our existing business; (c) additional
      operating expenses not offset by additional revenue; and (d) dilution of our
      stock as a result of issuing equity securities. Any expansion globally also
      entails additional risks relating to operating our business in environments
      with
      different legal and regulatory systems and business customs than those in
      Australia, incurring additional costs in locating and retaining those
      professionals with expertise in these area. There is also the likelihood that
      significant start up costs will be incurred and that it may take time to achieve
      successful market penetration in new markets. We may discover that such expanded
      operations are less profitable than existing operations and that losses may
      be
      incurred.




**We
      may be unable to implement our acquisition or expansion strategy and as a
      result, we may be less successful in the future** .




We
      may
      not be able to identify and acquire companies meeting our acquisition criteria
      on terms acceptable to us. Additionally, financing, if needed, to complete
      acquisitions may not always be available on satisfactory terms. Further, our
      acquisition strategy presents a number of risks to us, including adverse effects
      on our earnings after each acquisition, diversion of management's attention
      from
      our core business, failure to retain key acquired personnel and other risks
      from
      unanticipated events or liabilities arising after each acquisition. Some or
      all
      of these risks could have a material adverse effect on our business, financial
      condition and results of operations.




**We
      may have future capital needs for which we will need to access additional
      financing. Additional financing could dilute our current stockholders’ equity
      interests.**




If
      additional funds are raised through the issuance of equity or debt securities,
      our current stockholders may experience dilution and any such securities may
      have rights, preferences or privileges senior to those of the rights of our
      common stock.




There
      can
      be no assurance that additional financing will be available on terms favorable
      to us, or at all. If adequate funds are not available or not available on
      acceptable terms, we may not be able to fund our expansion, promote our brand
      name as we desire, take advantage of unanticipated acquisition opportunities,
      develop or enhance products or respond to competitive pressures. Any such
      inability could have a material adverse effect on our business, results of
      operations and financial condition.




**We
      may not be able to retain our key management and staff.**




We
      are
      highly dependent on the services of the principal members of our management.
      The
      loss of one or more of such individuals could substantially impair the quality
      of our products and affect our ongoing research and development programs. Our
      success depends in large part upon our ability to attract and retain highly
      qualified personnel. We compete in our hiring efforts with other wineries and
      wine marketing companies and we may have to pay higher salaries to attract
      and
      retain personnel.




**Our
      stock price is highly volatile** .




There
      is
      a significant risk that the market price of our common stock could decrease
      in
      the future in response to any of the following factors, some of which are beyond
      our control:




·
            variations
                in our quarterly operating results;




19




·
            general
                economic slowdowns;




·
            changes
                in market valuations of similar
                companies;




·
            sales
                of large blocks of our common
                stock;




·
            announcements
                by us or our competitors of significant contracts, acquisitions,
                strategic
                partnerships, joint ventures or capital commitments;
                and




·
            fluctuations
                in stock market prices and volumes, which are particularly common
                among
                highly volatile securities of internationally-based
                companies.




**Efforts
      to comply with securities laws and regulations have required substantial
      financial and personnel resources and we still may fail to comply.**




As
      directed by the Sarbanes-Oxley Act of 2002, the Securities and Exchange
      Commission adopted rules requiring public companies to include a report of
      management on the Company’s internal controls over financial reporting in their
      annual reports on Form 10-KSB. In addition, the public accounting firm auditing
      the Company’s financial statements must attest to and report on management’s
      assessment of the effectiveness of the Company’s internal controls over
      financial reporting.




The
      formal process of evaluating our internal controls over financial reporting,
      which has required the devotion of substantial financial and personnel
      resources, is continuing. Given the status of our efforts, coupled with the
      fact
      that guidance from regulatory authorities in the area of internal controls
      continues to evolve, uncertainty exists regarding our ability to comply by
      applicable deadlines.




**We
      are subject to the risks associated with doing business in
      Australia** .




As
      most
      of our current operations are conducted in Australia, the Company is subject
      to
      special considerations and significant risks not typically associated with
      companies operating in North America and Western Europe. These include risks
      associated with, among others, the political, economic and legal environments
      and foreign currency exchange. Our results may be adversely affected by changes
      in the political and social conditions in Australia, and by changes in
      governmental policies with respect to laws and regulations, anti-inflationary
      measures, currency conversion and remittance abroad, and rates and methods
      of
      taxation, among other things.




Yarraman
      Estate Pty Ltd, our wholly-owned subsidiary, is incorporated in Australia.
      All
      of our executive officers and most of our directors are non-residents of the
      United States. Therefore, it may be difficult for an investor, or any other
      person or entity, to enforce a U.S. court judgment based upon the civil
      liability provisions of the U.S. federal securities laws in an Australian court
      against us or any of those persons or to effect service of process upon these
      persons in the United States.




Additionally,
      it may be difficult for an investor, or any other person or entity, to enforce
      civil liabilities under U.S. federal securities laws in original actions
      instituted in Australia. It may be difficult to enforce a judgment in the United
      States against us and most of our officers and directors or to assert U.S.
      securities laws claims in Australia or serve process on most of our officers
      and
      directors.




**We
      may experience an impact of the United States Foreign Corrupt Practices Act
      on
      our business** .




We
      are
      subject to the United States Foreign Corrupt Practices Act, which generally
      prohibits United States companies from engaging in bribery or other prohibited
      payments to foreign officials for the purpose of obtaining or retaining
      business. Foreign companies, including some that may compete with us, are not
      subject to these prohibitions. Compliance with the Foreign Corrupt Practices
      Act
      could adversely impact our competitive position and failure to comply could
      subject us to penalties and other adverse consequences. We have attempted to
      implement safeguards to prevent and discourage non-compliant conduct by our
      employees and agents. We can make no assurance, however, that our employees
      or
      other agents will not engage in such conduct for which we might be held
      responsible. If our employees or other agents are found to have engaged in
      such
      practices, we could suffer severe penalties and other consequences that may
      have
      a material adverse affect on our business, financial condition and results
      of
      operations.




20




**Effects
      of International Sales** .




We
      intend
      to continue to market our current and future products in most major world
      markets. A number of risks are inherent in international transactions. In order
      for us to market our products in the U.S., Europe, Canada, Asia and certain
      other foreign jurisdictions, we may have to obtain required regulatory approvals
      or clearances and otherwise comply with extensive regulations regarding safety,
      manufacturing processes and quality, distribution and advertising rules and
      regulations. There can be no assurance that we will be able to obtain or
      maintain regulatory approvals or clearances in such countries or that it will
      not be required to incur significant costs in obtaining or maintaining its
      foreign regulatory approvals or clearances.




Fluctuations
      in currency exchange rates may adversely affect the demand for our products
      by
      increasing the price of our products in the currency of the countries in which
      the products are marketed.




Our
      consolidated financial statements are presented in Australian and U.S. dollars.
      Fluctuations in the rates of exchange between U.S. dollar and other foreign
      currencies may negatively impact our financial condition and results of
      operations. As we expand our presence into the U.S. and other international
      markets, we expect the percentage of both our revenues and expenditures
      denominated in non-Australian dollars to increase, with particular emphasis
      on
      U.S. dollars. For the foreseeable future, we expect our expenditures to be
      predominantly denominated in Australian dollars, resulting primarily from our
      activities in Australia, and expect capital expenditures to be denominated
      in
      Australian dollars.




**We
      may experience a risk of revenue reduction due to currency
      conversions** .




At
      this
      time, all of our revenue, expenses and capital purchasing activities are
      transacted in Australian Dollars. Capital transactions will always be reported
      based on the current exchange rates, and resulting gains and losses from
      historical rates are charged or credited directly to stockholders’ equity.
      Revenues and expenses will be converted using the weighted-average exchange
      rates for the periods being reported. Any major fluctuation in the average
      exchange rate between the Australian Dollar and the U.S. Dollar during a period
      will affect our results of operations reported as reported in U.S.
      Dollars.




To
      the
      extent future revenue is denominated in foreign currencies, we would be subject
      to increased risks relating to foreign currency exchange rate fluctuations
      that
      could have a material adverse affect on our financial condition and operating
      results. To date, we have not engaged in any hedging transactions in connection
      with our operations.




**We
      may not achieve the widespread brand recognition necessary to succeed outside
      of
      Australia** .




We
      believe it is imperative to our long term success that we obtain meaningful
      market share for our products in international markets. Therefore, we must
      quickly establish recognition of our brands. This will require us to must make
      substantial expenditures on product development, strategic relationships and
      marketing initiatives in new markets. In addition, we must devote significant
      resources to ensure that our customers are provided with a high quality product
      and a high level of customer service. Many of our potential competitors may
      have
      substantially greater financial, marketing and other resources and potentially
      greater access to content and distribution channels than us. We cannot be
      certain that we will have sufficient resources to achieve the early and
      widespread brand recognition we believe necessary to realize commercial
      acceptance of our products.




21




**Regulations
      in international markets relating to alcoholic beverages could adversely affect
      our business.**




Our
      business model is dependent upon the distribution of alcoholic beverages. In
      certain countries, we may be subject to state or national laws governing the
      distribution of alcoholic beverages. We may be required to expend substantial
      unforeseen resources to comply with such regulations. Failure to comply with
      such regulations could cause a significant disruption in our business
      domestically and internationally as it could distract management attention
      and
      have a material adverse effect on our business and financial condition or
      results of operations.




**Inability
      to hire experienced and capable employees or executives or enter into
      distributor agreements in non-Australian markets could adversely affect our
      business in such markets** .




We
      rely
      heavily on the performance of our officers and key employees in Australia as
      well as distributor agreements in foreign markets. Any growth will be dependent
      on our ability to retain and motivate qualified personnel in those markets
      and
      find retail market distributors with a broad base for re-sale of our products
      in
      the market. If we do not succeed in attracting new qualified employees or
      entering into an agreement with a distributor, our business could suffer
      significantly. Competition for qualified personnel is intense in certain
      markets, and we may be unable to identify, attract, hire, train, assimilate,
      or
      retain a sufficient number of highly skilled managerial, marketing and technical
      personnel necessary to implement our business plan. We may not be able to enter
      into distribution agreements in certain markets which could have a significant
      impact on our retail market penetration.




**We
      have a limited operating history.**




The
      Company has received only modest revenues and may experience many of the
      problems, delays, expenses and difficulties commonly encountered by smaller
      companies, many of which are beyond the Company’s control. These include, but
      are not limited to, unanticipated problems related to product development,
      regulatory compliance, manufacturing, marketing, additional costs and
      competition, product obsolescence, as well as problems associated with sales
      or
      operations in foreign countries. There can be no assurance that the Company
      will
      be able to market its products or that products will meet with customer
      acceptance or generate any revenue, or that the Company will ultimately achieve
      profitability. The Company has incurred significant development and marketing
      operating losses to date and there can be no assurance of future revenues or
      profits.




