**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




*(Mark One)*
              **ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d)
                  OF**x
              **THE
                  SECURITIES EXCHANGE ACT OF
                  1934**


For
      Fiscal Year Ended June 30, 2007




**OR**


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




For
      the
      Transition Period From __________ to __________




**Commission
      File No. 000-28865**




**YARRAMAN
                WINERY, INC.**(Name
                of small business issuer in its
                charter)





**Nevada**
            
            **88-0373061**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**700
                YARRAMAN ROAD, WYBONG**
              **UPPER
                HUNTER VALLEY**
              **NEW
                SOUTH WALES, AUSTRALIA**
            **2333**(Address
                of principal executive offices)
            
            (Zip
                Code)**(61)
                2 6547-8118**(Registrant’s
                telephone number, including area
                code)





Securities
      registered under Section 12(b) of the Exchange Act: **None**


Name
      of
      each Exchange on Which Registered: **None**


Securities
      registered under Section 12(g) of the Exchange Act: **$0.001
      Common Stock**





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 o No
x





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, 2007 fiscal year: $2,012,445.




As
      of
      September 26, 2008, there were 38,000,000 shares of the issuer’s common stock,
      par value $0.001, issued and outstanding. Of these, 10,479,400 shares are held
      by non-affiliates of the issuer. The market value of securities held by
      non-affiliates is approximately $15,719,100 based on the closing price of $1.50
      for the issuer’s common stock on September 26, 2008.




Traditional
      Small Business Disclosure Format (check one): Yes o Nox .




DOCUMENTS
      INCORPORATED BY REFERENCE


If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to Rule
      424(b) or (c) of the Securities Act of 1933, as amended (“Securities
      Act”).




Not
      Applicable










**Table
      of Contents**


FORWARD-LOOKING
                  STATEMENTS
              3PART
                  I
              
              4ITEM
                  1.
              DESCRIPTION
                  OF BUSINESS
              4ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY
              15ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              15ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO VOTE OF SECURITY HOLDERS
              15PART
                  II
              
              16ITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
              16ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
              17ITEM
                  7.
              FINANCIAL
                  STATEMENTS
              28ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              28ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES
              29ITEM
                  8B.
              OTHER
                  INFORMATIONPART
                  III
              
              30ITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(A) OF THE EXCHANGE ACT
              30ITEM
                  10.
              EXECUTIVE
                  COMPENSATION
              32ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
              35ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              37ITEM
                  13.
              EXHIBITS
              39ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              42









**FORWARD-LOOKING
      STATEMENTS**







Except
      for historical information, this report contains forward-looking statements
      within the meaning of Section 27A of the Securities Act of 1933 and Section
      21E
      of the Securities Exchange Act of 1934. Such forward-looking statements involve
      risks and uncertainties, including, among other things, statements regarding
      our
      business strategy, future revenues and anticipated costs and expenses. Such
      forward-looking statements include, among others, those statements including
      the
      words “expects,” “anticipates,” “intends,” “believes” and similar language. Our
      actual results may differ significantly from those projected in the
      forward-looking statements. Factors that might cause or contribute to such
      differences include, but are not limited to, those discussed in the section
      “Management’s Discussion and Analysis and Results of Operations.” You should
      carefully review the risks described in this Annual Report and in other
      documents we file from time to time with the Securities and Exchange Commission.
      You are cautioned not to place undue reliance on the forward-looking statements,
      which speak only as of the date of this report. We undertake no obligation
      to
      publicly release any revisions to the forward-looking statements or reflect
      events or circumstances after the date of this document.





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





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


•  Our
      ability to raise capital to fund capital expenditures;


•  Grape
      and
      other fruit price volatility;


•  Our
      ability to find and retain skilled personnel;


•  Regulatory
      developments; and


•  General
      economic conditions.





All
      references in this Form 10-KSB to the “Company,” “Yarraman,” “we,” “us” or “our”
are to Yarraman Winery, Inc. and its subsidiary, Yarraman Estate Pty Limited.





3




**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**




**General**





We
      were
      incorporated as a Nevada corporation on December 6, 1996 under the name Dazzling
      Investments, Inc. From January 1, 1997 until December 22, 2005, we were in
      the
      developmental stage and had no operations. 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 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 (the “Exchange
      Agreement”) with Yarraman Estate Pty Ltd (“Yarraman Australia”), the
      shareholders of Yarraman Australia, Delta Dawn Pty Limited, as trustee of the
      Yarraman Road 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 shares of our common stock (the “Shares”) to the Trustee. Yarraman
      Australia became our wholly-owned subsidiary and, upon the issuance of the
      Shares, the Trustee owned 60% of our issued and outstanding common stock.
      Through our wholly-owned subsidiary, Yarraman Australia, we operate our primary
      business, which consists of the operation of vineyards and wine production
      in
      Australia and distribution of our wine products in Australia, United States,
      Canada, New Zealand, Hong Kong and throughout Europe.





**Overview**




We
      produce and sell premium (up to US$14), super-premium (up to US$20) and
      ultra-premium (over US$20) wines. Our wines are made at our 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.





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$10 million has been spent since 1994 on capital improvements
      to the winery and vineyard.




4




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**





We
      offer
      a variety of wine for sale to retail customers. Our 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 our 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$23 per
      bottle.





These
      wines have received numerous awards and medals in the last three 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$16 per
      bottle.





These
      wines have received numerous awards and medals in the last four 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.





***Red
      Horse Range***




In
      May
      2006, we exported our first shipment of wines to our new distributor, Robert
      Whale Selections, in the United States. This range of wines comprises Shiraz
      Cabernet, Caberenet Merlot, Chardonnay and Semillon Verdelho and retail for
      approximately US$13 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. 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.




5




The
      Banjo
      Collection is an “export only” range that combines fruit sourced from our
      vineyards in the Upper Hunter Valley and Gundagai regions. These wines have
      received numerous 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 range of wines which was released in November 2005
      targeting domestic and international markets. These wines are currently
      distributed by a broad range of liquor retailers in Australia. The suggested
      retail price for these wines is approximately US$10. During the year ended
      June
      30, 2008 we shipped approximately 25,000 cases.





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.





***Yarraman
      Race Club***





Following
      the successful launch of the “Red Horse” range in the USA, Yarraman has recently
      released a similar series of wines in the Australian market. This range of
      wines
      has been releasesd in conjunction with a promotional offer whereby consumers
      who
      purchase a dozen of these wines become members of the Yarraman Race Club, and
      receive ownership shares in four Thoroughbred Race Horses. Members of the
      Yarraman Race Club receive many benefits, including a proportional share of
      the
      prize money won by the horses and invitations to attend race meetings when
      the
      horses are running.





**The
      Market**





***Overview***





The
      Australian Bureau of Statistics (ABS) reported that 1.37 million tons of grapes
      were harvested for winemaking purposes in 2007. This was a decrease of 23.1%
      from the 2006 harvest. The reasons behind the reduced harvest are primarily
      the
      continuing drought and scarcity of irrigation water, plus the affects of frost
      and bushfires in some areas. ABS has estimated that there were 173,776 hectares
      cultivated for wine, drying and table grapes in 2007, an increase of 4.3% over
      2005.





***Domestic
      Wine Sales***





Data
      published by the Australian Wine & Brandy Corporation (AWBC) shows that
      Australian wine accounted for 91% of domestic wine sales in Australia for 2007.
      Domestic sales of Australian wine increased to 439 million litres - a rise
      of
      slightly more than 1% compared to 2006. Red wine accounted for 36.9% of domestic
      sales, white wine accounted for 47.7%, the balance made up of sparkling and
      fortified wines. Yarraman Australia’s sales account for less than 1% of the
      domestic market.




6




We
      utilize 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. We
      have
      a central distribution depot in Sydney which services same or next day delivery
      in Sydney and New South Wales. We believe the program of self-representation
      is
      generating a strong presence in the New South Wales market with approximately
      US$731,209 in domestic sales during the 2007 fiscal year, a 35.9% increase
      from
      the prior period due to new restaurant, retail and wholesale accounts that
      were
      established.





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 our total Company sales.




In
      connection with our transition to a national network of affiliated wholesalers,
      we have entered into agreements with wholesalers (including Independent Liquor
      Group, Australian Liquor Marketers and Hotel Liquor Wholesalers) under which
      our
      products are distributed in certain states.





***Export
      Wine Sales***





In
      2007
      Australian wine exports grew to 785 million litres. The average price per litre
      increased 3% to US$3.25, the first time in five years that the average price
      for
      Australian wine exports has increased. The overall dollar value of these exports
      grew by 6.4% to US$2.55 billion. The United Kingdom remains the largest overseas
      market at 290 million litres (36.9%) , however the average value per litre
      is
      well below the overall average, at US$2.88. The United States is the second
      largest overseas market at 204 million litres (25.9%). The average value per
      litre in this market is well above the overall average, at $3.81 per litre.
      Yarraman Australia ships approximately 7,500 cases per year to the United States
      market and approximately 250 cases per year to the United Kingdom.





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 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 7500 cases per year to the United
      States, less than 1% of the total market.





With
      continuing investment and development in our brands, we plan to capitalize
      on
      consumer demand in our 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.




7




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


sAustralia
              
              sCanada
              
              sChinasUSA
              
              sPoland
              
              sJapansDenmark
              
              sSingapore
              
              sVietnamsSwitzerland
              
              sGermanysHong
                  Kong
              
              sUnited
                  KingdomsIreland
              
              sMalaysia


We
      export
      approximately 41% of our annual 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.





We
      appoint 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 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.





**Seasonal
      and Quarterly Results**





We
      have
      historically experienced and expect to continue experiencing seasonal
      fluctuations in our 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 we have 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**





As
      of
      June 30, 2007, our winery had 1.5 million liters of wine in tank and barrel.
      Both our 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 met both our domestic and export market
      expectations into 2007. As a result we elected not to crop our vineyards in
      2007. This enabled us to reduce inventory of both packaged and bulk wines during
      the year ended June 30, 2007 and will enable us to similarly reduce inventory
      during the fiscal year ending June 30, 2008. While we intend to expand our
      export markets particularly into Asia any shortages of varietals can be sourced
      competitively on the bulk wine market in Australia.




8




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, Andrew Lyon resigned as our Chief Executive Officer and
      President, and we appointed Wayne Rockall as our Chief Executive Officer. .
      On
      September 20, 2007 Wayne Rockall resigned. On September 25, 2008 Ian Long was
      appointed Chief Executive Officer and President.





On
      April
      27, 2007 John Wells resigned as our Chief Financial Officer and Secretary.
      On
      May 18, 2007 Mark Valencic was appointed as Secretary and on October 1, 2007
      Raymond Brien was appointed as Chief Financial Officer. On September 20, 2007
      Mark Valencic resigned as Secretary and Lawrence Lichter was appointed as
      Secretary. On June 30, 2008 Raymond Brien resigned as Chief Financial Officer.
      On September 25, 2008 Lawrence Lichter was appointed Chief Financial
      Officer.