**The
      success of our plan of operation is uncertain.**




The
      Company’s proposed plan of operation and prospects will be largely dependent
      upon the Company’s ability to successfully attract distributors and build brand
      awareness with customers. There can be no assurance that the Company will be
      able to successfully implement its business plan or that unanticipated expenses,
      problems, or difficulties will not occur which would result in material delays
      in its implementation. There are no assurances that the Company will be able
      to
      generate sufficient revenues from sales to distributors to become
      profitable.




**We
      may rely upon our relationships with distributors, alliance partners and
      customers** .




The
      Company believes that to be successful it may need to establish on-going
      partnership/support relationships with certain customers and distributors.
      The
      Company’s reliance on these relationships may involve risks including among
      other things, the risk of bankruptcy of the partner, the inability of such
      partner to undertake necessary financial obligations, possible inconsistent
      business goals or interests or a possible conflict on business decisions or
      positions.




22




**Enforceability
      or claims for civil liability is uncertain** .




The
      majority of the Company’s officers and directors reside outside the United
      States. The Company anticipates that a substantial portion of the assets that
      may be developed or acquired by it will be located outside the United States
      and, as a result, it may not be possible for investors to effect service of
      process within the United States upon the officers or directors, or to enforce
      against the Company’s assets or against such person judgments obtained in United
      States courts predicated upon the liability provisions, and most particularly
      the civil liability provisions, of the United States securities laws or state
      corporation or other law.




**We
      may have risks due to our foreign operations and dependence on foreign sales
      representatives** .




As
      a
      substantial portion of the Company’s operation will be subject to various
      factors characteristic of conducting business outside the United States, such
      as
      import duties, trade restrictions, work stoppages, foreign currency
      fluctuations, export controls or license requirements, political or economic
      instability, impositions of government controls and other factors, any or all
      of
      which could have a material adverse effect on the business of the Company.
      Agreements may also be more difficult to enforce and receivables more difficult
      to collect through a foreign country’s legal or currency expatriation systems.
      In addition, the laws of certain countries relating to proprietary rights do
      not
      protect the Company’s products and intellectual property rights to the same
      extent as do the laws of the United States and Australia.




**We
      may experience risks relating to our growth and expansion** .




Growth
      of
      the Company’s business may place significant pressures on the Company’s
      management, operation and technical resources. The Company believes that for
      competitive reasons, it is important to obtain a customer base as early as
      possible and accordingly, the failure to expand operations in the early years
      of
      the Company’s business may hinder or preclude significant future growth. If the
      Company is successful in obtaining customers for its products, the Company
      may
      be required to raise substantial additional funds and deliver large volumes
      of
      products to its customers on a timely basis at a reasonable cost to the Company.
      The Company may be required to obtain additional financing in order to pursue
      additional business opportunities. The Company’s success will also depend in
      part upon its ability to provide customers with timely service and support.
      The
      Company will also be required to develop and improve operational, management
      and
      financial systems and control. Failure to manage growth would have a material
      adverse effect on the business of the Company and expenses arising from Company
      activities to increase market penetration and support growth may have a negative
      impact on operating results.




**Item
                7.**
            **Financial
                Statements****.**




Our
      consolidated financial statements and the notes thereto begin on page F-1 of
      this Annual Report on Form 10-KSB.




**Item
                8.**
            **Changes
                In and Disagreements with Accountants on Accounting and Financial
                Disclosure****.**





Not
      Applicable.


23
  **Item
                  8A.**
              **Controls
                  and Procedures.**


Evaluation
      of Disclosure on Controls and Procedures .





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





Changes
      in Internal Control Over Financial Reporting .




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




**Item
                8B.**
            **Other
                Information**.****




None.




24




**PART
      III**




**Item
                  9.**
              **Directors,
                  Executive Officers,
                  Promoters and Control Persons; Compliance With Section 16(a) of
                  the
                  Exchange Act.**


Since
      June 30, 2006, and as of the date hereof our directors and executive officers
      are as follows:





**Name**
            **Age**
            **Position**Wayne
                Rockall
            50
            Chief
                Executive Officer and PresidentJohn
                Laurence Wells
            52
            Chief
                Financial Officer and SecretaryWilliam
                J. Stubbs
            66
            DirectorWilliam
                Bernard Middleton
            65
            DirectorJohn
                J. Moroney
            51
            DirectorFrank
                Starr
            52
            DirectorBrian
                Johnston
            61
            DirectorAndrew
                Lyon
            49
            Former
                Chief Executive Officer and
                President




**Wayne
      Rockall** ,
      age 50,
      Chief Executive Officer and President. Mr. Rockall has been serving as Chief
      Executive Officer and President of the Company since September 1, 2006. Mr
      Rockall has been employed from 2004 to 2006 as Sales Director for Swift + Moore
      Pty Ltd, a subsidiary of Brown-Forman Corp., with annual sales of approximately
      AU$250 million. At Swift + Moore, he managed a sales and marketing staff of
      more
      than 140 people. Prior to Swift + Moore, he was General Manager, Australasia
      Regional Director of SOLA Optical, an NYSE-listed designer and manufacturer
      of
      ophthalmic lenses, from 1999 to 2004. Mr. Rockall is a graduate of Macquarie
      University, Sydney with a bachelors of arts degree. He also holds a diploma
      of
      marketing from Ku Ring Gai College (UTS).





**John
      Laurence Wells** ,
      age 52,
      Chief Financial Officer and Secretary. Mr. Wells has been the Chief Financial
      Officer of Yarraman Australia since March 2005. From March 2003 through April
      2005, Mr. Wells held the position of Chief Financial Officer and Secretary
      of
      Waratah Engineering Pty Ltd. From July 2001 through February 2003, Mr. Wells
      was
      the Manager of Finance and Administration for Brokenwood Wines Pty Ltd. He
      also
      served as Chief Financial Officer and Secretary of Jeffrey Mining Products
      Pty
      Ltd., an Australian subsidiary of Jeffrey Mining Products LP, from March 1982
      until March 2001. In addition to his full-time employment, Mr. Wells has held
      the position of Corporate Secretary for a number of corporations over the last
      twenty years. Mr. Wells has a Bachelor of Commerce Degree from University of
      Newcastle, Australia which was obtained in 1977. Mr. Wells is an associate
      of
      the Australian Society of Certified Practicing Accountants.





**William
      J. Stubbs** ,
      age 66,
      Director. Mr. Stubbs is currently self-employed as an independent business
      consultant, his sole occupation since May 31, 2003. Prior to his independent
      consulting business, Mr. Stubbs served as a consultant to and the Chief
      Financial Officer of AHF Capital Management Pty Limited from February 2001.
      From
      January 31, 1994 through December 15, 2000, Mr. Stubbs served as the Chief
      Financial Officer for Independent Print Media Group Pty Limited (formerly the
      Hannan Group), where he was also a member of the audit committee. Mr. Stubbs
      has
      experience in tax and finance, as well as a background in accounting. He is
      a
      registered tax agent in Australia and is a former fellow of the Institute of
      Company Directors, a fellow in the Australian Society of Certified Practising
      Accountants. Mr. Stubbs is also a Justice of the Peace of New South Wales,
      Australia. Mr. Stubbs holds an accounting degree from the Sydney Technical
      College in Sydney, Australia which he earned in 1962.




25




**William
      Bernard Middleton** ,
      age 65,
      Director. Mr. Middleton has served as President and Chief Executive Officer
      of
      Corporate Capital Group, Inc. since July 1988, an investment bank with offices
      in New York; Sydney, Australia; and Auckland, New Zealand; involved in
      international mergers and acquisitions. He was Managing Director and Chief
      Executive of Advanced Systems Research, a high technology wireless research
      company in Sydney, Australia, from September 1987 until June 1988. He was
      President and Chief Executive Officer of Arthur Young Business Systems, a
      computer software developer with offices in New York and Sydney, Australia,
      from
      November 1980 until March 1987. He was Managing Director and Chief Executive
      Officer of Foundation Computer Systems in Sydney, Australia, a company involved
      in developing and marketing computer solutions for pharmacies throughout
      Australia, from January 1977 until October 1980. He was a National Divisional
      Manager with Xerox Australia, from April 1971 until November 1976. He was
      Production Manager then Sales Manager of Permail in Sydney, Australia, a company
      involved in providing marketing services to the pharmaceutical industry from
      January 1967 until March 1971. He was an officer in the New Zealand Regular
      Army
      from December 1961 until he resigned his commission with the rank of Captain
      in
      December 1966. Mr. Middleton is a Mechanical Engineering graduate of The Royal
      Military College of Australia at Duntroon in Canberra, Australia, where he
      attended from January 1958 until December 1961.





**John
      J. Moroney** ,
      age 51,
      Director. Mr. Moroney is the President, Chief Executive Officer and a Director
      of Juvent, Inc., a company specializing in drug-free therapy for the prevention
      and treatment of osteoporosis. Mr. Moroney also serves as the President of
      Landmark Financial Corporation, which he founded in 1983 to provide corporate
      finance advisory services to emerging life sciences companies, specializing
      in
      capital raising, mergers and acquisitions, and product licensing work. Between
      1985 and 1991, Landmark was involved in an exclusive arrangement with Ladenburg,
      Thalmann & Co., one of the oldest investment banks in New York, to
      capitalize on emerging opportunities in the healthcare market, where Mr. Moroney
      served as a Managing Director. In 1991, Mr. Moroney became a co-founder and
      Chairman of Flemington Pharmaceutical Corporation, a publicly held
      development-stage drug delivery company (now NovaDel Pharmaceuticals; AMEX:
      NVD). Prior to founding Landmark, Mr. Moroney spent ten years in commercial
      banking with Citibank, United Jersey Bank, and Midlantic Bank. Mr. Moroney
      holds
      B.S. and M.B.A. degrees from Fordham University.





**Frank
      Starr** ,
      age 52,
      Director. Mr. Starr is the President and CEO of Axonn Chartered Accountants
      a
      chartered accounting and advisory firm, specializing in agricultural businesses,
      a position held since 1983. Prior to 1983 Mr. Starr was a manager with Ernst
      & Young for five years. Mr. Starr holds Master of Commerce and Bachelor of
      Commerce degrees obtained from the University of New South Wales in Sydney,
      Australia.