On
      April
      2, 2007 John J. Moroney resigned as a Director and on September 20, 2007 Brian
      Johnson and Frank Starr resigned as Directors. On May 1, 2008 Gary Blom was
      appointed to the Board of Directors and William Middleton resigned from the
      Board. On June 24, 2008 Ian Long was appointed to the Board of Directors. None
      of the foregoing resignations are the result of any disagreements between us
      and
      the resigning person on any matters related to our operations, policies or
      practices.





On
      December 21, 2006 we submitted an offer to merge by scheme of arrangement with
      Evans & Tate, Ltd., a company publicly traded in Australia. The terms of the
      offer included a combination of issuance of shares of our common stock and
      issuance of convertible notes. On February 14, 2007, we submitted a revised
      offer, which offer was conditionally accepted pending the results of due
      diligence by Evans & Tate, Ltd. Our revised offer was rejected on March 16,
      2007. In connection with this transaction we entered into a Conditional Sale
      Deed to purchase 18,387,998 shares of Evans & Tate, Ltd. stock from a third
      party. Upon rejection of our offer by Evans & Tate, Ltd., the Conditional
      Sale Deed was terminated. Related to this acquisition we incurred $312,009
      of
      expenses as of June 30, 2007.





**Research
      and Development**





Our
      research and development focuses on the following four areas:





*Fermentation*





We
      engage
      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.




9




*Barrels
      and Oak Alternatives*





All
      of
      our French and American oak barrels are custom made by a select group of
      cooperages to match the exact requirements for our wine styles. These barrels
      provide oak characters to our products and integrate the oak characters into
      its
      super and ultra-premium wines. In addition, after successfully completing
      extensive trials with oak alternatives, we have implemented these practices
      in
      our wine making process for premium wines.





*Viticulture*




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





During
      the years ended June 30, 2007 and 2006 we did not incur any research and
      development expenses.





**Customers**





For
      the
      years ended June 30, 2007 and 2006 the Company’s largest customer accounted for
      12% and 28% of sales, respectively. There was no receivable from the customer
      as
      of June 30, 2007.





**Suppliers**





We
      use
      materials and supplies, such as glass bottles, closures, labels, boxes and
      chemicals, that we currently obtain 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 we use just-in-time bottling
      and packaging for premium wine exports.





**Competition**





The
      2008
      Australian Wine Industry Directory lists 1,165 wine producers that export wine,
      more than half of all producers. Fosters Group and Hardy Wine Company
      (Constellation) account for 49% of all exports by volume, while the top 20
      exporters account for 91%. The remaining 1,145 exporters compete for 9% of
      the
      export volume. The Australian wine industry is highly competitive, with all
      regions of Australia having producers of Premium, Super Premium and Ultra
      Premium wines that will compete with the Company’s own products. Wine production
      in Australia is dominated by large wineries that have significantly greater
      financial, production, distribution and marketing resources than the Company.
      Management believes that the principal competitive factor in the Premium, Super
      Premium and Ultra Premium markets are product quality, price and label
      recognition. We have received positive reviews of our wines and believe our
      prices are competitive with other producers. Increasingly, the competiton is
      also coming from other wine producing countries. Wine imports into Australia
      grew by 40.7% in volume, to 34.2 million litres during 2007.




10




According
      to data published by the Australian Wine and Brandy Corporation, approximately
      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 our projected production level. Management believes
      that
      we compete favorably with respect to each of these factors. We have received
      positive reviews of our wines and believe our 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 June 2009. The current production level of many Hunter
      Valley wineries is smaller than the production level of the Company’s
      winery.





**Note
      Sales**





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”). Principal was 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, we granted the Investors rights of first refusal on financings we
      may
      do in the future. The principal balance of the notes was collected as of
      December 31, 2006. Interest receivable amounting $36,851 is due on this Note as
      of June 30, 2007 and has been classified as other receivable in our accompanying
      financial statements. In connection with the Share Sale, we issued 1,250,000
      shares of common stock to MillhouseIAG Limited (“Millhouse”) as a finder’s fee.




11




**Charter
      Amendment**





On
      February 3, 2006, our Board of Directors and the holders of a majority of our
      outstanding common stock voted to increase the number of our authorized shares
      of capital stock. Pursuant to this authorization, on or about March 17, 2006,
      we
      increased the number of authorized shares of our 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.





**Loans**





On
      December 21, 2005 we entered into a loan agreement with Provident Capital
      (Provident), a financial institution located in Australia. The amount of the
      loan was $4,071,000 with monthly interest payments due on the 15th of each
      month
      at the rate of 10% per annum, rising to 16% per annum if we are late in our
      payments. The principal balance was due and payable on December 31, 2007 but
      has
      been extended to December 31, 2008. The loan is secured by certain of our
      property, plant and equipment and is guaranteed by the Trust. As of June 30,
      2007, the loan balance was $4,818,008 inclusive of accrued and unpaid interest.





On
      December 21 2005, prior to the Exchange Agreement and in connection with the
      Asset Purchase, Yarraman Australia entered into a loan agreement with the
      Yarraman Road Trust (Trust), the nominal holder of all of Yarraman Australia’s
      shares. The outstanding principal balance of this loan was $1,695,006 as of
      June 30, 2007. This loan advance is non-interest bearing. The loan is secured
      by
      the fixed assets of the Company, subordinated to all other loans of the Company
      collateralized by the fixed assets. A total of 50% of the loan payable, or
      $847,503, is to be repaid in thirty-six monthly installments and was scheduled
      to commence on the first business day of the twenty-fifth month following the
      loan agreement, or approximately February 1, 2008. On the thirty-sixth month
      of
      payment, in January 2011, the remaining 50% of the loan payable or $847,503
      is
      due and payable. The initial repayment date of February 2008 was extended to
      June 30, 2008. On June 30, 2008 the Trust agreed to convert this loan into
      equity and received approximately 4,516,900 shares of common stock.





On
      May 1,
      2006 Yarraman Australia entered into a loan agreement with the Trust in the
      principal amount of $763,920. Originally, this loan agreement had an
      interest rate of 8%, with the same repayment terms of the December 21, 2005
      loan. During the year ended June 30, 2006 a total of $10,910 in interest expense
      was recorded on this loan, until the Trust waived the interest requirement
      on
      this loan. On June 30, 2008 the Trust agreed to convert this loan into equity
      and received approximately 2,042,600 shares of common stock.





On
      May
      25, 2006 the Trust extended to Yarraman Australia an additional $12,732, to
      be
      repaid in accordance with the same terms as the December 21, 2005 loan. This
      loan advance is also non-interest bearing.




12




As
      of
      June 30, 2007 the Company is indebted to Whinners Pty., Ltd., owned by Geoffrey
      White, one of the unit holders of the Company’s majority shareholder for
      $2,905,987, including accrued interest of $94,179. Whinners Pty., Ltd. has
      made
      various advances, loans and payments on behalf of the Company, all of which
      are
      unsecured, and due on demand. These advances and loans accrued interest on
      their
      outstanding balance ranging between 0% and 10% per annum. On July 1, 2007 these
      advances and loans, including additional loans and advances made subsequent
      to
      June 30, 2007, were restructured into one loan agreement for approximately
      $3,289,000. This new loan includes approximately $689,000 related to a sale
      of
      wine by Whinners Pty., Ltd. to the Company. This portion of the new loan is
      to
      be repaid commencing December 7, 2007 with receipts from the proceeds of the
      re-sale of this wine by the Company until it is repaid in full. The entire
      new
      loan accrues interest at 6.5% per annum. This new loan is secured by the fixed
      assets of the Company, subordinate to the loan from Provident, such loan
      totaling $4,818,008 as of June 30, 2007. This new loan, together with
      outstanding interest, is to be repaid for any amounts still outstanding on
      September 30, 2008. On June 30, 2008 Whinners Pty., Ltd. agreed to convert
      approximately $2,037,000 of this debt into equity and received 5,440,476 shares
      of common stock.





**Regulatory
      Matters**





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





***Australian
      Regulatory Board***





We
      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. Our business has been
      regulated by the Australian Wine and Brandy Corporation since our
      formation.





**Trademarks
      and Intellectual Property**





All
      trademarks and intellectual property are licensed to us 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**




We
      believe that our operations are in substantial compliance with all applicable
      environmental requirements of Australia. With regard to its control of
      production and waste management, management believes we operate within all
      international standards.




13




**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 $10.25 million for industrial
      special risk coverage, approximately $8.5 million for general liability coverage
      and $8.5 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.





**Consulting
      Agreements**





On
      February 24, 2006 we entered into a consulting agreement with Madison One Group,
      Ltd.(“ Madison One”), a strategic planning consulting firm to assist us to
      identify potential candidates for acquisition purposes and assist in the
      negotiation and execution of such transactions. As compensation, we agreed
      to
      pay the firm a monthly, nonrefundable, fee of $6,500. The original term of
      the
      contract was from March 1, 2006 until July 1, 2006, but it was continued past
      that date on a month-to-month basis. This agreement was terminated in April
      2007.





On
      January 1, 2006 we entered into a consulting agreement with the 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 us is reduced to
      less
      than 15%. Thereunder, we are paying the Trust an annual fee of approximately
      $82,100. This agreement was terminated as of June 30, 2008.





**Employees**





As
      of
      June 30, 2007, we had seven full-time employees and four part-time employees.
      During May to July we employ additional part-time, seasonal employees for vine
      pruning. There are also additional 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***





Ian
      Long,
      Chief Winemaker and Chief Executive Officer. Mr. Long has over 20 years
      experience in winemaking and wine business management, including 10 years as
      Senior Winemaker at Rosemount Estate and 5 years as Group Operations Winemaker
      for Southcorp Wines. In the role at Southcorp Mr. Long was responsible for
      production optimization across the Southcorp Group of eleven company wineries
      and six contract processors, being accountable for developing the overall vision
      for winemaking facilities and the transition plan to achieve this vision. The
      Southcorp Group produced brands such as Penfolds, Lindemans, Rosemount, Seppelt
      & Wynns.





14





**Significant
      Subsidiaries**





Our
      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.





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$36,000 (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 entered into an extension of the lease with Delta
      Dawn Pty Limited during the second six months of 2006 on the same terms and
      conditions. Subsequently this lease was not renewed and was terminated on May
      31, 2007.





The
      Company’s executive offices and administrative offices are located on the Wybong
      property at the vineyard.





**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. **** The
      dispute was resolved amicably subsequent to June 30, 2007 with no charge to
      the
      Company.





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




None.