**Brian
      Johnston** ,
      age 61,
      Director. Retired since December 2005, Mr. Johnston had served as the Managing
      Director of Allied Domecq NZ (Montana Wines), a position held since March 2004.
      Prior to that he held the position of Director of Global Operations of Allied
      Domecq for a period of eighteen months. Between 1988 and May 2001, he held
      the
      position of Executive General Manager Operations reporting to Group Chief
      Executive of Southcorp Ltd. Wine Division in Adelaide. Before joining Southcorp,
      Mr. Johnston was the Operations Director for Nabisco Brands Pty Ltd, a position
      he held from 1984 to 1988 which followed a promotion from Production Manager
      of
      Nabisco Brands Pty Ltd, a position held from 1977 to 1984. Mr. Johnston holds
      a
      Degree of Veterinary Science from Edinburgh University.




26




**Andrew
      Lyon** ,
      age 49,
      Former Chief Executive Officer and President. Mr. Lyon
      joined as Chief Executive Officer of Yarraman Australia in August 2005 and
      resigned as Chief Executive Officer and President of the Company effective
      September 1, 2006. He has 20 years of executive experience with both private
      and
      public companies internationally. His experience with agricultural businesses
      began in 1979 in Zimbabwe and South Africa. From 1996 to 2001 he was Managing
      Director of his family business, C W Lyon Pty Ltd an agri-business specializing
      in large volume horticultural exports from Africa to Europe, USA and Australia.
      He served as Chief Executive Officer of the multi-national Wormald International
      in the Pacific region from 1987 to 1995. From 2002 to 2005 he consulted to
      a
      number of private companies in Australia in change management and restructuring
      including export strategies and development including wineries and wine retail.
      He is a business studies graduate from the University of Western Australia
      GSM.





There
      have been no transactions to which the Registrant or any of its subsidiaries
      was
      or is to be a party, in which any of the directors or officers had, or will
      have
      a direct or indirect material interest.





All
      directors hold office until the next annual stockholders’ meeting or until their
      death, resignation, retirement, removal, disqualification, or until their
      successors have been elected and are qualified. Our officers serve at the will
      of the Board of Directors.





Compliance
      With Section 16(a) of Exchange Act




Based
      on
      our review of copies of Forms 3, 4 and 5 filed with the SEC or written
      representations from certain reporting persons, we believe that during fiscal
      year ended June 30, 2006, all officers, directors, and greater than ten-percent
      beneficial owners timely complied with the applicable filing requirements of
      Section 16(a) of the Securities Exchange Act of 1934.





Code
      of Ethics




On
      February 3, 2006, we adopted a code of ethics that applies to our officers,
      employees and directors, including our Chief Executive Officer (principal
      executive officer) and Chief Financial Officer (principal financial and
      accounting officer), and other persons who perform similar functions. A copy
      of
      our Code of Ethics is filed as Exhibit 14.1 hereto. Our Code of Ethics is
      intended to be a codification of the business and ethical principles which
      guide
      us, and to deter wrongdoing, to promote honest and ethical conduct, to avoid
      conflicts of interest, and to foster full, fair, accurate, timely and
      understandable disclosures, compliance with applicable governmental laws, rules
      and regulations, the prompt internal reporting of violations and accountability
      for adherence to this Code.




Audit
      Committee




The
      Board
      of Directors has adopted an Audit Committee Charter. The Board of Directors
      had
      appointed each of Frank Starr, John Moroney and William Stubbs to the Audit
      Committee. Each of Frank Starr, John Moroney and William Stubbs meets the
      independence requirements and standards currently established by the SEC. The
      Board of Directors has designated William Stubbs to serve on the Audit Committee
      member as Chairman and "audit committee financial expert" within the meaning
      of
      the rules and regulations of the SEC.




The
      Audit
      Committee assists the Board by overseeing the performance of the independent
      auditors and the quality and integrity of our internal accounting, auditing
      and
      financial reporting practices. The Audit Committee is responsible for retaining
      (subject to stockholder ratification) and, as necessary, terminating, the
      independent auditors, annually reviews the qualifications, performance and
      independence of the independent auditors and the audit plan, fees and audit
      results, and pre-approves audit and non-audit services to be performed by the
      auditors and related fees.




27




**Item
                  10.**
              ****Executive
                  Compensation.****


The
      following tables reflects the cash compensation we paid, as well as certain
      other compensation paid or accrued, during each of our last three fiscal years
      to the identified persons (the “Named Executive Officers”).




**SUMMARY
      COMPENSATION TABLE**




**Long-term
                Compensation****Annual
                Compensation (1)**
            
            **Awards****Name**
              **and**
              **principal**
              **position**
            
            **Year**
            
            **Salary**
              
              **($)**
            
            **Bonus**
              
              **($)**
            
            **Other
                Annual Compensation**
              **($)
                (1)**
            
            **Restricted**
              **Stock**
              **Award(s)**
              
              **($)**
            
            **Securities**
              **Underlying**
              **Options/SARs**
              
              **(#)**
            
            **Long-Term**
              **Incentive**
              **Plan
                Payouts**
              
              **($)**
            
            **All
                Other**
              **Compensation**
              **($)
                (2)**Wayne
              Rockall,
              CEO
                (2)
            
            2006
            
            0
            
            0
            
            0
            
            -0-
            
            -
            
            
            
            $0Andrew
              Lyon,
              CEO
                (3)
            
            2006
            
            51,455(4)
            
            $0
            
            10,239
            
            -0-
            
            -
            
            
            
            $02005
            
            -0-
            
            $0
            
            
            
            -0-
            
            -
            
            
            
            $02004
            
            -0-
            
            $0
            
            
            
            -0-
            
            -
            
            
            
            $0John
              Wells,
              CFO(5)
            
            2006
            
            56,087
            
            $0
            
            8,787
            
            -0-
            
            -
            
            
            
            $02005
            
            0-
            
            $0
            
            0
            
            -0-
            
            -
            
            
            
            $02004
            
            -0-
            
            $0
            
            
            
            -0-
            
            -
            
            
            
            $0




(1) We
      have
      concluded that the aggregate amounts of perquisites and other personal benefits
      paid to the named individuals do not exceed the lesser of $50,000 or 10% of
      the
      compensation reported in the table for such individuals.




(2) Mr.
      Rockall assumed the position of Chief Executive Officer on September 1, 2006
      and
      did not collect any compensation during the 2006 fiscal year, his compensation
      arrangement is described below under the section entitled “Employment
      Contracts.”




(3) Mr.
      Lyon
      assumed the position of Chief Executive Officer on December 22, 2005. He
      resigned as Chief Executive Officer effective September 1, 2006.




(4) Prior
      to his
      appointment as Chief Executive Officer, Mr. Lyon received $41,944 in
      compensation for his work as a consultant during the 2006 fiscal
      year.




(5) Mr.
      Wells
      assumed the position of Chief Financial Officer on December 22,
      2005.




28




**OPTION/SAR
      GRANTS DURING 2006 FISCAL YEAR (INDIVIDUAL GRANTS)**




**Individual
                    Grants****Name**
                **Number
                    of Securities Underlying Options Granted**
                **Percent
                    of Total Options Granted to Employees in Fiscal
                    Year**
                **Exercise
                    or Base Price**
                **Expiration
                    Date**Wayne
                    Rockall, CEO
                0
                0
                0
                N/AAndrew
                    Lyon, CEO
                0
                0
                0
                N/AJohn
                    Wells, CFO
                0
                0
                0
                N/A





**AGGREGATED
      OPTION/SAR EXERCISES DURING 2006 FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
      VALUES**




**Name**
            
            **Shares**
              **Acquired**
              **on**
              **Exercise**
              **(#)**
            
            **Value**
              **Realized**
              **($)**
            
            **Number
                of Securities**
              **Underlying
                Unexercised**
              **Options/SARs
                At Fiscal**
              **Year-End
                (#)**
              **Exercisable/Unexercisable**
            
            **Value
                of Unexercised In-**
              **The-Money
                Options/SARs**
              **At
                Fiscal Year-End ($)**
              **Exercisable/Unexercisable**Exercisable
            
            Unexercisable
            
            Exercisable
            
            UnexercisableWayne
                Rockall, CEO
            
            0
            
            -
            
            -
            
            -
            
            -
            
            -Andrew
                Lyon, CEO
            
            0
            
            -
            
            -
            
            -
            
            -
            
            -John
                Wells, CFO
            
            0
            
            -
            
            -
            
            -
            
            -
            
            -




29




**COMPENSATION
      COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION**




The
      Board
      of Directors has a Compensation Committee that makes recommendations to the
      Board of Directors concerning salaries and incentive compensation for our
      officers, including our Chief Executive Officer, Chief Financial Officer and
      employees. Our Compensation Committee consists of Frank Starr, Brian Johnston
      and William Stubbs. The Board of Directors has designated Frank Starr to serve
      on the Compensation Committee member as Chairman. Each of the members of the
      Committee is independent and none have served as an officer or employee of
      the
      Company.




None
      of
      the members of the Compensation Committee have any relationship with the Company
      or any of its officers of employees other than in connection with their role
      as
      a director. None of the members of the Compensation Committee have participated
      in any related party transactions with the Company since the beginning of the
      Company’s last fiscal year.




**EMPLOYMENT
      CONTRACTS**




Yarraman
      has entered into an employment agreement with Mr. Rockall that provides for
      his
      total annual compensation for serving as a Chief Executive Officer and President
      to be AU$200,000. Mr. Rockall will also be entitled to bonus of up to 100%
      of
      base salary on achieving key budget and performance criteria and when Yarraman
      finalized a stock option plan, he will be granted 250,000 stock options in
      the
      Company, the vesting of which will be based on achieving agreed performance
      criteria.




Yarraman
      had an employment agreement with Mr. Andy Lyon that provided for total annual
      compensation for serving as Chief Executive Officer and President to be
      AU$150,000.




Yarraman
      has an employment agreement with Mr. John Wells that provides for his total
      annual compensation to be AU$85,000 plus a motor vehicle allowance of AU$10,000
      for serving as Chief Financial Officer.




**COMPENSATION
      OF DIRECTORS**





Members
      of the Board Directors are to each receive fees in the sum of AU$20,000 per
      year, with a wine allowance to the value of AU$5,000 and accommodation
      entitlements at Yarraman Estate in the Upper Hunter Valley, Australia. The
      Board
      of Directors resolved that these fees were based on each Director attending
      and
      preparing for no fewer than four Board meetings per year and in addition
      providing additional assistance to the Company as required.





Bill
      Stubbs is paid an additional fee of AU$5,000 in recognition of his role and
      responsibilities as Chairman of the Board of Directors of the
      Company.




**Item
                11.**
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.




The
      following table sets forth, as of September 20, 2006, certain information
      concerning the beneficial ownership of our Common Stock by (i) each stockholder
      known by us to own beneficially five percent or more of our outstanding common
      stock; (ii) each director; (iii) each executive officer; and (iv) all of our
      executive officers and directors as a group, and their percentage ownership
      and
      voting power.