15




**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****2006**March
                31, 2006
            
            $
            2.00
            
            $
            1.00June
                30, 2006
            
            $
            2.35
            
            $
            2.35September
                30, 2006
            
            $
            2.35
            
            $
            2.35December
                31, 2006
            
            $
            2.35
            
            $
            2.35**2007**March
                31, 2007
            
            $
            2.35
            
            $
            2.35June
                30, 2007
            
            $
            2.35
            
            $
            2.35September
                30, 2007
            
            $
            2.35
            
            $
            2.35December
                31, 2007
            
            $
            2.35
            
            $
            2.35**2008**March
                31, 2008
            
            $
            2.35
            
            $
            2.35June
                30, 2008
            
            $
            1.50
            
            $
            1.50





As
      of
      June 30, 2008 there were 53 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





We
      issued
      no securities during the fiscal year ended June 30, 2007.





On
      October 23, 2006 the Company entered into a consulting agreement with Warrick
      Duthy Consulting (Warrick), in Australia, for services in recruiting certain
      consultants and Board members for us, for services in assisting the Company
      in
      establishing international distribution arrangements, and for services with
      a
      potential business merger.  Certain milestones were set in the
      contract.  Upon completion of each milestone an agreement was made for
      payment to the consultant in shares of the Company stock as
      follows:




16




Milestone 1 - 50,000 shares of stock, or $100,000 in shares, whichever is
      greater


Milestone 2 - 50,000 shares of stock, or $100,000 in shares, whichever is
      greater


Milestone 3 - 100,000 shares of stock, or $200,000 in shares, whichever is
      greater





As
      of
      June 30, 2007 Milestone 1 was completed and the Company has recorded in its
      financial statements the related shares to be issued as stated above. In April
      2007 the agreement with Warrick was terminated and Milestones 2 and 3 were
      never
      reached.





**ITEM
      6.**  **MANAGEMENT** **’S
      DISCUSSION AND ANALYSIS** **AND
      RESULTS OF OPERATIONS**




**Overview**





Our
      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, 2007 and 2006, we incurred losses of $4,452,780 and
      $1,234,667, respectively. In addition, we have suffered recurring losses from
      operations, cash deficiencies and the inability to meet our maturing obligations
      without borrowing from related parties and selling shares of our stock. These
      issues raise substantial concern about our ability to continue as a going
      concern. Our continuation as a going concern is dependent upon our ability
      to
      generate sufficient cash flow to meet our obligations on a timely basis, to
      retain our current financing, to obtain additional financing, and ultimately
      to
      attain profitability. As of June 30, 2008 we were able to convert approximately
      $4,500,000 of debt into equity by issuing shares of our common
      stock.





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, which were subsequently distributed to each such
      owner.




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 to operate as a reporting company
      in
      the United States.




17




**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,****2007**
              
              **2006**Revenue
              
              $
              2,012,445
              
              
              100
              %
              $
              1,830,151
              
              
              100
              %Cost
                  of Revenue
              
              $
              2,997,698
              
              
              149
              %
              $
              1,326,478
              
              
              72
              %Gross
                  Profit
              
              $
              (985,253
              )
              
              (49)
              %
              $
              503,673
              
              
              28
              %Other
                  (Income) Expense
              
              $
              881,799
              
              
              (44)
              %
              $
              (193,659
              )
              
              (11)
              %General
                  and administrative expenses
              
              $
              2,585,728
              
              
              128
              %
              $
              1,544,681
              
              
              84
              %Income
                  (loss) before income tax
              
              $
              (4,452,780
              )
              
              (221)
              %
              $
              (1,234,667
              )
              
              (67)
              %Income
                  tax expenses
              
              $
              0
              
              
              0
              %
              $
              0
              
              
              0
              %Net
                  Income (loss)
              
              $
              (4,452,780
              )
              
              (221)
              %
              $
              (1,234,667
              )
              
              (67)
              %





**Twelve
      Months Ended June 30, 2007 Compared to Twelve Months Ended June 30,
      2006**




***Revenue*** .
      Revenue
      was $2,012,445 in the twelve months ended June 30, 2007 compared to $1,830,151
      in the twelve months ended June 30, 2006. The increase in revenues of $182,294
      or approximately 10%, was primarily related to the following items: (1) an
      increase in our domestic sales of $262,676, (2) a decrease in our contract
      winemaking and other sales of $218,618, and (3) the effect of fluctuation in
      the
      exchange rate between the Australian Dollar and the US Dollar of approximately
      USD$149,000.





***Cost
      of Revenue*** .
      Cost of
      revenue was $2,997,698 in the twelve months ended June 30, 2007 compared to
      $1,326,478 in the twelve months ended June 30, 2006, an increase of $1,671,220.
      As a percentage of revenue, cost of revenue was 149% in the twelve months ended
      June 30, 2007 compared to 72.4% in the twelve months ended June 30, 2006. The
      increase in cost of revenue is primarily due to adjustments to the valuation
      of
      our inventory of $1,781,599 and the effect of the fluctuation in the exchange
      rate between the Australian Dollar and the US Dollar of approximately $235,000.




During
        the subsequent year ending June 30, 2008, the management of the Company sold
        approximately 341,300 liters of unbottled wine at below cost. The Company
        recorded approximately $920,000 in cost of sales to reflect this inventory
        at
        lower of cost or market at June 30, 2007 and for the year then ended. Per
        Company management this reduction in inventory is not indicative of impairment
        to any other inventory product at June 30, 2007. The sale in the subsequent
        year
        ended June 30, 2008, per management, was to infuse working capital for ongoing
        operations.


***Gross
      Profit (Loss)*** .
      Gross
      loss was $985,253 in the twelve months ended June 30, 2007 compared to gross
      profit of $503,673 in the twelve months ended June 30, 2006. As a percentage
      of
      revenues, gross profit decreased to (49)% in the twelve months ended June 30,
      2007 from 28% in the twelve months ended June 30, 2006 for the reasons discussed
      above.





***Other
      Income (Expense)*** .
      Other
      expense was $881,799 in the twelve months ended June 30, 2007 compared to
      $193,659 in the twelve months ended June 30, 2006. The increase in other expense
      of $688,140 was primarily attributable to an increase in our interest expense
      of
      $624,884. Our interest expense increased substantially due to increased
      borrowings as described in our financial statements and a full year of
      amortization of imputed interest on our related party debts which only existed
      for six months during the year ended June 30, 2006.




18




***Sales,
      General and Administrative Expenses*** .
      Sales,
      general and administrative expenses were $2,585,728 in the twelve months ended
      June 30, 2007 compared to $1,544,681 in the twelve months ended June 30, 2006.
      This is an increase of $1,041,047 or approximately 66.4% from the 2006 period
      to
      the 2007 period. This increase was primarily attributable to an increase in
      our
      expenses related to leasing and operating the Wirrila vineyard of $359,352,
      an
      increase in depreciation expense of $127,594 and an expense of $229,481 due
      to
      the effect of the fluctuation in the exchange rate between the Australian Dollar
      and the US Dollar.




As
      a
      percentage of revenues, sales, general and administrative expenses increased
      to
      approximately 128% in the twelve months ended June 30, 2007 from 84% in the
      twelve months ended June 30, 2006 due to the reasons as discussed
      above.




***Net
      Income (Loss)*** .
      Our net
      loss was $4,452,780 in the twelve months ended June 30, 2007 compared to a
      net
      loss of $1,234,667 in the twelve months ended June 30, 2006. This increase
      in
      loss was primarily attributable to an increase in our cost of sales as described
      above combined with the increase in sales, general and administrative costs
      and
      interest expense, also outlined above.




**Liquidity
      and Capital Resources**




As
      of
      June 30, 2007, we had $150,072 of cash and cash equivalents and $1,067,047
      of
      working capital as compared to $110,438 and $4,537,003, respectively, at June
      30, 2006. Cash flow from operations is expected to improve as a result of our
      cost cutting measures, including the termination of the Wirrilla lease and
      related operating costs and improved sales. Cash flow from financing activities
      is expected to improve as the Company converted approximately $4,500,000 of
      debt
      into equity by issuing 12,000,000 shares of common stock.




On
        December 21 2005, prior to the Exchange Agreement and in connection with
        the
        Asset Purchase, Yarraman Australia entered into a loan agreement with the
        Trust,
        the nominal holder of all of Yarraman Australia’s shares. The outstanding
        principal balance of this loan is $1,695,006. This loan advance is non-interest
        bearing. The loan is secured by the fixed assets of the Company, subordinated
        to
        all other loans of the Company collateralized by the fixed assets. A total
        of
        50% of the loan payable, or $847,503, is to be repaid in thirty-six monthly
        installments commencing on the first business day of the twenty-fifth month
        following the loan agreement, or approximately February 1, 2008. On the
        thirty-sixth month of payment, in January 2011, the remaining 50% of the
        loan
        payable or $847,503 is due and payable. The initial repayment date of February
        2008 has been extended to June 30, 2008.
 
 On
        May 1,
        2006 Yarraman Australia entered into a loan agreement with the Trust in the
        principal amount of $763,920. Originally, this loan agreement had an
        interest rate of 8%, with the same repayment terms of the December 21, 2005
        loan. During the year ended June 30, 2006 a total of $10,910 in interest
        expense
        was recorded on this loan, until the Trust waived the interest requirement
        on
        this loan. On May 25, 2006 the Trust extended to Yarraman Australia an
        additional $12,732, to be repaid in accordance with the same terms as the
        December 21, 2005 loan. This loan advance is also non-interest
        bearing.
 
 As
        of
        June 30, 2008 loan advances totaling $2,471,658 and the $763,920 loan payable
        were converted into 6,559,524 shares of the Company common stock.
 
 As
        the
        entire above loan advances, totaling $2,471,658 were non-interest bearing,
        the
        Company recorded an imputed interest of $871,307 which is recorded as discount
        on debt and a contribution of capital to the Company. This discount on debt
        is
        being amortized over the term that these loan advances are outstanding. During
        the year ended June 30, 2007, the Company amortized $214,392 of this discount
        on
        debt recorded as interest expense. All these loan advances are recorded as
        long-term debt.


19




As
      of
      June 30, 2007 the Company is indebted to Whinners Pty., Ltd., owned by Geoffrey
      White, one of the unit holders of the Company’s majority shareholder for
      $3,289,000. This related party has made various advances, loans and payments
      on
      behalf of the Company and has provided necessary cash flow. On July 1, 2007
      these advances and loans, including additional loans and advances made
      subsequent to June 30, 2007, were restructured into one loan agreement for
      approximately $3,289,000. This portion of the new loan is to be repaid
      commencing December 7, 2007 with receipts from the proceeds of the re-sale
      of
      this wine by the Company until it is repaid in full. The entire new loan accrues
      interest at 6.5% per annum. This new loan is secured by the fixed assets of
      the
      Company, subordinate to the loan from Provident, such loan totaling $4,818,008
      as of June 30, 2007. This new loan, together with outstanding interest, is
      to be
      repaid for any amounts still outstanding on September 30, 2008. As of June
      30,
      2008 Whinners Pty., Ltd. agreed to convert approximately $2,037,000 of this
      debt
      into equity and received 5,440,476 shares of common stock.





Management
      has been exploring options to refinance its long term loan from Provident,
      currently with an outstanding balance of $4,818,008. Any refinancing transaction
      will seek terms that provide a lower interest rate, which management believes
      will further increase the amount cash flow as a result of savings because of
      lower interest payments.





Management
      has also been exploring additional investment capital alternatives with
      professional investment bankers in the United States to raise an additional
      $3,500,000.





**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.





**Off-Balance
      Sheet Arrangements**





We
      have
      no off-balance sheet arrangements.




20


**Risks
      Factors**





*In
      addition to other information in this Annual Report, the following risk factors
      should be considered in evaluating our business and prospects. We face a variety
      of risks that may affect our operations or financial results and many of those
      risks are driven by factors that we cannot control or predict. If any of the
      following risks actually occurs, our business, prospects, financial condition
      and results of operations could be materially adversely affected. In that case,
      the trading price of our common stock would likely decline and you may lose
      all
      or a part of your investment.*





**Our
      business may be adversely affected 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.




21




**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
      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.





**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.




22




**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;





·
            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.




23




**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. 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. Due to changes in our personnel over the last fiscal
      year we were unable to timely file our financial reports. Steps have been taken
      to rectify this situation.





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




As
      most
      of our current operations are conducted in Australia, we are 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.
      Some of our executive officers and all 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.




24




**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 we will
      not be required to incur significant costs in obtaining or maintaining 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.




25




**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 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.





**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.**




We
      have
      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 our 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 we will be able to market its products
      or that products will meet with customer acceptance or generate any revenue,
      or
      that we will ultimately achieve profitability. We have incurred significant
      development and marketing operating losses to date and there can be no assurance
      of future revenues or profits.




26




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




Our
      proposed plan of operation and prospects will be largely dependent upon our
      ability to successfully attract distributors and build brand awareness with
      customers. There can be no assurance that we will be able to successfully
      implement our 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 we 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.**




We
      believe that to be successful we may need to establish on-going
      partnership/support relationships with certain customers and distributors.
      Our
      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.





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




The
      majority of our officers and directors reside outside the United States. We
      anticipate that a substantial portion of the assets that may be developed or
      acquired by us 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 our officers or directors, or to enforce against our 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 our 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 our business. 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 our products
      and
      intellectual property rights to the same extent as do the laws of the United
      States and Australia.




27




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




Growth
      of
      our business may place significant pressures on our management, operation and
      technical resources. We believe 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 our business may hinder or preclude
      significant future growth. If we are successful in obtaining customers for
      our
      products, we may be required to raise substantial additional funds and deliver
      large volumes of products to our customers on a timely basis at a reasonable
      cost to us. We may be required to obtain additional financing in order to pursue
      additional business opportunities. Our success will also depend in part upon
      our
      ability to provide customers with timely service and support. We 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
      our business and expenses arising from our 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**




Kabani
      & Company, Inc., was our principal independent accountant for the fiscal
      year ended June 30, 2006. On October 1, 2007, they were dismissed and we engaged
      Sherb & Co., LLP, as our principal independent accountant for the fiscal
      year ended June 30, 2007. The dismissal of Kabani & Company, Inc. and
      appointment of Sherb & Co., LLP was approved by our board of
      directors.





The
      report of Kabani & Company, Inc. on our financial statements for the year
      ended June 30, 2006 contained no adverse opinion or disclaimer of opinion,
      nor
      was it qualified or modified as to uncertainty, audit scope or accounting
      principle except that such report was modified to include an explanatory
      paragraph with respect to our ability, in light of our lack of capital and
      history of significant operating losses, to continue as a going concern.





In
      connection with the audit for the fiscal year ended June 30, 2006 and during
      the
      subsequent interim period through October 1, 2007, there were no disagreements
      between us and Kabani & Company, Inc. on any matter of accounting principles
      or practices, financial statement disclosure, or auditing scope or procedures,
      which disagreements, if not resolved to their satisfaction, would have caused
      Kabani & Company, Inc. to make reference to the subject matter of the
      disagreement in connection with their reports.





In
      connection with the audit of the fiscal year ended June 30, 2006 and during
      the
      subsequent interim period through October 1, 2007, Kabani & Company, Inc.
      did not advise us that:





·
            internal
                controls necessary for us to develop reliable financial statements
                did not
                exist;




28




·
            information
                had come to their attention that led them to no longer be able to
                rely on
                our management’s representations or made them unwilling to be associated
                with the financial statements prepared by our management;





·
            there
                was a need to expand significantly the scope of their audit, or that
                information had come to their attention during such time periods
                that if
                further investigated might materially impact the fairness or reliability
                of either a previously issued audit report or the underlying financial
                statement; or the financial statements issued or to be issued covering
                the
                fiscal periods subsequent to the date of the most recent financial
                statements covered by an audit report; or





·
            information
                had come to their attention that they had concluded materially impacted
                the fairness or reliability of either (i) a previously issued audit
                report
                or the underlying financial statements, or (ii) the financial statements
                issued or to be issued covering the fiscal periods subsequent to
                the date
                of the most recent financial statements covered by an audit report.





Prior
      to
      the engagement of Sherb & Co., LLP we had no consultations or discussions
      with Sherb & Co., LLP regarding the application of accounting principles to
      a specific completed or contemplated transaction, or the type of audit opinion
      that might be rendered by them on or financial statements. Further, prior to
      their engagement, we received no oral or written advice from Sherb & Co.,
      LLP of any kind.





**IT** **EM
      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.





29




**PART
      III**





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A)
      OF THE EXCHANGE ACT**




As
      of
      September 25, 2008 our directors and executive officers are as
      follows:





**Name**
            **Age**
            **Position**William
                J. Stubbs
            67
            Director,
                ChairmanIan
                Long
            42
            Director,
                Chief Executive Officer, PresidentLawrence
                Lichter
            46
            Chief
                Financial Officer, SecretaryGary
                Blom
            57
            Director





**William
      J. Stubbs** ,
      Director, Chairman.


William
      J. 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.





**Ian
      Long,** Chief
      Executive Officer, President and Director.


Ian
      Long
      has over 20 years experience in winemaking and wine business management,
      including 10 years as Senior Winemaker at Rosemount Estate and 5 years as Group
      Operations Winemaker for Southcorp Wines. In the role at Southcorp Mr. Long
      was
      responsible for production optimization across the Southcorp Group of 11 company
      wineries and 6 contract processors, being accountable for developing the overall
      vision for winemaking facilities & the transition plan to achieve this
      vision. The Southcorp Group produced brands such as Penfolds, Lindemans,
      Rosemount, Seppelt & Wynns. Mr. Long has been a member of the Board of
      Directors since June 2008 and our Chief Executive officer and President since
      September 25, 2008.





**Lawrence
      Lichter** ,
      Chief
      Financial Officer and Secretary.


Lawrence
      Lichter has been serving as Secretary since September 20, 2007 and as Chief
      Financial Officer since September 25, 2008. Mr. Lichter has been a certified
      public accountant since 1984. In 1991 he founded Lichter, Yu & Associates, a
      certified public accounting firm for which he still works that provides
      consulting services to public companies and assists them with the preparation
      of
      their financial statements and with their SEC and Sarbanes Oxley compliance
      matters. From December 1999 through March 2008 Mr. Lichter served as the chief
      financial officer for Pacific American Services Group, LLC, a company which
      owns
      an institutional securities firm and a financial services firm and which
      specializes in income tax preparation and business management.




30




**Gary
      Blom**


Gary
        Blom
        has spent over 25 years as an investment banker in the United States and
        Australia. After spending 12 years on Wall Street as Managing Partner of
        an
        International Investment Bank which specialized in Corporate Finance, Mergers
        and Acquisitions he returned to Australia in 1994 to successfully launch
        the
        Imax theatres in Australia, New Zealand and Asia. Since 1994 he has been
        an
        investor in Yarraman Estate. In recent years he has joined as a partner of
        Barrack & York, an Australian corporate advisory firm that specializes in
        providing a full service platform integrating and coordinating investment
        banking, tax, accounting and legal services to corporations in the global
        market.


There
      have been no transactions to which we or any of our subsidiaries was or is
      to be
      a party, in which any of our 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, 2007, 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.


31





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 was filed as Exhibit 14.1 to our Annual Report on Form 10-KSB
      for the fiscal year ended June 30, 2006. 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. A copy of our Code of Ethics will be provided to any
      person requesting same without charge.





Audit
      Committee




Our
      Board
      of Directors has adopted an Audit Committee Charter. Our Board of Directors
      had
      appointed William Stubbs to the Audit Committee. 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.





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**




The
      following table sets forth information concerning the total compensation paid
      or
      accrued by us during the two fiscal years ended June 30, 2007 to:




·
            all
                individuals that served as our chief executive officer and chief
                financial
                officer or acted in a similar capacity for us at any time during
                the
                fiscal year ended June 30, 2007;
                and




·
            all
                individuals that served as executive officers of ours at any time
                during
                the fiscal year ended June 30, 2007 that received annual compensation
                during the fiscal year ended June 30, 2007 in excess of
                $100,000.




32


2006


Name
                  and
                Principal Position
              
              Year
              
              Salary
                  ($)
              
              Bonus
                  ($)
              
              Stock
                  Awards ($)
              
              Option
                  Awards ($)
              
              Non-Equity
                  Incentive Plan Compen-sation ($)
              
              Change
                  in Pension Value and Non-qualified Deferred Compen-sation Earnings
                  ($)
              
              All
                  Other Compensation ($)
              
              Total
                  ($)(a)
              
              (b)
              
              (c)
              
              (d)
              
              (e)
              
              (f)
              
              (g)
              
              (h)
              
              (i)
              
              (j)Wayne
                  Rockall(1),
              
              
              2007
              
              
              92,363
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              92,363Chief
                    Executive
              
              
              2006
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0OfficerRaymond
                Brien(2),Chief
                  Financial
              
              
              2007
              
              
              4,038
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              538
              
              
              4,576OfficerAndrew
                  Lyon(3),
              
              
              2007
              
              
              52,144
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              52,144Chief
                  Executive
              
              
              2006
              
              
              51,455
              (3)
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              10,239
              
              
              0OfficerJohn
                  Wells(4),
                  Chief
                Financial
                  Officer
              
              
              2006
              
              
              77,333
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              4,167
              
              
              81,500


(1)
            Mr.
                Rockall served as our Chief Executive Officer from September 1, 2006
                until
                September 20, 2007 and did not collect any compensation from us during
                the
                2006 fiscal year. (2)
            Mr.
                Brien served as our Chief Financial Officer from October 1, 2007
                until
                June 30, 2008. (3)
            Mr.
                Lyon served as our Chief Executive Officer from December 22, 2005
                until
                September 1, 2006. (4)
            Mr.
                Wells served as our Chief Financial Officer from December 22, 2005
                until
                April 27, 2007.