30





**Title
                of Class**
            **Name
                and Address of**
              **Beneficial
                Owner**
            **Shares
                Beneficially**
              **Owned
                (1)**
            **Percent
                of Class**Common
                Stock, $.001 par value
            Delta
                Dawn Pty Ltd., as trustee for the Yarraman Road Trust (2)
            15,000,000(3)
            60.0%Common
                Stock, $.001 par value
            Huntleigh
                Investment Fund Limited
              49
                Micoud Street
              Castries,
                St. Lucia
            4,880,556
                (4)
            19.52%Common
                Stock, $.001 par value
            Wayne
                Rockall, Chief Executive Officer and President (2)(5)
            0
            *Common
                Stock, $.001 par value
            Andrew
                Lyon, Chief Executive Officer and President (2)(5)
            0
            *Common
                Stock, $.001 par value
            John
                Laurence Wells, Chief Financial Officer (2)
            0
            *Common
                Stock, $.001 par value
            William
                J. Stubbs, Director
              58
                Terry Road
              Box
                Hill, New South Wales 2765 Australia
            0
            *Common
                Stock, $.001 par value
            William
                Middleton, Director
              c/o
                Corporate Capital Group, Inc.
              954
                Lexington Avenue, Suite 242
              New
                York, New York 10021
            0
            *Common
                Stock, $.001 par value
            John
                J. Moroney, Director
              39
                Worthington Ave.
              Spring
                Lake, New Jersey 07762
            0
            *Common
                Stock, $.001 par value
            Frank
                Michael Starr, Director
              Unit
                8, 28 Black Street
              Yarralumla
                ACT 2600
              Australia
            0
            *Common
                Stock, $.001 par value
            Robert
                Brian Johnston, Director
              The
                Dee, Gully Road,
              Carey
                Gully SA 5144
              Australia
            0
            *Common
                Stock, $.001 par value
            Total
                Held by Directors and Executive Officers (seven
                individuals)
            0
            *




_______


(1) Unless
      otherwise noted, the Registrant believes that all persons named in the table
      have sole voting and investment power with respect to all shares of the Common
      Stock beneficially owned by them. A person is deemed to be the beneficial owner
      of securities which may be acquired by such person within sixty (60) days from
      the date indicated above upon the exercise of options, warrants or convertible
      securities. Each beneficial owner’s percentage of ownership is determined by
      assuming that options, warrants or convertible securities that are held by
      such
      person (not those held by any other person) and which are exercisable within
      sixty (60) days of the date indicated above, have been exercised. To date,
      the
      Registrant has not granted any options, warrants or any other form of securities
      convertible into its common stock.




(2) The
      address of the beneficial owner is c/o Yarraman Estate, 700 Yarraman Road,
      Wybong, Upper Hunter, New South Wales, 2333 Australia.




31




(3) Delta
      Dawn Pty Ltd. is trustee of Yarraman Road Trust, an Australian unit trust
      created by a declaration of trust contained in a deed poll dated September
      26,
      2002. Interests in the trust property are evidenced by the issuance of units
      to
      the trust beneficiaries, with each unitholder entitled to the benefit of the
      assets of the Trust in the proportion in which they are registered as holding
      units from time to time. While the unitholders do not have the ability to direct
      the disposition and the voting of securities of the Registrant held in the
      name
      of Delta Dawn Pty Ltd as trust property, they may be deemed to beneficially
      own
      the securities as a result of their rights under the Trust documents. All
      unitholders have disclaimed any beneficial ownership that may be imposed due
      to
      interpretations of unitholders’ ownership of the trust property.




(4) Based
      on
      information reported by Hunteigh Investment Fund Limited on an amendment to
      Schedule 13G dated April 28, 2006.




(5) Mr.
      Lyon
      assumed the positions of Chief Executive Officer and President on December
      22,
      2005. He resigned as Chief Executive Officer and President effective September
      1, 2006. Mr. Rockall assumed the positions of Chief Executive Officer and
      President on September 1, 2006.




*
      Less
      than one percent.





Equity
      Compensation Plan Information




We
      do not
      have any equity compensation plans.




**Item
                12.**
            Certain
                Relationships and Related Transactions.




Since
      our
      inception as a public company, certain members of the Board of Directors,
      shareholders and general management have made loans to Yarraman Australia to
      cover certain ordinary business expenses.




We
      entered into various related party transactions with Yarraman Road Trust,
      various unit holders of Yarraman Road Trust, related entities of unit holders
      of
      Yarraman Road Trust and officers of the Company.




Yarraman
      Australia leased approximately 200 acres of vineyards and related plant and
      equipment from its former parent, the Yarraman Road Trust. Terms of the
      agreement included annual payment of AUD $285,000 plus GST of AU$28,500,
      approximately US $239,000. The lease began on July 1, 2003 and terminated on
      December 22, 2005 when we purchased the vineyard and related plant and
      equipment.




We
      also
      pay The Yarraman Road Trust approximately $35,000 per month for the use of
      additional vineyard land also located in Australia. On January 1, 2006 we
      entered into an agreement to lease this land for AU$43,750 plus GST
      (approximately US$35,000) per month. The term of the lease was until June 30,
      2006 and during this period we paid an amount of AU$263,515.




Yarraman
      Australia has received loans from the Yarraman Road Trust (its former parent)
      to
      fund operations and purchase assets. The balance of this loan was AU$2,946,649
      as at June 30, 2006.




In
      August
      we entered into a loan agreement with Whinners Pty Ltd. To borrow up to
      AU$500,000, with interest payable at 8.75%, due on September 30 th 2006.




32




Stockholders
      and Directors of the Company and of Yarraman Road Trust were provided wine
      during the year ended June 30, 2006 valued at AU$34,578.




The
      Company paid consulting fees to one of the Unit Holders of its Parent in the
      amount of approximately AU$110,000 during the twelve months ended June 30,
      2006.




On
      January 1, 2006 we entered into a consulting agreement with Delta Dawn Pty.,
      Ltd
      as Trustee for the Yarraman Road Trust to provide business consulting services
      related to the wine industry for a term of two years or until such time as
      its
      ownership percentage in our Company is reduced to less then 15%. We agreed
      to
      pay AU$100,000 plus GST (approximately US$78,000) annually. The Company also
      had
      a liability to this company related to the consulting fee of AU$12,319 as of
      June 30, 2006.




During
      the twelve months ended June 30, 2006 we included in its revenue fees for wine
      making and storage of wine of approximately $444,235 to a company in which
      we
      have a joint venture agreement.




During
      the same period we also included in our costs of operation an amount of
      AU$159,226 resulting from the joint venture. Offsetting the costs was a gain
      of
      AU$203,271 resulting from our adjusting the terms of one of our grape processing
      arrangements in which we had an obligation to provide 108,701 liters of 2005
      vintage, which we settled by providing 2004 vintage.





In
      January 2004 Yarraman Australia entered into a Grape Processing Arrangement
      with
      two other Australian corporations for the 2004 harvest. The terms of the
      arrangement required Yarraman Australia to process the grape harvest provided
      by
      the other entities into bulk wine and provide safe storage. The agreement
      stipulates that for this service we would receive fifty percent (50%) of the
      proceeds of the sale of the bulk wine or finished wine. We also had the right
      to
      receive up to fifty percent (50%) of the bulk wine for consideration of our
      services.





Yarraman
      Australia also entered into a Grape Processing Arrangement with the same entity
      as above for the 2005 harvest. The agreement terms were the same except that
      we
      were to receive forty five percent of the proceeds from the sale of the finished
      bulk wine or the option of receiving 45% of the actual bulk wine inventory.
      We
      agreed to receive 45% of the bulk wine inventory.







The
      Company’s assets are also pledged as collateral for indebtedness of Yarraman
      Australia’s prior parent, the Yarraman Road Trust. As of June 30, 2006 the
      outstanding balance on this debt was approximately AU$5,090,735.






**Item
                13.**
            Exhibits.







**Exhibit**
              **Number**
            **Description**2.1
            Share
                Exchange Agreement, dated December 22, 2005 (incorporated herewith
                by
                reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current Report on Form
                8-K dated December 22, 2005 and filed with the Securities and Exchange
                Commission on December 22, 2005).




33




3.1
            Certificate
                of Incorporation of Yarraman Winery, Inc. (incorporated herewith
                by
                reference to Exhibit 3.1 to Yarraman Winery, Inc.’s Registration Statement
                on Form 10-SB filed with the Securities and Exchange Commission on
                January
                12, 2002) as amended by Certificate of Amendment to Certificate of
                Incorporation dated (incorporated herewith by reference to Appendix
                A of
                Yarraman Winery, Inc’s Definitive Information Statement on Schedule 14C
                filed with the Securities and Exchange Commission March 16,
                2006).3.2
            Amended
                and Restated By-laws of Yarraman Winery, Inc. (incorporated herewith
                by
                reference to Exhibit A to Appendix B of Yarraman Winery, Inc’s Definitive
                Information Statement on Schedule 14C filed with the Securities and
                Exchange Commission March 16, 2006).10.1
            Stock
                Purchase Agreement dated as of December 22, 2005 (incorporated herewith
                by
                reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current Report on Form
                8-K dated December 22, 2005 and filed with the Securities and Exchange
                Commission on December 22, 2005).10.2
            Promissory
                Note dated as of December 22, 2005 from Oriental Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.3
            Promissory
                Note dated as of December 22, 2005 from Glenealy Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.4
            Promissory
                Note dated as of December 22, 2005 from Leeds Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.5
            Promissory
                Note dated as of December 22, 2005 from Sunvalley Limited (incorporated
                herewith by reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current
                Report on Form 8-K dated December 22, 2005 and filed with the Securities
                and Exchange Commission on December 22, 2005).10.6
            Promissory
                Note dated as of December 22, 2005 from Dragon Enterprises Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.7
            Lease
                Agreement dated May 12, 2006 between Yarraman Estate Pty Ltd and
                Delta
                Dawn Pty Limited (incorporated herewith by reference to Exhibit 10.1
                to
                Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.8
            Heads
                of Agreement dated March 24, 2006 between Yarraman Estate Pty Ltd.
                and
                World Icon International Limited (incorporated herewith by reference
                to
                Exhibit 10.2 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB
                for the period ended March 31, 2006 and filed with the Securities
                and
                Exchange Commission on May 15, 2006).10.9
            Agreement
                for Services dated February 24, 2006 between Madison One Data Group
                Limited and Yarraman Winery, Inc. (incorporated herewith by reference
                to
                Exhibit 10.3 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB
                for the period ended March 31, 2006 and filed with the Securities
                and
                Exchange Commission on May 15, 2006).10.10
            Consulting
                Agreement dated as of January 1, 2006 between Yarraman Estate Pty
                Ltd and
                Delta Dawn Pty Limited (incorporated herewith by reference to Exhibit
                10.4
                to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).




34




10.11
            Loan
                Agreement dated December 21, 2005 between Yarraman Estate Pty Ltd
                and
                Delta Dawn Pty Limited (incorporated herewith by reference to Exhibit
                10.5
                to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.12
            Loan
                Agreement dated May 1, 2006 between Yarraman Estate Pty Ltd and Delta
                Dawn
                Pty Limited (incorporated herewith by reference to Exhibit 10.6 to
                Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.13
            Loan
                Agreement dated August 1, 2006 between Yarraman Winery Inc. and Whinners
                Pty Ltd, filed herewith.14.1
            Code
                of Ethics, filed herewith.31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of
                the
                Securities Exchange Act of 1934, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed herewith.31.2
            Certification
                of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002, filed herewith.32.1
            Certification
                of Chief Executive Officer and the Principal Financial Officer Pursuant
                to
                18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), filed
                herewith.




**Item
                14.**
            **Principal
                Accountant Fees and Services****.**





The
      firm
      of Kabani & Company, Inc. has served as our independent auditors since April
      3, 2006 when it replaced Lichter, Yu & Associates. The Board of Directors
      has appointed Kabani & Company, Inc. to continue as our independent auditors
      for the fiscal year ending June 30, 2006.





Audit
      Fees were for professional services rendered for the audit of the Company’s
      annual financial statements, the review of quarterly financial statements,
      and
      the preparation of statutory and regulatory filings. Audit-Related Fees relate
      to professional services rendered in connection with employee benefit plan
      audits, accounting consultations, due diligence and audits in connection with
      acquisitions. Tax fees consist of fees billed for professional services for
      tax
      compliance, tax planning and tax advice. These services include assistance
      regarding federal, state and international tax compliance and planning, tax
      audit defense, and mergers and acquisitions. All other fees consist of
      shareholder meeting attendance and printing services. The Audit Committee
      considered and determined that the provision of non-audit services provided
      by
      Kabani & Company, Inc. is compatible with maintaining the firm’s
      independence.




35




**AUDIT
      FEES FOR FISCAL YEAR ENDED JUNE 30, 2006**




Audit
      fees consist of fees billed for professional services rendered for the audit
      of
      our financial statements and the review or audit of the interim statements.
      The
      total fees billed for Lichter, Yu & Associates for the fiscal year ended
      June 30, 2006 was $29,137 and applicable for the fiscal year ended December
      31,
      2005 was $20,000.




The
      total
      fees billed for Kabani & Company, Inc. for the fiscal year ended June 30,
      2006 was $49,500.




**AUDIT
      RELATED FEES FOR FISCAL YEAR ENDED JUNE 30, 2006**




Audit
      fees consist of fees billed for professional services rendered for the audit
      of
      our financial statements and the review or audit of the interim statements.




The
      total
      fees billed for Lichter, Yu & Associates for the fiscal year ended June 30,
      2006 was $29,137 and applicable for the fiscal year ended December 31, 2005
      was
      $20,000.




The
      total
      fees billed for Kabani & Company, Inc. for the fiscal year ended June 30,
      2006 was $49,500.




**TAX
      FEES FOR FISCAL YEAR ENDED JUNE 30, 2006**




The
      total
      fees billed for Lichter, Yu & Associates for the fiscal year ended June 30,
      2006 was $0 and applicable for the fiscal year ended December 31, 2005 was
      $0.




The
      total
      fees billed for Kabani & Company, Inc. for the fiscal year ended June 30,
      2006 was $0.




**ALL
      OTHER FEES FOR FISCAL YEAR ENDED JUNE 30, 2006**




The
      total
      fees billed for Lichter, Yu & Associates for the fiscal year ended June 30,
      2006 was $0 and applicable for the fiscal year ended December 31, 2005 was
      $0.




The
      total
      fees billed for Kabani & Company, Inc. for the fiscal year ended June 30,
      2006 was $0.




Pre-Approval
      of Services .




The
      Audit
      Committee pre-approves all services, including audit services, provided by
      our
      independent accountants. For audit services, the independent auditor provides
      the board with an engagement letter outlining the scope of the audit services
      proposed to be performed during the year, which must be formally accepted by
      the
      board before the audit commences.




36




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.




YARRAMAN
              WINERY,
              INC.Date:
                September 27, 2006
            By:
            /s/ Wayne RockallWayne
                Rockall
              Chief
                Executive Officer and President




In
      accordance with Section 13 or 15(d) of the Exchange Act, this report has been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.


Date:
                  September 27, 2006
              By:
              /s/
                Wayne RockallWayne
                  Rockall
                Chief
                  Executive Officer and President
 Date:
                      September 27, 2006
                  By:
                  /s/
                    John
                    WellsJohn
                        Wells
                      Chief
                        Financial Officer and Secretary
 Date:
                        September 27, 2006
                    By:
                    /s/
                      William J. StubbsWilliam
                          J. Stubbs
                        Chairman
                          of the Board of Directors
 Date:
                          September 27, 2006
                      By:
                      /s/ William MiddletonWilliam
                            Middleton
                          Director
 Date:
                            September 27, 2006
                        By:
                        /s/
                          John
                          J. MoroneyJohn
                              J. Moroney
                            Director
 Date:
                                September 27, 2006
                            By:
                            /s/
                              Frank StarrFrank
                                    Starr
                                  Director
 Date:
                                  September 27, 2006
                              By:
                              /s/
                                Brian JohnstonBrian
                                      Johnston
                                    Director
  37


**Exhibit
      Index**




**Exhibit**
              **Number**
            **Description**2.1
            Share
                Exchange Agreement, dated December 22, 2005 (incorporated herewith
                by
                reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current Report on Form
                8-K dated December 22, 2005 and filed with the Securities and Exchange
                Commission on December 22, 2005).3.1
            Certificate
                of Incorporation of Yarraman Winery, Inc. (incorporated herewith
                by
                reference to Exhibit 3.1 to Yarraman Winery, Inc.’s Registration Statement
                on Form 10-SB filed with the Securities and Exchange Commission on
                January
                12, 2002) as amended by Certificate of Amendment to Certificate of
                Incorporation dated (incorporated herewith by reference to Appendix
                A of
                Yarraman Winery, Inc’s Definitive Information Statement on Schedule 14C
                filed with the Securities and Exchange Commission March 16,
                2006).3.2
            Amended
                and Restated By-laws of Yarraman Winery, Inc. (incorporated herewith
                by
                reference to Exhibit A to Appendix B of Yarraman Winery, Inc’s Definitive
                Information Statement on Schedule 14C filed with the Securities and
                Exchange Commission March 16, 2006).10.1
            Stock
                Purchase Agreement dated as of December 22, 2005 (incorporated herewith
                by
                reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current Report on Form
                8-K dated December 22, 2005 and filed with the Securities and Exchange
                Commission on December 22, 2005).10.2
            Promissory
                Note dated as of December 22, 2005 from Oriental Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.3
            Promissory
                Note dated as of December 22, 2005 from Glenealy Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.4
            Promissory
                Note dated as of December 22, 2005 from Leeds Holdings Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.5
            Promissory
                Note dated as of December 22, 2005 from Sunvalley Limited (incorporated
                herewith by reference to Exhibit 2.1 to Yarraman Winery, Inc.’s Current
                Report on Form 8-K dated December 22, 2005 and filed with the Securities
                and Exchange Commission on December 22, 2005).10.6
            Promissory
                Note dated as of December 22, 2005 from Dragon Enterprises Limited
                (incorporated herewith by reference to Exhibit 2.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated December 22, 2005 and filed with
                the Securities and Exchange Commission on December 22,
                2005).10.7
            Lease
                Agreement dated May 12, 2006 between Yarraman Estate Pty Ltd and
                Delta
                Dawn Pty Limited (incorporated herewith by reference to Exhibit 10.1
                to
                Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.8
            Heads
                of Agreement dated March 24, 2006 between Yarraman Estate Pty Ltd.
                and
                World Icon International Limited (incorporated herewith by reference
                to
                Exhibit 10.2 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB
                for the period ended March 31, 2006 and filed with the Securities
                and
                Exchange Commission on May 15, 2006).









10.9
            Agreement
                for Services dated February 24, 2006 between Madison One Data Group
                Limited and Yarraman Winery, Inc. (incorporated herewith by reference
                to
                Exhibit 10.3 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB
                for the period ended March 31, 2006 and filed with the Securities
                and
                Exchange Commission on May 15, 2006).10.10
            Consulting
                Agreement dated as of January 1, 2006 between Yarraman Estate Pty
                Ltd and
                Delta Dawn Pty Limited (incorporated herewith by reference to Exhibit
                10.4
                to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.11
            Loan
                Agreement dated December 21, 2005 between Yarraman Estate Pty Ltd
                and
                Delta Dawn Pty Limited (incorporated herewith by reference to Exhibit
                10.5
                to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.12
            Loan
                Agreement dated May 1, 2006 between Yarraman Estate Pty Ltd and Delta
                Dawn
                Pty Limited (incorporated herewith by reference to Exhibit 10.6 to
                Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the period
                ended March 31, 2006 and filed with the Securities and Exchange Commission
                on May 15, 2006).10.13
            Loan
                Agreement dated August 1, 2006 between Yarraman Winery Inc. and Whinners
                Pty Ltd, filed herewith.14.1
            Code
                of Ethics, filed herewith31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of
                the
                Securities Exchange Act of 1934, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed herewith.31.2
            Certification
                of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002, filed herewith.32.1
            Certification
                of Chief Executive Officer and the Principal Financial Officer Pursuant
                to
                18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), filed
                herewith.








YARRAMAN
        WINERY, INC. AND SUBSIDIARY
 
 CONSOLIDATED
        FINANCIAL STATEMENTS
 
 JUNE
        30,
        2006







**TABLE
      OF CONTENTS**


Report
                    of Independent Registered Public Accounting Firm
                F-1
                    - F-2Consolidated
                    Balance Sheet
                F-3Consolidated
                    Statements of Operations
                F-4Consolidated
                    Statements of Cash Flow
                F-5Consolidated
                    Statements of Changes in Stockholders’ Equity
                F-6Notes
                    to Consolidated Financial Statements
                F-7
                    - F-24




**REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
          the
          Stockholders and Board of Directors
 Yarraman
          Winery, Inc.
 
 We
          have
          audited the accompanying consolidated balance sheet of Yarraman Winery,
          Inc. and
          subsidiary (a Nevada Corporation) as of June 30, 2006 and the related
          consolidated statements of operations, stockholders’ deficit and cash flows for
          the year then ended. These financial statements are the responsibility
          of the
          Company’s management. Our responsibility is to express an opinion on these
          financial statements based on our audit.
 