We
      have
      not issued any stock options or maintained any stock option or other incentive
      plans since our inception. We have no plans in place and have never maintained
      any plans that provide for the payment of retirement benefits or benefits that
      will be paid primarily following retirement including, but not limited to,
      tax
      qualified deferred benefit plans, supplemental executive retirement plans,
      tax-qualified deferred contribution plans and nonqualified deferred contribution
      plans. Similarly, we have no contracts, agreements, plans or arrangements,
      whether written or unwritten, that provide for payments to the named executive
      officers or any other persons following, or in connection with the resignation,
      retirement or other termination of a named executive officer, or a change in
      control of us or a change in a named executive officer’s responsibilities
      following a change in control.




33




**COMPENSATION
      COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION**




Our
      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 William Stubbs. The Board
      of
      Directors has designated William Stubbs 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
      Australia had an employment agreement with Wayne Rockall that provided for
      his
      total annual compensation for serving as Chief Executive Officer and President
      of AU$200,000. Wayne Rockall was also entitled to a bonus of up to 100% of
      base
      salary on achieving key budget and performance criteria, which were never met.





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




Yarraman
      Australia had an employment agreement with Mr. John Wells that provided for
      his
      total annual compensation of AU$75,000 for serving as Chief Financial
      Officer.





Yarraman
      Australia had an employement agreement with Mr. Raymond Brien that provided
      for
      his total annual compensation to be AU$75,000 and an auto allowance of AU$10,000
      for serving as Chief Financial Officer.





The
      Company has an agreement with Mr. Lawrence Lichter that provides for annual
      compensation of US$25,000 for serving as company Secretary.





**COMPENSATION
      OF DIRECTORS**





Prior
      to
      May 1, 2008 members of our Board Directors received 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. Our
      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 us as required.





Bill
      Stubbs was 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.




34




As
      of May
      1, 2008 the only Director that will receive a fee for his services is the
      Chairman, William Stubbs. The fee will be AUD 10,000 per year, approximately
      US$8,500.




For
      the
      year ended June 30, 2007 director compensation was as follows:


Name
              
              Fees
                Earned
                  or
                Paid
                  in
                Cash
              
              Stock
                Awards
              
              Option
                Awards
              
              Non-Equity
                Incentive
                Plan
                Compensation
              
              Non-Qualified
                Deferred
                Compensation
                Earnings
              
              All
                  Other
                Compensation
              
              TotalWilliam
                  Stubbs
              
              $
              20,700
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              20,700William
                  Middleton
              
              $
              16,420
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              16,420




**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AN** **D
      RELATED STOCKHOLDER MATTERS**




The
      following table sets forth, as of September 30, 2008, certain information
      concerning the beneficial ownership of our Common Stock by:





·
            each
                stockholder known by us to own beneficially five percent or more
                of our
                outstanding common stock;





·
            each
                director;





·
            each
                executive officer; and





·
            all
                of our executive officers and directors as a group, and their percentage
                ownership and voting power.





Title
                of Class
            
            Name
                and Address of Beneficial
              Owner
            
            Shares
              Beneficially
              Owned
                (1)
            
            Percent
                of
              Class†Common
                Stock, $0.001 par value
            
            
            Delta
                Dawn Pty Ltd., as trustee for the Yarraman Road Trust (2)
            
            
            7,642,237(3
            )
            
            20.28
            %Common
                Stock, $0.001 par value
            
            
            Huntleigh
                Investment Fund Limited
              49
                Micoud Street
              Castries,
                St. Lucia
            
            
            3,534,012
                (4
            )
            
            9.30
            %Common
                Stock, $0.001 par value
            
            
            William
                J. Stubbs, Director
              58
                Terry Road
              Box
                Hill, New South Wales Australia 2765
            
            
            75,000
            
            
            *Common
                Stock, $0.001 par value
            
            
            Whinners
                Pty., Ltd
              Sydney,
                NSW Australia
            
            
            8,399,163
            
            
            22.10
            %




35




Title
                of Class
            
            Name
                and Address of Beneficial
              Owner
            
            Shares
              Beneficially
              Owned
                (1)
            
            Percent
                of
              Class†Common
                Stock, $0.001 par value
            
            
            Ian
                Long, CEO, President, Director
              700
                Yarraman Road
              Wybong,
                NSW Australia 2333
            
            
            275,000
            
            
            *Common
                Stock, $0.001 par value
            
            
            Gary
                Blom, Director
              Mallfame
                Pty., Ltd.
              Sydney,
                NSW Australia
            
            
            6,045,200
            
            
            15.91
            %Common
                Stock, $0.001 par value
            
            
            Lawrence
                Lichter, CFO and Secretary
              16133
                Ventura Boulevard, #425
              Encino,
                CA 91436 USA
            
            
            90,000
            
            
            *Common
                Stock, $0.001 par value
            
            
            Menala
                Pty., Ltd.
              Sydney,
                NSW Australia
            
            
            2,060,800
            
            
            5.42
            %Common
                Stock, $0.001 par value
            
            
            Total
                Held by Directors and Executive Officers
            
            
            6,420,200
            
            
            16.89
            %




† As
      of
      September 30, 2008 there were 38,000,000 shares of our common stock, par value
      $0.001 per share, issued and outstanding.





*
      Less
      than one percent.





(1)
            Unless
                otherwise noted, we believe 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, we have not granted any options, warrants
                or
                any other form of securities convertible into our 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.





(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.




36




(4)
            Based
                on information reported by Huntleigh Investment Fund Limited on a
                Form 4
                filed on June 5, 2006.





Equity
      Compensation Plan Information




We
      do not
      have any equity compensation plans.





**ITEM
      12.**  **CERTAIN
      RELATION** **SHIPS
      AND RELATED TRANSACTIONS** **,
      AND DIRECTOR INDEPENDENCE**




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





The
      Company pays the Trustee approximately $35,000 per month for the use of
      additional vineyard land also located in Australia. On January 1, 2006 the
      Company entered into a written agreement to lease this vineyard land for
      approximately $35,000 per month. The term was from January 1, 2006 through
      June
      30, 2006. As of July 1, 2006 this lease was on a month-to-month basis with
      the
      same payment terms. This leasing arrangement was terminated in May 2007. During
      the years ended June 30, 2007 and 2006 total lease expense was approximately
      $359,000 and $196,000, respectively.





Stockholders
      and Directors of the Company and of the Trust were provided wine during the
      years ended June 30, 2007 and 2006 valued at $24,505 and $25,858,
      respectively.





The
      Company had wine sales to entities related to various Stockholders, Officers
      and
      Directors totaling $4,734 and $8,406 during the years ended June 30, 2007 and
      2006, respectively.





On
      January 1, 2006 Yarraman Australia entered into a consulting agreement with
      the
      Trustee 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 the Company is reduced to less than 15%. Under this agreement
      the Company must pay the Trustee $100,000AUD (Australian Dollars) or
      approximately $82,100 USD (US Dollars) annually.  During the years ended
      June 30, 2007 and 2006 the Company paid the Trustee approximately $126,860
      and
      $58,542, respectively.





During
      the years ended June 30, 2007 and 2006 the Company included in its revenue,
      fees
      for wine making and storage of wine of approximately $0 and $808,361,
      respectively, to a company (related through common shareholder) with whom
      Yarraman Australia had an agreement.




37




On
      December 21 2005, prior to the Exchange Agreement and in connection with the
      Asset Purchase, Yarraman Australia entered into a loan agreement with the Trust,
      the nominal holder of all of Yarraman Australia’s shares. The outstanding
      principal balance of this loan is $1,695,006 as of June 30, 2008. This loan
      advance is non-interest bearing. The loan is secured by the fixed assets of
      the
      Company, subordinated to all other loans of the Company collateralized by the
      fixed assets. A total of 50% of the loan payable, or $847,503, was to be repaid
      in thirty-six monthly installments commencing on the first business day of
      the
      twenty-fifth month following the loan agreement, or approximately February
      1,
      2008. In January 2011, the remaining 50% of the loan payable or $847,503 is
      due
      and payable. The initial repayment date of February 2008 has been extended
      to
      June 30, 2008. On June 30, 2008 the Trustee agreed to convert this loan into
      equity and received approximately 4,516,900 shares of common stock.





On
      May 1,
      2006 Yarraman Australia entered into a loan agreement with the Trustee in the
      principal amount of $763,920. Originally, this loan agreement had an
      interest rate of 8%, with the same repayment terms of the December 21, 2005
      loan. During the year ended June 30, 2006 a total of $10,910 in interest expense
      was recorded on this loan, until the Trustee waived the interest requirement
      on
      this loan. On June 30, 2008 the Trustee agreed to convert this loan into equity
      and received approximately 2,042,600 shares of common stock.





On
      May
      25, 2006 the Trustee extended to Yarraman Australia an additional $12,732,
      to be
      repaid in accordance with the same terms as the December 21, 2005 loan. This
      loan advance is also non-interest bearing.





As
      the
      loan advances, totaling $2,471,658 were non-interest bearing, the Company
      recorded an imputed interest of $871,307 which is recorded as discount on debt
      and a contribution of capital to the Company. This discount on debt is being
      amortized over the term that these loan advances are outstanding. During the
      year ended June 30, 2007, the Company amortized $207,365 of this discount on
      debt recorded as interest expense. All these loan advances are recorded as
      long-term debt.





The
      following is a reconciliation of the above loan advances as of June 30,
      2007:





December
                21, 2005 advance
            
            $
            1,695,006May
                1, 2006 advance
            
            
            763,920May
                25, 2006
            
            
            12,7322,471,658Discount
                on debt
            
            
            (936,953
            )1,534,705Amortization
                of discount on debt (balance sheet purposes)
            
            
            214,392$
            1,749,097





As
      of
      June 30, 2007 the Company is indebted to Whinners Pty., Ltd., owned by Geoffrey
      White, one of the unit holders of the Company’s majority shareholder for
      $2,905,987, including accrued interest of $94,179. This related party has made
      various advances, loans and payments on behalf of the Company, all of which
      are
      unsecured, and due on demand. These advances and loans accrued interest on
      their
      outstanding balance ranging between 0% and 10% per annum. On July 1, 2007 these
      advances and loans, including additional loans and advances made subsequent
      to
      June 30, 2007, were restructured into one loan agreement for approximately
      $3,289,000. This new loan includes approximately $689,000 related to a sale
      of
      wine by the related party to the Company. This portion of the new loan was
      to be
      repaid commencing December 7, 2007 with receipts from the proceeds of the
      re-sale of this wine by the Company until it is repaid in full. The entire
      new
      loan accrues interest at 6.5% per annum. This new loan is secured by the fixed
      assets of the Company, subordinate to the loan from Provident Bank, such loan
      totaling $4,818,008 as of June 30, 2007. This new loan, together with
      outstanding interest, is to be repaid for any amounts still outstanding on
      September 30, 2008. As of June 30, 2008 Whinners agreed to convert AUD2,400,000,
      approximately US$2,037,000, of this loan into equity and received 5,440,476
      shares of common stock.