 We
          conducted our audit of these statements in accordance with the standards
          of the
          Public Company Accounting Oversight Board (United States). Those standards
          require that we plan and perform the audit to obtain reasonable assurance
          about
          whether the financial statements are free of material misstatement. An
          audit
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the financial statements. An audit also includes assessing
          the
          accounting principles used and significant estimates made by management,
          as well
          as evaluating the overall financial statement presentation. We believe
          that our
          audit provides a reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of Yarraman Winery, Inc. and
          subsidiary as of June 30, 2006 and the results of its operations and its
          cash
          flows for the year ended June 30, 2006 in conformity with accounting principles
          generally accepted in the United States of America.
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern. As discussed in Note 13 to
          the
          consolidated financial statements, the Company’s significant operating losses
          and insufficient capital raise substantial doubt about its ability to continue
          as a going concern. Management’s plans regarding those matters also are
          described in Note 13. The consolidated financial statements do not include
          any
          adjustments that might result from the outcome of this uncertainty.
 
 
 /s/
          Kabani & Company, Inc.
  
 **KABANI
          & COMPANY, INC.**
 
 Los
          Angeles, California
 September
          7, 2006


F-1


LICHTER,
          YU & ASSOCIATES
 9191
          Towne Centre Drive, Suite 406
 **San
          Diego, CA 92122**
   **INDEPENDENT
          AUDITOR’S REPORT**
   To
          the
          Board of Directors
 **YARRAMAN
          WINERY, INC.**
 Wybong,
          New South Wales, Australia
   We
          have
          audited the consolidated statements of operations, stockholders’ equity and cash
          flows of Yarraman Winery, Inc. for the year ended June 30, 2005. These
          financial
          statements are the responsibility of the Company’s management. Our
          responsibility is to express an opinion on these financial statements based
          on
          our audits.
  We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audits to obtain reasonable assurance about whether the
          financial statements are free of material misstatement. An audit includes
          examining, on a test basis, evidence supporting the amounts and disclosures
          in
          the financial statements. An audit also includes assessing the accounting
          principles used and significant estimates made by management, as well as
          evaluating the overall financial statement presentation. We believe that
          our
          audits provide a reasonable basis for our opinion.
  In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the results of Yarraman Winery, Inc.’s operations and its
          cash flows for the year ended June 30, 2005 in conformity with accounting
          principles generally accepted in the United States of America.
  The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in Note 14 to the financial
          statements, the Company has suffered recurring losses from operations and
          has a
          net capital deficiency that raise substantial doubt about its ability to
          continue as a going concern. Management's plans in regard to these matters
          are
          also described in Note 14. The financial statements do not include any
          adjustments that might result from the outcome of this uncertainty.
   /s/
          Lichter, Yu & Associates
  November
          14, 2005
 San
          Diego, CA
    F-2
 **YARRAMAN
                    WINERY, INC. AND SUBSIDIARY****(FORMERLY
                    KNOWN AS DAZZLING INVESTMENTS, INC.)****CONSOLIDATED
                    BALANCE SHEET****June
                    30, 2006**
  **ASSETS****Current
                    Assets**Cash
                    and cash equivalents
                
                $
                110,438Accounts
                    receivable, net
                
                
                570,257Inventory
                
                
                4,831,820Other
                    receivables
                
                
                112,578Other
                    assets
                
                
                249,221Total
                    Current Assets
                
                
                5,874,314**Property,
                    plant and equipment, net**
                
                
                3,852,909**Intangible
                    asset**
                
                
                182,475**Total
                    Assets**
                
                $
                9,909,698**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****Current
                    Liabilities**Accounts
                    payable and accrued expenses
                
                $
                967,798Capital
                    leases, current portion
                
                
                89,028Due
                    to related party
                
                
                280,485Total
                    Current Liabilities
                
                
                1,337,311**Long
                    Term Liabilities**Capital
                    leases, net of current portion
                
                
                102,967Related
                    party loans
                
                
                1,844,943Long-term
                    debt
                
                
                4,078,921Total
                    Long Term Liabilities
                
                
                6,026,831**Total
                    Liabilities**
                
                
                7,364,142**Stockholder's
                    Equity**Preferred
                    stock, $.001 par value, 10,000,000 authorized;none
                    issued and outstanding
                
                
                -Common
                    stock, $.001 par value, 90,000,000 authorized;25,000,000
                    shares issued and outstanding
                
                
                25,000Additional
                    paid in capital
                
                
                4,583,945Other
                    comprehensive income
                
                
                152,189Accumulated
                    deficit
                
                
                (2,215,578
                )Total
                    Stockholder's Equity
                
                
                2,545,556**Total
                    Liabilities and Stockholder's Equity**
                
                $
                9,909,698The
                    accompanying notes are an integral part of these consolidated
                    financial
                    statements.






F-3


**YARRAMAN
                WINERY, INC. AND SUBSIDIARY****(FORMERLY
                KNOWN AS DAZZLING INVESTMENTS, INC.)****CONSOLIDATED
                STATEMENTS OF OPERATIONS****FOR
                THE YEARS ENDED JUNE 30, 2006 AND
                2005**


**2006**
            
            **2005**Sales,
                net
            
            $
            1,830,151
            
            $
            2,293,354Cost
                of sales
            
            
            1,326,478
            
            
            1,397,104**Gross
                profit**
            
            
            503,673
            
            
            896,250Selling,
                general and administrative expenses
            
            
            1,544,681
            
            
            1,277,719**Loss
                from operations**
            
            
            (1,041,008
            )
            
            (381,469
            )Other
                (Income) ExpenseInterest
                income
            
            
            (39,981
            )
            
            (2,701
            )Interest
                expense
            
            
            246,601
            
            
            7,134Gain
                on settlement of debt
            
            
            (152,012
            )
            
            -Finders'
                fee for reverse acuistion
            
            
            161,734
            
            
            -Gain
                on sale of fixed assets
            
            
            -
            
            
            (830
            )Gain
                on foreign currency
            
            
            (22,683
            )
            
            (7,774
            )Total
                Other (Income) Expense
            
            
            193,659
            
            
            (4,171
            )**Net
                loss**
            
            $
            (1,234,667
            )
            $
            (377,298
            )Other
                comprehensive income (loss)Foreign
                currency translation
            
            
            17,901
            
            
            114,375**Comprehensive
                Loss**
            
            $
            (1,216,766
            )
            $
            (262,923
            )**Net
                loss per share:**Basic
                & diluted
            
            
            (0.07
            )
            
            (0.03
            )**Weighted
                average number of shares outstanding:**Basic
                & diluted
            
            
            17,202,152
            
            
            15,000,000The
                accompanying notes are an integral part of these consolidated financial
                statements.




F-4




**YARRAMAN
                    WINERY, INC. AND SUBSIDIARY****(FORMERLY
                    KNOWN AS DAZZLING INVESTMENTS, INC.)****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS****FOR
                    THE YEARS ENDED JUNE 30, 2006 AND
                    2005**




**2006**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              
              $
              (1,234,667
              )
              $
              (377,298
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
              
              
              216,017
              
              
              97,194Gain
                  on settlement of debt
              
              
              (152,012
              )
              
              -(Increase)
                  / decrease in assets:Account
                  receivables
              
              
              132,403
              
              
              (440,207
              )Inventory
              
              
              (1,926,112
              )
              
              (439,461
              )Other
                  receivables
              
              
              20,629
              
              
              (119,932
              )Other
                  assets
              
              
              (77,993
              )
              
              340Deposits
              
              
              -
              
              
              14,705Increase
                  / (decrease) in current liabilities:Accounts
                  payable and accrued expenses
              
              
              225,722
              
              
              170,689Total
                  Adjustments
              
              
              (1,561,346
              )
              
              (716,672
              )**Net
                  cash used in operations**
              
              
              (2,796,013
              )
              
              (1,093,970
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of property, plant & equipment
              
              
              (36,142
              )
              
              (206,957
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Collection
                  on note receivable
              
              
              2,000,000
              
              
              -Proceeds
                  from note payable
              
              
              61,568
              
              
              -Payments
                  on capital leases
              
              
              (62,841
              )
              
              (147,353
              )Payments
                  on loans from related parties
              
              
              (7,478
              )
              
              -Proceeds
                  from loans from related parties
              
              
              1,100,054
              
              
              1,213,507**Net
                  cash provided by financing activities**
              
              
              3,091,303
              
              
              1,066,154Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              (192,433
              )
              
              114,375**Net
                  increase (decrease) in cash and cash equivalents**
              
              
              66,715
              
              
              (120,398
              )**Cash
                  and cash equivalents, beginning balance**
              
              
              43,723
              
              
              164,121**Cash
                  and cash equivalents, ending balance**
              
              $
              110,438
              
              $
              43,723**SUPPLEMENTAL
                  DISCLOSURES:**Cash
                  paid during the year for:Income
                  tax payments
              
              $
              -
              
              $
              -Interest
                  payments
              
              $
              246,601
              
              $
              7,134Non-cash
                  investing and financing activities:Purchase
                  of assets from former parentAssets
                  purchased
              
              
              5,759,740
              
              
              -Liabilities
                  assumed
              
              
              (4,384,740
              )
              
              -Payable
                  to former parent
              
              
              (431,151
              )
              
              -Contribution
                  to equity
              
              
              (943,850
              )
              
              -$
              -
              
              $
              -
  The
                  accompanying notes are an integral part of these consolidated financial
                  statements.




F-5




**YARRAMAN
                  WINERY, INC. AND SUBSIDIARY****(FORMERLY
                  KNOWN AS DAZZLING INVESTMENTS, INC.)****CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS' EQUITY****FOR
                  THE YEARS ENDED JUNE 30, 2006 AND
                  2005**




**Additional**
              
              **Other**
              
              
              
              **Total****Common
                  Stock**
              
              
              
              **Paid-In**
              
              **Comprehensive**
              
              **Accumulated**
              
              **Stockholders'****Shares**
              
              **Amount**
              
              **Capital**
              
              **gain
                  (loss)**
              
              **Deficit**
              
              **Equity****Balance
                  June 30, 2004**
              
              
              15,000,000
              
              $
              15,000
              
              $
              1,710,751
              
              $
              19,913
              
              $
              (603,613
              )
              $
              1,142,051Other
                  comprehensive gain
              
              
              -
              
              
              -
              
              
              -
              
              
              114,375
              
              
              -
              
              
              114,375Net
                  loss for the year ended June 30, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (377,298
              )
              
              (377,298
              )**Balance
                  June 30, 2005**
              
              
              15,000,000
              
              
              15,000
              
              
              1,710,751
              
              
              134,288
              
              
              (980,911
              )
              
              879,128Recapitalization
                  as result of reverse acquistion
              
              
              3,496,500
              
              
              3,497
              
              
              (51,449
              )
              
              -
              
              
              -
              
              
              (47,953
              )Settlement
                  of debt in exchange of issuance of sharesof
                  the subsidiary
              
              
              -
              
              
              -
              
              
              931,146
              
              
              -
              
              
              -
              
              
              931,146Stock
                  issued for finders fee
              
              
              1,250,000
              
              
              1,250
              
              
              (1,250
              )
              
              -
              
              
              -
              
              
              -Sale
                  of stock
              
              
              5,253,500
              
              
              5,254
              
              
              1,994,747
              
              
              -
              
              
              -
              
              
              2,000,000Other
                  comprehensive gain
              
              
              -
              
              
              -
              
              
              -
              
              
              17,901
              
              
              -
              
              
              17,901Net
                  loss for the year ended June 30, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,234,667
              )
              
              (1,234,667
              )**Balance
                  June 30, 2006**
              
              
              25,000,000
              
              $
              25,000
              
              $
              4,583,945
              
              $
              152,189
              
              $
              (2,215,578
              )
              $
              2,545,556
    The
                  accompanying notes are an integral part of these consolidated financial
                  statements.






F-6


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      1 - NATURE
      OF OPERATIONS





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





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




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




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




We
      produce and sell premium, super premium and ultra premium varietal wines. Our
      wines are made from grapes grown at our vineyard (the "Vineyard") and from
      grapes purchased from other Australian vineyards. The grapes are crushed,
      fermented and made into wine at the our winery and the wines are sold
      principally under the Company's Yarraman Estate Vineyard, Black Cypress, Banjo
      and Down Under labels. Yarraman Australia’s Vineyard and Winery are located in
      the Upper Hunter Valley, approximately 200 miles north of Sydney,
      Australia.




On
      February 3, 2006, the Company voted to change its fiscal year end from December
      31 st to June
      30 th to
      correspond with the fiscal year end of the operating entity.








F-7




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Basis
      of Presentation





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





Principles
      of Consolidation





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




Revenue
      Recognition




The
      Company’s revenue recognition policies are in compliance with Staff accounting
      bulletin (SAB) 104. We
      recognize revenue when the product is shipped and title passes to the customer, when
      a
      formal arrangement exists, the price is fixed or determinable, the delivery
      is
      completed, no other significant obligations of the Company exist and
      collectibility is reasonably assured. The
      Company's standard terms are 'FOB' shipping point, with no customer acceptance
      provisions. No products are sold on consignment. Credit sales are recorded
      as
      trade accounts receivable and no collateral is required. Revenue from items
      sold
      through the Company's retail location is recognized at the time of sale. The
      Company has established an allowance for doubtful accounts based upon factors
      pertaining to the credit risk of specific customers, historical trends, and
      other information. Delinquent accounts are written-off when it is determined
      that the amounts are uncollectible. Revenues are recognized net of the amount
      of
      goods and services tax (GST) payable to the Australian taxing
      authority.




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




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




F-8




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Cash
      and Cash Equivalents





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





Accounts
      Receivable





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. Allowance for doubtful debts amounted to $54,743
      as
      at June 30, 2006.





Segment
      Reporting





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




Fair
      Value of Financial Instruments




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




Inventories




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







F-9




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**











NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Winemaking
                  and packaging materials
              
              $
              70,337Work
                  in progress ( costs related to unprocessedand/
                  or unbottled products )
              
              
              4,243,189Finished
                  good (bottled wine)
              
              
              518,294Total
              
              $
              4,831,820




Property,
      Plant and Equipment




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





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




Land
                improvements 15 years
              Winery
                building 30 years
              Equipment
                5-7 years




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






F-10




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**











NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




As
      of
      June 30, 2006 Property, Plant & Equipment consist of the
      following:




Buildings
                    and improvements
                
                $
                47,457Land
                
                
                772,552Plant
                    and equipment
                
                
                3,303,007Computer
                    equipment
                
                
                35,709Furniture
                    and fixtures
                
                
                19,6314,178,356Accumulated
                    depreciation
                
                
                (325,447
                )$
                3,852,909




Capital
      Lease Obligations





Included
      in Property, Plant and Equipment are $219,690 of fixed assets that were
      purchased on capital lease arrangements (note 8). .





Intangible
      Assets





Effective
      July 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No.
      142, “Goodwill and Other Intangible Assets.” The adoption of SFAS No. 142
      required an initial impairment assessment involving a comparison of the fair
      value of trademarks, patents and other intangible assets to current carrying
      value. No impairment loss was recognized for the period ended June 30, 2006
      and
      2005. As of June 30, 2006, the intangible assets comprised of water licenses
      of
      $182,475 which are held in perpetuity.





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





F-11







**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**











NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Contingencies





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





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





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





Advertising





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





Use
      of
      Estimates





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







F-12


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Concentration
      of Credit Risk





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




Basic
      and Diluted Earnings Per Share




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




Statement
      of Cash Flows




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




Income
      Taxes





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




F-13




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Translation
      Adjustment





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




New
      Accounting Pronouncements





In
      December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
      Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
      eliminate the exception for non-monetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance.





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





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






F-14


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      2 - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




New
      Accounting Pronouncements (continued)




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




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




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




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




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




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




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




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




The
        Company is still in the process of evaluating the effect of these statements
        on
        its financials.
 
 Reclassifications:
 
 For
        comparative purposes, prior year’s consolidated financial statements may have
        been reclassified to conform with report classifications of the current
        year.


F-15




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








NOTE
      3 - CASH
      & CASH EQUIVALENTS





We
      maintain our cash balances at various banks in Australia. The Company deposits
      funds only in institutions that we believe to be financially sound.








NOTE
      4 - ACCOUNTS
      PAYABLE AND ACCRUED EXPENSES





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




Trade
                  Creditors
              
              $
              540,588Other
                  Creditors
              
              
              269,670Payroll
                  liabilities
              
              
              157,541Total
              
              $
              967,798


The
      provision for employee benefits to annual leave represents the value of the
      estimated future cash outflows to be made resulting from employees’ services
      provided to the reporting dates based on their current wage rate. As of June
      30,
      2006 annual leave liability existed in the amount of $48,944 which is included
      in the payroll liabilities.





Note
      5 - RELATED
      PARTY TRANSACTIONS





We
      entered into various related party transactions with Yarraman Road Trust,
      various unit holders of Yarraman Road Trust, related entities of unit holders
      of
      Yarraman Road Trust and officers of the Company.





Yarraman
      Australia leased vineyards and related plant and equipment from its former
      parent, the Yarraman Road Trust. Terms of the agreement included annual payment
      of $285,000 AUD plus GST of $28,500 AUD, approximately $239,000 USD. The lease
      began on July 1, 2003 and terminated on December 22, 2005 when we purchased
      the
      vineyard and related plant and equipment.





We
      also
      pay The Yarraman Road Trust approximately $34,000 per month for the use of
      additional vineyard land also located in Australia per a verbal agreement.
      On
      January 1, 2006 we entered into a written agreement to lease this vineyard
      land
      for $43,750 AUD plus GST (approximately $35,000 USD) per month. The term was
      from January 1, 2006 through June 30, 2006. As of July 1, 2006 this lease is
      on
      a month to month basis with the same payment terms.





Yarraman
      Australia had received loans from its former Parent to fund operations and
      purchase assets. As part of the terms of the purchase agreement the balance
      of
      this loan was $1,612,666 AUD and will be paid per the terms disclosed in Note
      8.





F-16





**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      5 - RELATED
      PARTY TRANSACTIONS (Continued)





On
      May 1,
      2006 we entered into a loan agreement with Delta Dawn Pty., Ltd as Trustee
      for
      the Yarraman Road Trust in the amount of $900,000 AUD, approximately $665,000
      USD. Interest is payable at an annual rate of 8%. On May 25, 2006 Delta Dawn
      Pty., Ltd. lent us an additional $15,000 AUD, approximately $10,950 USD, to
      be
      repaid in conjunction with the May 1, 2006 loan. During the year ended June
      30,
      2006, the interest expense on this loan amounted to approximately
      $10,910.





Stockholders
      and Directors of the Company and of Yarraman Road Trust were provided wine
      during the fiscal year ended June 30, 2006 valued at $25,858.





The
      Company had wine sales to entities related to various Stockholders, Officers
      and
      Directors totaling $8,406 during the year ended June 30, 2006.


The
      Company paid consulting fees to one of the Unit Holders of its Parent in the
      amount of approximately $82,261 during the year ended June 30, 2006. The Company
      also had a liability to this individual related to the consulting fee of
      approximately $9,075 as of June 30, 2006.





On
      January 1, 2006 we entered into a consulting agreement with Delta Dawn Pty.,
      Ltd
      as Trustee for the Yarraman Road Trust to provide business consulting services
      related to the wine industry for a term of two years or until such time as
      their
      ownership percentage in our Company is reduced to less then 15%. We agree to
      pay
      $100,000 AUD plus GST, approximately $78,000 USD, annually. During the year
      ended June 30, 2006 we paid Delta Dawn Pty. Ltd $58,542.





During
      the year ended June 30, 2006 the Company included in its revenue, fees for
      wine
      making and storage of wine of approximately $444,235 to a company (related
      through a common shareholder) with whom they had a joint venture agreement.
      The
      Company also recorded a gain on settlement of debt of $152,012 on settlement
      of
      debt by exchange of wine of lesser value, with the related party. See Note
      6.





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





Assets
                purchased
            
            $
            5,759,740Liabilities
                assumed
            
            
            (4,384,740
            )Payable
                to former parent
            
            
            (431,151
            )Contribution
                to capital
            
            
            (943,850
            )Net
            
            
            0








The
      Company’s assets are also pledged as collateral for indebtedness of Yarraman
      Australia’s prior Parent, the Yarraman Road Trust. As of June 30, 2006 the
      outstanding balance on this debt was approximately $3,715,726. See Note 6.




F-17




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      6 - COMMITMENTS
      AND CONTINGENCIES





Operating
      Leases





Yarraman
      Australia leased approximately 200 acres of vineyard land and plant and
      equipment from its prior parent, the Yarraman Road Trust, for $285,000 AUD
      per
      year plus GST of $28,500 AUD per year, approximately $239,000 USD. The lease
      was
      entered into on July 1, 2003 and is for a term of two years, but may continue
      past that date at the same rate until canceled by either party. This lease
      was
      terminated on December 22, 2005 when the Company purchased all property under
      this lease. Please see Note 5 - Related Party Transactions.