38




**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)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)




39




**Exhibit
                Number**
            **Description**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)




40




**Exhibit
                Number**
            **Description**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 (incorporated herewith by reference to Exhibit 10.13 to Yarraman
                Winery, Inc.’s Annual Report on Form 10-KSB for the year ended June 30,
                2006 and filed with the Securities and Exchange Commission on September
                28, 2006)10.14
            Assignment
                of Debts Agreement dated February 2007 between Yarraman Estate Pty
                Limited
                and Whinners Pty Limited (incorporated herewith by reference to Exhibit
                10.1 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the
                quarter ended March 31. 2007 and filed with the Securities and Exchange
                Commission on June 25, 2007)14.1
            Code
                of Ethics (incorporated herewith by reference to Exhibit 14.1 to
                Yarraman
                Winery, Inc.’s Annual Report on Form 10-KSB for the year ended June 30,
                2006 and filed with the Securities and Exchange Commission on September
                28, 2006)16.1
            Letter
                from Kabani & Company, Inc. regarding change in certifying accountant
                (incorporated herewith by reference to Exhibit 16.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated September 20, 2007 and filed with
                the Securities and Exchange Commission on November 2,
                2007)21.1
            Subsidiaries
                of Yarraman Winery, Inc.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 herewith31.2
            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




41




**Exhibit
                Number**
            **Description**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
                herewith32.2
            Certification
                of Chief Financial 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**




Audit
      Fees .




The
      aggregate fees billed to us by our principal accountant for services rendered
      during the fiscal years ended June 30, 2007 and 2006 are set forth in the table
      below:





**Fee
                Category**
            
            **Fiscal
                year ended June 30, 2007**
            
            **Fiscal
                year ended June 30, 2006**Audit
                fees (1)
            
            $
            19,855
            
            $
            14,480Audit-related
                fees (2)
            
            $
            0
            
            $
            0Tax
                fees (3)
            
            $
            0
            
            $
            0All
                other fees (4)
            
            $
            0
            
            $
            0Total
                fees
            
            $
            19,855
            
            $
            14,480





(1)
            Audit
                fees consists of fees incurred for professional services rendered
                for the
                audit of consolidated financial statements, for reviews of our interim
                consolidated financial statements included in our quarterly reports
                on
                Form 10-QSB and for services that are normally provided in connection
                with
                statutory or regulatory filings or
                engagements.





(2)
            Audit-related
                fees consists of fees billed for professional services that are reasonably
                related to the performance of the audit or review of our consolidated
                financial statements, but are not reported under “Audit fees.”





(3)
            Tax
                fees consists of fees billed for professional services relating to
                tax
                compliance, tax planning, and tax
                advice.





(4)
            All
                other fees consists of fees billed for all other
                services.





Audit
      Committee’s Pre-Approval Practice .





Section
      10A(i) of the Securities Exchange Act of 1934 prohibits our auditors from
      performing audit services for us as well as any services not considered to
      be
“audit services” unless such services are pre-approved by the board of directors
      (in lieu of the audit committee) or unless the services meet certain de minimis
      standards. Accordingly, our audit committee pre-approves all services, including
      audit services, provided by our independent accountants.





42


**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: October
              6,
              2008
            By:
            /s/
              Ian
              LongName:Ian
              LongTitle:Chief
              Executive Officer and Director(Principal Executive Officer)





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.


YARRAMAN
                  WINERY,
                  INC.Date: October
                6, 2008
              By:
              /s/
                William J. StubbsName:
                William J. StubbsTitle:  
                Director, ChairmanDate: October
                6, 2008
              By:
              /s/
                Lawrence P. LichterName:
                Lawrence LichterTitle:  
                Chief Financial Officer(Principal Financial Officer andPrincipal Accounting Officer)Date: October
                6, 2008
              By:
              /s/
                Gary BlomName: 
                Gary BlomTitle:   
                Director
 43





**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)




44




**Exhibit
                Number**
            **Description**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)




45




**Exhibit
                Number**
            **Description**10.13
            Loan
                Agreement dated August 1, 2006 between Yarraman Winery, Inc. and
                Whinners
                Pty Ltd (incorporated herewith by reference to Exhibit 10.13 to Yarraman
                Winery, Inc.’s Annual Report on Form 10-KSB for the year ended June 30,
                2006 and filed with the Securities and Exchange Commission on September
                28, 2006)10.14
            Assignment
                of Debts Agreement dated February 2007 between Yarraman Estate Pty
                Limited
                and Whinners Pty Limited (incorporated herewith by reference to Exhibit
                10.1 to Yarraman Winery, Inc.’s Quarterly Report on Form 10-QSB for the
                quarter ended March 31. 2007 and filed with the Securities and Exchange
                Commission on June 25, 2007)14.1
            Code
                of Ethics (incorporated herewith by reference to Exhibit 14.1 to
                Yarraman
                Winery, Inc.’s Annual Report on Form 10-KSB for the year ended June 30,
                2006 and filed with the Securities and Exchange Commission on September
                28, 2006)16.1
            Letter
                from Kabani & Company, Inc. regarding change in certifying accountant
                (incorporated herewith by reference to Exhibit 16.1 to Yarraman Winery,
                Inc.’s Current Report on Form 8-K dated September 20, 2007 and filed with
                the Securities and Exchange Commission on November 2,
                2007)21.1
            Subsidiaries
                of Yarraman Winery, Inc.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 herewith31.2
            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 herewith32.1
            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
                herewith32.2
            Certification
                of Chief Financial Officer and the Principal Financial Officer Pursuant
                to
                18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), filed
                herewith





46







**YARRAMAN
      WINERY, INC. AND SUBSIDIARY**





**CONSOLIDATED
      FINANCIAL STATEMENTS**








**JUNE
      30, 2007**














47







**TABLE
      OF CONTENTS**











Report
                of Sherb & Co., LLP
            F-1Consolidated
                Balance Sheet
            F-2Consolidated
                Statement of Operations
            F-3Consolidated
                Statement of Cash Flow
            F-4Consolidated
                Statements of Changes in Stockholders’ Equity (Deficit)
            F-5Notes
                to Consolidated Financial Statements
            F-6
                - F-21





48


REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board
        of
        Directors
 Yarraman
        Winery, Inc
 700
        Yarraman Road, Wybong
 Upper
        Hunter Valley
 New
        South
        Wales, Australia
  We
        have
        audited the accompanying balance sheet of Yarraman Winery, Inc. as of June
        30,
        2007 and the related statements of operations, stockholders' deficit and
        cash
        flows for the year ended June 30, 2007. 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 in accordance with generally accepted auditing standards
        as
        established by the Auditing Standards Board (United States) and in accordance
        with the auditing 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. The Company is not required to have, nor were we engaged
        to perform, and audit of its internal control over financial reporting. Our
        audit included consideration of internal control over financial reporting
        as a
        basis for designing audit procedures that are appropriate in the circumstances,
        but not for the purposes of expressing an opinion on the effectiveness of
        the
        Company’s internal control over financial reporting. Accordingly, we express no
        such opinion. 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 provide 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. as of
        June
        30, 2007 and the results of their operations and their cash flows for the
        year
        ended June 30, 2007 in conformity with accounting principles generally accepted
        in the United States of America.
  /s/
                  Sherb & Co., LLPCertified
                  Public Accountants
 
 New
        York,
        New York
 September
        18, 2008


F-1





YARRAMAN
                WINERY, INC. AND SUBSIDIARYCONSOLIDATED
                BALANCE SHEETSJUNE
                30, 2007




ASSETSCurrent
                AssetsCash
                and cash equivalents
            
            $
            150,072Accounts
                receivable, net
            
            
            775,718Inventory
            
            
            4,074,056Other
                receivables
            
            
            85,931Other
                assets
            
            
            227,672Total
                Current Assets
            
            
            5,313,449Property,
                plant and equipment, net
            
            
            4,235,575Intangible
                asset
            
            
            212,200$
            9,761,224LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            1,199,567Capital
                leases, current portion
            
            
            140,849Due
                to related party
            
            
            2,905,986Total
                Current Liabilities
            
            
            4,246,402Long
                Term Liabilities:Capital
                leases, net of current portion
            
            
            124,847Loans
                payable - related party (net of discount on debt of
                $722,561)
            
            
            1,749,097Long-term
                debt
            
            
            4,818,008Total
                Long Term Liabilities
            
            
            6,691,952Total
                Liabilities
            
            
            10,938,354Stockholders’
                Equity (Deficit):Common
                stock, $.001 par value,25,000,000
                shares authorized and outstanding
            
            
            25,000Additional
                paid in capital
            
            
            5,455,252Other
                comprehensive income
            
            
            10,977Accumulated
                deficit
            
            
            (6,668,359
            )Total
                Stockholders’ (Deficit) Equity
            
            
            (1,177,130
            )$
            9,761,224




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




F-2


YARRAMAN
                  WINERY, INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF OPERATIONSYEAR
                  ENDED JUNE 30, 2007
  Sales,
                  net
              
              $
              2,012,445Cost
                  of sales
              
              
              2,997,698Gross
                  profit
              
              
              (985,253
              )Selling,
                  general and administrative expenses
              
              
              2,585,728Loss
                  from operations
              
              
              (3,570,981
              )Other
                  (Income) ExpenseInterest
                  income
              
              
              (1,088
              )Interest
                  expense
              
              
              871,485Gain
                  on settlement of debt
              
              
              -Finders
                  fee for reverse acquisition
              
              
              -Gain
                  on sale of fixed assets
              
              
              13,032Transaction
                  gain (loss) on foreign currency
              
              
              (1,630
              )Total
                  Other (Income) Expense
              
              
              881,799Loss
                  before income taxes
              
              
              (4,452,780
              )Provision
                  for income taxes
              
              
              -Net
                  loss
              
              
              (4,452,780
              )Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              
              (141,212
              )Comprehensive
                  Loss
              
              $
              (4,593,992
              )Net
                  loss per share:Basic
                  and diluted
              
              $
              (0.18
              )Weighted
                  average number of shares outstanding:Basic
                  and diluted
              
              
              25,000,000
  Weighted
                  average of dilutive securities has not been calculated since the
                  effect of
                  dilutive securities is anti-dilutiveThe
                  accompanying notes are an integral part of these audited consolidated
                  financial statements.




F-3


YARRAMAN
                  WINERY, INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF CASH FLOWSYEAR
                  ENDED JUNE 30, 2007
    CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  Loss
              
              $
              (4,452,780
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
              
              
              389,266Gain
                  on settlement of debt
              
              
              -Shares
                  to be issued for consulting fees
              
              
              117,000Amortization
                  of discount on debt
              
              
              205,905(Increase)
                  / decrease in assets:Accounts
                  receivables
              
              
              (205,461
              )Inventory
              
              
              757,764Other
                  receivables
              
              
              26,647Other
                  assets
              
              
              21,549Increase
                  in liabilities:Accounts
                  payable and accrued expenses
              
              
              114,768Total
                  Adjustments
              
              
              1,427,438Net
                  cash used in operations
              
              
              (3,025,342
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESAcquisition
                  of property and equipment
              
              
              -CASH
                  FLOWS FROM FINANCING ACTIVITIESCollection
                  on Note Receivable
              
              
              -Proceeds
                  from long-term debt
              
              
              74,634Capital
                  lease payments
              
              
              (95,164
              )Payment
                  on loan payable- related party
              
              
              -Due
                  to related party
              
              
              2,905,986Loans
                  payable - related party
              
              
              -Net
                  cash provided by financing activities
              
              
              2,885,456Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              179,520Net
                  increase in cash and cash equivalents
              
              
              39,634Cash
                  and cash equivalents, beginning balance
              
              
              110,438Cash
                  and cash equivalents, ending balance
              
              $
              150,072SUPPLEMENTAL
                  DISCLOSURES:Cash
                  paid for:Income
                  tax payments
              
              $
              -Interest
                  payments
              
              $
              282,949Non-cash
                  financing and investing activitiesPurchase
                  of equipment under capital leases
              
              $
              144,297Discount
                  on debt
              
              $
              871,307
  The
                  accompanying notes are an integral part of these audited consolidated
                  financial statements.




F-4


YARRAMAN
                  WINERY INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENT OF STOCKHOLDERS' EQUITY
                  (DEFICIT)
  TotalAdditional
              
              Other
              
              
              
              Stockholders'Common
                  Stock
              
              Paid
              
              Comprehensive
              
              Accumulated
              
              EquityShares
              
              Amount
              
              in
                  Capital
              
              Income
                  (Loss)
              
              Deficit
              
              (Deficit)Balance
                  as of June 30, 2006
              
              
              25,000,000
              
              $
              25,000
              
              $
              4,583,945
              
              $
              152,189
              
              $
              (2,215,578
              )
              $
              2,545,556Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (141,212
              )
              
              -
              
              
              (141,212
              )Discount
                  on debt
              
              
              
              
              
              
              
              
              871,307
              
              
              
              
              
              
              
              
              871,307Net
                  loss for the year ended June 30, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,452,780
              )
              
              (4,452,780
              )Balance
                  as of June 30, 2007
              
              
              25,000,000
              
              $
              25,000
              
              $
              5,455,252
              
              $
              10,977
              
              $
              (6,668,358
              )
              $
              (1,177,129
              )
  The
                  accompanying notes are an integral part of these audited consolidated
                  financial statements.





F-5


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


NOTE
      1 - NATURE
      OF OPERATIONS





On
      December 16, 2005, Yarraman Estate Pty Limited, a privately owned Australian
      company engaged in the production of wine (“Yarraman Australia”), purchased from
      the beneficial owners of all of Yarraman Australia’s shares, (the
“Shareholders”) and Delta Dawn Pty Limited as trustee (the Trustee”) of the
      Yarraman Road Trust (the “Trust”), the nominal holder of such shares, certain
      assets including land, buildings and equipment and water license rights by
      assuming certain debt, capital leases, contribution to paid in capital for
      the
      Trust and a liability to the Trust (the “Asset Purchase”). The assets and
      liabilities were recorded at the historical cost of the related party. No cash
      was exchanged. The following is a summary of the transaction:





Assets
                Purchased
            
            $
            5,759,740Liabilities
                Assumed
            
            
            (4,384,740
            )Payable
                to Former Parent
            
            
            (431,151
            )Contribution
                to Capital
            
            
            (943,849
            )$
            -





Yarraman
      Australia’s assets are pledged as collateral for a loan advance owed by Yarraman
      Australia’ to a commercial bank. Prior to the Asset Purchase, the Trust was the
      borrower of this loan, subsequent to the Asset Purchase Yarraman Australia
      assumed the loan. As of June 30, 2007 the outstanding balance on this debt
      was
      $4,818,008.





On
      December 22, 2005, Yarraman Australia, the Trustee and the Trust, entered into
      a
      Share Exchange Agreement (the “Exchange Agreement”) with Yarraman Winery, Inc.
      formerly Dazzling Investments, Inc., a company incorporated on December 6,
      1996
      under the laws of the State of Nevada. Under the terms of the exchange agreement
      Yarraman Winery, Inc. issued 15,000,000 shares of their common stock for all
      the
      issued and outstanding shares of Yarraman Australia (the “Share Exchange”). 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”).  Henceforth Yarraman Winery, Inc. or Yarraman Australia are to be
      referred to as the “Company”, unless reference is made to the respective company
      for reference to events surrounding that company.





The
      Share
      Exchange has been accounted for as a reverse acquisition under the purchase
      method of accounting since the stockholders of Yarraman Australia obtained
      control of the consolidated entity. Accordingly, the acquisition has been
      recorded as a recapitalization of Yarraman Australia, with Yarraman Australia
      being treated as the continuing entity. The historical financial statements
      presented are those of Yarraman Australia. The balance sheet consists of the
      net
      assets of Yarraman Australia, the accounting acquirer, at historical cost and
      the net assets of Yarraman Winery, Inc., the legal acquirer, at historical
      cost.
      The statements of operations include the operations of the accounting acquirer
      for the period presented and the operations of the legal acquirer from the
      date
      of the acquisition. 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 Yarraman Australia.





The
      Company produces and sells premium, super premium and ultra premium varietal
      wines. The Company’s wines are made from grapes grown at their vineyard (the
“Vineyard”) and from grapes purchased from other Australian vineyards. The
      grapes are crushed, fermented and made into wine at the Company’s 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.




F-6


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**




Prior
      to
      the Exchange Agreement, on August 15, 2005, the Company’s Board of Directors’
declared a 4.55 for 1 common stock dividend to the stockholders 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.  In connection with the Exchange
      Agreement, certain stockholders 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 as a result of the reverse acquisition. All prior
      year
      information has been adjusted to reflect the stock cancellation and the stock
      dividend.





In
      connection with Exchange Agreement, 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 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. This right was relinquished in
      September 2006. The principal balance of the note has been collected as of
      December 31, 2006. Interest receivable amounting $36,851 is due on this Note
      as
      of June 30, 2007 and has been classified as other receivable in the accompanying
      financial statements.





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






F-7




**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


NOTE 2
      - SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Basis
      of Presentation


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





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. The Company recognizes
      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.





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 $42,440
      as
      of June 30, 2007.





Vineyard
      Development Costs


Vineyard
      development costs consist primarily of the costs of the vines and expenditures
      related to labor and materials to prepare the land and construct vine trellises.
      The costs are capitalized and included in property, plant and equipment until
      the vineyard becomes commercially productive, at which time annual amortization
      is recognized using the straight-line method over the estimated economic useful
      life of the vineyard, which is estimated to be 30 years. Amortization expense
      of
      vineyard development costs aggregated $3,460 for the year ended June 30, 2007,
      and is included in inventory costs and ultimately becomes a component of costs
      of goods sold.





Goods
      and Services Tax


Revenues,
      expenses and assets are recognized net of the amount of goods and services
      tax
      (GST), except where the amount of GST incurred is not recoverable from the
      taxation authority. In these circumstances, the GST is recognized as part of
      the
      cost of acquisition of the asset or as part of the expense. Receivables and
      payables are stated with the amount of GST included.




The
      net
      amount of GST recoverable from, or payable to, the Australian Tax Authority
      (ATO) is included as current asset or liability in the statement of financial
      position. Cash flows are included in the statement of cash flows on a gross
      basis. The GST components of cash flows arising from investing and financing
      activities, which are recoverable from, or payable to, the ATO are classified
      as
      operating cash flows. The Company has a net consumption tax receivable of $9,761
      as of June 30, 2007.




F-8


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


In
      addition to GST, the Company is required to collect wine equalisation tax
      (“WET”) on sales of wine product to non-exempt Australian customers. Revenue is
      recorded net of WET taxes. The WET taxes payable is offset by a rebate of the
      WET tax offered by the Australian Taxation Office. The WET rebate of the WET
      tax
      is phased out after a statutory amount of Australian sales have been achieved.
      The Company has a net WET rebate receivable of $13,266 at June 30, 2007.





Inventories


Yarraman
      Australia’s annual crop and production costs are recognized as work-in-process
      inventories. Such costs are accumulated with related direct and indirect
      harvest, wine processing and production costs, and are transferred to finished
      goods inventories when the wine is produced, bottled, and ready for sale. The
      cost of finished goods is recognized as cost of sales when the wine product
      is
      sold. Inventories are stated at the lower of first-in, first-out (“FIFO”) cost
      or market by variety. In accordance with general practices in the wine industry,
      wine inventories are generally included in current assets in the accompanying
      balance sheet, although a portion of such inventories may be aged for more
      than
      one year.   As of June 30, 2007 inventory consisted of raw material,
      work in progress and finished goods as follows:




During
        the subsequent year ending June 30, 2008, the management of the Company sold
        approximately 341,300 liters of unbottled wine at below cost. The Company
        recorded approximately $920,000 in cost of sales to reflect this inventory
        at
        lower of cost or market at June 30, 2007 and for the year then ended. Per
        Company management this reduction in inventory is not indicative of impairment
        to any other inventory product at June 30, 2007. The sale in the subsequent
        year
        ended June 30, 2008, per management, was to infuse working capital for ongoing
        operations.


Winemaking
                and packaging materials
            
            $
            97,858Work
                in progress (costs related to unprocessed and/ or unbottled products
                )
            
            
            3,434,408Finished
                good (bottled wine)
            
            
            541,790Total
            
            $
            4,074,056





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
      amortizations are removed from the respective accounts and the resulting gain
      or
      loss is credited or charged to income.