On
      January 1, 2006 we entered into a written agreement with Delta Dawn Pty, Ltd.
      as
      trustee for Yarraman Road Trust, to lease additional vineyard land in Australia.
      The monthly rent is $43,750 AUD plus GST, approximately $32,000 USD. The lease
      term commences on January 1, 2006 and terminates on June 30, 2006; there is
      no
      option to renew. See Note 5 above.





Grape
      Processing Arrangements





In
      January 2004 Yarraman Australia entered into a Grape Processing Arrangement
      with
      two other Australian corporations for the 2004 harvest. The terms of the
      arrangement required Yarraman Australia to process the grape harvest provided
      by
      the other entities into bulk wine and provide safe storage. The agreement
      stipulates that for this service we will receive fifty percent (50%) of the
      proceeds of the sale of the bulk wine or finished wine. We also had the right
      to
      purchase up to fifty percent (50%) of the bulk wine for consideration of its
      services.





Yarraman
      Australia exercised its right and purchased fifty percent (50%) of the related
      bulk wine during the year ended June 30, 2005 and purchased 461,106 litres
      of
      wine valuing approximately $210,000.





Corporate
      Sponsorship





Yarraman
      Australia entered into a five year Sponsorship Agreement beginning on April
      1,
      2004 with Luna Park Sydney. The terms of the sponsorship require the Company
      to
      pay approximately $37,676 for year one, approximately $41,444 for years two
      through four, and approximately $48,979 for year five.





In
      September 2005 the agreement with Luna Park was renegotiated. The terms now
      call
      for a payment of minimum $45,992 for year two. The fee for the years two through
      five will be calculated based on a formula related to the number of patrons
      attending the Luna Park Sydney facility.





F-18




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      6 - COMMITMENTS
      AND CONTINGENCIES (Continued)





Guarantor





Our
      assets have been pledged as collateral for indebtedness owed by Yarraman Road
      Trust, to a financial institution in Australia, the repayment of which the
      Company has guaranteed. The outstanding balance on this debt was approximately
      $3,715,726 as of June 30, 2006.





Consulting
      Agreements





On
      February 24, 2006 we entered into a consulting agreement with a Firm in New
      York
      to assist us in identifying suitable candidates for acquisition purposes and
      assist in the negotiation and execution of the transaction. As compensation
      we
      agree to pay the firm a monthly, nonrefundable, fee of $6,500 beginning March
      1,
      2006 and ending on July 1, 2006. We also agree to pay a transaction fee that
      is
      based on a sliding percentage of any completed acquisition. The total monthly
      fees paid under the agreement may be deduction from the total transaction
      fee.





On
      January 1, 2006 we entered into a consulting agreement with Delta Dawn Pty.,
      Ltd
      as Trustee for the Yarraman Road Trust to provide business consulting services
      related to the wine industry for a term of two years or until such time as
      their
      ownership percentage in our Company is reduced to less then 15%. We agree to
      pay
      $100,000 AUD plus GST, approximately $78,000 USD, annually. See Note
      5.





Arbitration





We
      have
      entered into arbitration on a legal matter regarding one of our grape processing
      arrangements. A dispute has arisen regarding storage charges that were invoiced
      related to the storage of wine processed under the arrangement. The total amount
      in dispute is $225,000 AUD, which is approximately $165,000 USD. This amount
      has
      been recorded in our income during the fiscal years ended June 30, 2006, 2005
      and 2004. No reserve has been accrued for this amount as we intend to vigorously
      defend our position and believe that we will prevail.





Note
      7 - COMMON
      STOCK





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




On
      December 12, 2005, the Board of directors submitted to, and a majority of
      shareholders eligible to vote, approved a proposal that pursuant to the terms
      of
      a Share Exchange Agreement (the “Agreement”), the Company acquired all of the
      outstanding capital stock of Yarraman Australia in exchange for 15,000,000
      shares of the Company’s common stock to the Trustee (the "Transaction"). This
      issuance of the Company’s common stock is intended to be exempt from
      registration under the Securities Act of 1933, as amended ("Securities Act").





F-19


**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**








Note
      7 - COMMON
      STOCK (Continued)




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





In
      connection with the Stock Purchase, the Company issued 1,250,000 shares of
      common stock (the “Millhouse Shares”) in exchange to MillhouseIAG Limited
      (“Millhouse”) as a finder’s fee.




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




On
      February 3, 2006, the Board of Directors of the Company and the holders of
      a
      majority of the Company’s outstanding common stock voted to increase the number
      of authorized shares of its capital stock. Pursuant to this authorization,
      on or
      about March 17, 2006 (20 days after the mailing of the notice to shareholders
      regarding such amendment) the Company shall increase the number of authorized
      shares of its capital stock to 100,000,000 shares, of which ninety million
      (90,000,000) shares are Common Stock, par value of $0.001, and ten million
      (10,000,000) shares are Preferred Stock, par value of $0.001, which may be
      issued in one or more series or classes as designated by the Board of Directors,
      from time to time, without the approval of stockholders.





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




Note
      8
      - LONG
      TERM DEBT





Loans





On
      December 21, 2005 we entered into a loan agreement with a financial institution
      located in Australia. The amount of the loan is $5,577,397 Australian Dollars,
      approximately $4,071,000 with monthly interest payments due on the
      15 th of each
      month at the rate of 10% per annum, rising to 16% per annum if the Company
      is
      late in its payments. The principal balance is due and payable on December
      31,
      2007. The loan is secured by certain property, plant and equipment of the
      Company as well as a guarantee by Yarraman Australia’s former parent and by a
      stockholder of the Company. As of June 30, 2006, the loan balance is $4,078,921
      inclusive of accrued and unpaid interest.





F-20





**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      8
      - LONG
      TERM DEBT (Continued)





On
      December 22, 2005 we entered into a loan agreement with Delta Dawn Pty., Ltd
      as
      Trustee for the Yarraman Road Trust. The principle amount of the loan is
      $1,612,666 AUD, approximately $1,177,000 USD.





On
      May 1,
      2006 we entered into a loan agreement with Delta Dawn Pty., Ltd as Trustee
      for
      the Yarraman Road Trust in the amount of $900,000 AUD, approximately $656,000
      USD. Interest is payable at an annual rate of 8%. On May 25, 2006 Delta Dawn
      Pty., Ltd. lent us an additional $15,000 AUD, approximately $10,950 USD, to
      be
      repaid in conjunction with the May 1, 2006 loan.





The
      Delta
      Dawn Pty., Ltd. loan agreements require principle payments as follows for the
      fiscal years ending on June 30 th :





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




Leases




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




Plant
                  and equipment
              
              $
              219,690Accumulated
                  depreciation
              
              
              27,467$
              192,223


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







Total
                minimum lease payments
            
            $
            191,995Amount
                representing interest
            
            
            (22,087
            )Present
                value of net minimum lease payments
            
            
            169,908Current
                portion
            
            
            (73,649
            )Long-term
                capital lease obligation
            
            $
            96,259






F-21





**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      8
      - LONG
      TERM DEBT (Continued)





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





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





June
                  30,2007
              
              $
              89,0282008
              
              
              78,2452009
              
              
              24,723Total
              
              $
              191,996





Note
      9
      - STOCK
      EXCHANGE AGREEMENT





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





Accordingly,
      the financial statements include the following:





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


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








Note
      10 - OTHER
      COMPREHENSIVE INCOME





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





Foreign
                  Currency
                Translation
                  AdjustmentBalance
                  at June 30, 2004
              
              $
              19,913Change
                  for 2005
              
              
              114,375Balance
                  at June 30, 2005
              
              
              134,288Change
                  for 2006
              
              
              17,901Balance
                  at June 30, 2006
              
              $
              152,189




F-22





**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**







**Note
      11 -INCOME TAXES**




Total
      Federal and State income tax expense for the fiscal years ended June 30, 2006
      and 2005 amounted to $0 and $0, respectively. For the fiscal years ended
      June 30, 2006 and 2005 there is a difference of 34% and 34% between the federal
      statutory tax rate and the effective tax rate.




The
                  following is a reconciliation of income tax expense:2006
              
              U.S.
              
              International
              
              TotalCurrent
              
              $
              -
              
              $
              -
              
              $
              -Deferred
              
              
              -
              
              
              (580,508
              )
              
              (580,508
              )Total
              
              
              -
              
              
              (580,508
              )
              
              (580,508
              )
  2005
              
              
              U.S.
              
              
              International
              
              
              TotalCurrent
              
              
              -
              
              
              -
              
              
              -Deferred
              
              
              -
              
              
              (7,047
              )
              
              (7,047
              )Total
              
              $
              -
              
              $
              (7,047
              )
              $
              (7,047
              )
  Reconciliation
                  of the differences between the statutory U.S. Federal income tax
                  rate
                  and
                  the effective rate is as
                  follows:
  2006
              
              
              2005Federal
                  statutory tax rate
              
              
              34
              %
              
              34
              %Increase
                  (decrease) in rate resulting from:Non
                  US income taxed at different rates
              
              
              -34
              %
              
              -34
              %Effective
                  tax rate
              
              
              -
              
              
              -


F-23




**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2006**





Note
      12 -
      MAJOR CUSTOMERS AND VENDORS





For
      the
      year ended June 30, 2006 our largest customer accounted for 28% of our sales.
      There was no receivable from the customer as of June 30, 2006. For
      the
      year ended June 30, 2006 our largest vendor accounted for 18% of our purchases.
      As of June 30, 2006, the amount payable to the vendor was $7,017.





Note
      13 - GOING
      CONCERN





The
      accompanying financial statements have been prepared on a going concern basis
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. As shown in the financial statements, during
      the years ended June 30, 2006 and 2005, the Company incurred losses of
      $1,234,667 and $377,298, respectively. In addition, the
      Company has suffered recurring losses from operations, cash deficiencies and
      the
      inability to meets it’s maturing obligations without borrowing from related
      parties and sale of its stock.  These issues may raise substantial concern
      about its ability to continue as a going concern.




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




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




The
      Company has completed its merger with as stated in Note 11. Related to this
      merger we were able to sell 5,253,500 shares of stock for $2,000,000. We also
      borrowed 915,000 AUD, approximately $675,950 USD, from our former Parent, Delta
      Dawn Pty., Ltd.





We
      are
      also in discussions with potential acquisition candidates that will
      significantly improve our operating results and working capital.




On
      August
      1, 2006, we entered into a loan agreement from a related party to borrow up
      to
      500,000 AUD, approximately $365,000 USD, with interest payable at 8.75% per
      anum, due on September 30, 2006.




Note
      14 - SUBSEQUENT
      EVENT





On
      August
      1, 2006 we entered into a loan agreement from a related party to borrow up
      to
      500,000 AUD, approximately $365,000 USD, with interest payable at 8.75% per
      annum, due on September 30, 2006.








F-24