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





Land
                improvements
            15
                yearsWinery
                building
            30
                yearsEquipment
            5-7
                years




F-9


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


As
      of
      June 30, 2007 Property, Plant and Equipment consist of the
      following:





Buildings
                and improvements
            
            $
            36,698Land
            
            
            898,400Plant
                and equipment
            
            
            4,003,850Computer
                equipment
            
            
            41,527Furniture
                and fixtures
            
            
            22,8305,003,305Accumulated
                depreciation
            
            
            (767,730
            )$
            4,235,575





Capital
      Lease Obligations


Included
      in Property, Plant and Equipment are $292,705 of net fixed assets that were
      purchased on capital lease arrangements.





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 current assets and current liabilities qualifying as
      financial instruments are a reasonable estimate of fair value.




Long-Lived
      Assets


The
      Company has adopted Statement of Financial Accounting Standards No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”),
      which addresses financial accounting and reporting for the impairment or
      disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
      Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
      the Results of Operations for a Disposal of a Segment of a Business.” The
      Company periodically evaluates the carrying value of long-lived assets to be
      held and used in accordance with SFAS 144. Under SFAS 144 impairment losses
      are
      to be recorded on long-lived assets used in operations when indicators of
      impairment are present and the undiscounted cash flows estimated to be generated
      by those assets are less than the assets’ carrying amounts. In that event, a
      loss is recognized based on the amount by which the carrying amount exceeds
      the
      fair market value of the long-lived assets. Loss on long-lived assets to be
      disposed of is determined in a similar manner, except that fair market values
      are reduced for the cost of disposal. Based on its review, the Company believes
      that, as of June 30, 2007 there were no significant impairments of its
      long-lived assets.





Intangible
      Assets


Effective
      July 2002, the Company adopted Statement of Financial Accounting Standards
      No.
      142 (“SFAS 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 year ended June
      30, 2007. As of June 30, 2007 the intangible assets comprised of water licenses
      valued at $212,200, which are held in perpetuity.




F-10


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**




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. As of June 30, 2007
      all
      trademarks and other intangibles had been fully amortized.





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.





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.





Basic
      and Diluted Earnings Per Share


Earnings
      per share are 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 stated 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. For the year ended June 30, 2007 the Company’s common stock
      equivalents have not been included for earning per share calculations as they
      are ant-dilutive.




F-11


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


Net
      loss per share


The
      Company has adopted SFAS 128, “Earnings per Share.” Loss per common share is
      computed by dividing loss available to common shareholders by the weighted
      average number of common shares outstanding during the period. The common stock
      equivalents have not been included as they are anti-dilutive. As of June 30,
      2007 there are no common share equivalents.





Translation
      Adjustment


The
      accounts of Yarraman Australia are maintained, and their financial statements
      were expressed, in Australian Dollars (AUD). Such financial statements were
      translated into U.S. Dollars (USD) in accordance with Statement of Financial
      Accounting Standards No. 52 (“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 Statement of Financial Accounting Standards No. 130 (“SFAS No.
      130”), “Reporting Comprehensive Income” as a component of stockholders’
equity.





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.




Concentration
      of Credit Risk


Financial
      instruments that potentially subject the Company to concentrations of credit
      risk are cash, and accounts receivables arising from their normal business
      activities. The Company places their cash in what they believe to be
      credit-worthy financial institutions. The Company has a diversified customer
      base, most of which are in Australia. The Company routinely assesses the
      financial strength of its customers and, based upon factors surrounding the
      credit risk, establishes an allowance, if required, for uncollectible accounts
      and, as a consequence, believes that its accounts receivable credit risk
      exposure beyond such allowance is limited.




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.




Comprehensive
      Income


The
      Company has adopted Financial Accounting Standard No. 130 (“SFAS 130”),
“Reporting Comprehensive Income”. This statement establishes rules for the
      reporting of comprehensive income and its economic components. Comprehensive
      income consists of net loss to common stockholders and foreign currency
      translation adjustments and is presented in the consolidated statements of
      operations and Stockholders’ equity.




F-12


**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


Advertising


Advertising
      is expensed as incurred. Advertising expenses for the years ended June 30,
      2007
      were approximately $22,500.





Shipping
      Costs


Shipping
      costs are included in selling and marketing expenses and totaled approximately
      $80,200 for the year ended June 30, 2007.





Income
      taxes


The
      Company files federal and state income tax returns in the United States for
      its
      domestic operations, and files separate foreign tax returns for the Company’s
      Australian subsidiary. Income taxes are accounted for under Statement of
      Financial Accounting Standards No. 109, “Accounting for Income Taxes,” which is
      an asset and liability approach that requires the recognition of deferred tax
      assets and liabilities for the expected future tax consequences of events that
      have been recognized in the Company’s financial statements or tax
      returns.





Reclassifications:


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





New
      Accounting Pronouncements





-
            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 management
                of
                the Company is currently evaluating the effect of this pronouncement
                on
                the consolidated financial
                statements.





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




F-13




**YARRAMAN
        WINERY, INC. AND SUBSIDIARY**
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


1.
            A
                brief description of the provisions of this Statement


2.
            The
                date that adoption is required


3.
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.





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





-
            
            In
                February 2007, FASB issued FASB Statement No. 159, The Fair Value
                Option
                for Financial Assets and Financial Liabilities. FAS 159 is effective
                for
                fiscal years beginning after November 15, 2007. Early adoption is
                permitted subject to specific requirements outlined in the new Statement.





The
      new
      Statement allows entities to choose, at specified election dates, to measure
      eligible financial assets and liabilities at fair value that are not otherwise
      required to be measured at fair value. If a company elects the fair value option
      for an eligible item, changes in that item’s fair value in subsequent reporting
      periods must be recognized in current earnings. FAS 159 also establishes
      presentation and disclosure requirements designed to draw comparison between
      entities that elect different measurement attributes for similar assets and
      liabilities. The management of the Company is currently evaluating the effect
      of
      this pronouncement on financial statements.





-
            In
                December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
                consolidated Financial Statements”. This Statement amends ARB 51 to
                establish accounting and reporting standards for the non-controlling
                (minority) interest in a subsidiary and for the deconsolidation of
                a
                subsidiary. It clarifies that a non-controlling interest in a subsidiary
                is an ownership interest in the consolidated entity that should be
                reported as equity in the consolidated financial statements. SFAS
                No. 160
                is effective for fiscal years beginning on or after December 15,
                2008.
                Management of the Company is currently evaluating the effect of this
                pronouncement on financial
                statements.





-
            In
                March 2008, the FASB issued FASB Statement No. 161, Disclosures about
                Derivative Instruments and Hedging Activities. The new standard is
                intended to improve financial reporting about derivative instruments
                and
                hedging activities by requiring enhanced disclosures to enable investors
                to better understand their effects on an entity’s financial position,
                financial performance, and cash flows The new standard also improves
                transparency about the location and amounts of derivative instruments
                in
                an entity’s financial statements; how derivative instruments and related
                hedged items are accounted for under Statement 133; and how derivative
                instruments and related hedged items affect its financial position,
                financial performance, and cash flows. . It is effective for financial
                statements issued for fiscal years and interim periods beginning
                after
                November 15, 2008, with early application encouraged. Management
                is
                currently evaluating the effect of this pronouncement on financial
                statements.




F-14
 
  YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**





-
            In
                December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”.
                This Statement replaces SFAS No. 141, Business Combinations. This
                Statement retains the fundamental requirements in Statement 141 that
                the
                acquisition method of accounting (which Statement 141 called the
                purchase
                method) be used for all business combinations and for an acquirer
                to be
                identified for each business combination. This Statement also establishes
                principles and requirements for how the acquirer: a) recognizes and
                measures in its financial statements the identifiable assets acquired,
                the
                liabilities assumed, and any non-controlling interest in the acquiree;
                b)
                recognizes and measures the goodwill acquired in the business combination
                or a gain from a bargain purchase and c) determines what information
                to
                disclose to enable users of the financial statements to evaluate
                the
                nature and financial effects of the business combination. SFAS No.
                141(R)
                will apply prospectively to business combinations for which the
                acquisition date is on or after Company’s fiscal year beginning December
                15, 2008. While the Company has not yet evaluated this statement
                for the
                impact, if any, that SFAS No. 141(R) will have on its consolidated
                financial statements, the Company will be required to expense costs
                related to any acquisitions after September 30,
                2009.


-
              In
                  May 2008, the Financial Accounting Standards Board (FASB) issued
                  Statement
                  of Financial Accounting Standards (SFAS) No. 162, “The Hierarchy of
                  Generally Accepted Accounting Principles.” The new standard is intended to
                  improve financial reporting by identifying a consistent framework,
                  or
                  hierarchy, for selecting accounting principles to be used in preparing
                  financial statements that are presented in conformity with U.S.
                  generally
                  accepted accounting principles (GAAP) for non-governmental entities.
                  Management of the Company is currently evaluating the effects,
                  if any,
                  that SFAS No. 162 may have on our financial
                  reporting.




NOTE 3
      - CASH
      & CASH EQUIVALENTS





Cash
      and
      cash equivalents include cash in hand and cash in time deposits, certificates
      of
      deposit and all highly liquid debt instruments with original maturities of
      three
      months or less. As of June 30, 2007 cash held in Australian Commercial banks
      are
      within Australian Statutory limits.





NOTE 4
      - ACCOUNTS
      PAYABLE AND ACCRUED EXPENSES





As
      of
      June 30, 2007 the accounts payable and accrued expenses comprised of the
      following:





Trade
                creditors
            
            $
            740,545Accrued
                Expenses
            
            
            309,976Payroll
                liabilities
            
            
            32,046Stock
                to be issued
            
            
            117,000$
            1,199,567





Included
      in accrued expenses is a provision for annual employee leave, it 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, 2007 annual leave was $33,668.





At
      June
      30, 2007 included in accrued expenses are a net consumption tax receivable
      of
      $9,761 and a net WET tax receivable of $13,266.





NOTE 5
      - MAJOR
      CUSTOMERS AND VENDORS





For
      the
      years ended June 30, 2007 the Company’s largest customer accounted for 12% of
      sales. There was no receivable from the customer as of June 30, 2007.





For
      the
      year ended June 30, 2007 the Company had no vendors that accounted for more
      than
      10% of purchases.




F-15


YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


NOTE 6
      - RELATED
      PARTY TRANSACTIONS





The
      Company entered into various related party transactions with the Trustee and
      the
      Trust that is their primary stockholder. The Trust was the sole shareholder
      of
      Yarraman Australia prior to the Share Exchange.





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





-
            
            The
                Company pays the Trustee approximately $35,000 per month for the
                use of
                additional vineyard land also located in Australia. On January 1,
                2006 the
                Company entered into a written agreement to lease this vineyard land
                for
                approximately $35,000 per month. The term was from January 1, 2006
                through
                June 30, 2006. As of July 1, 2006 this lease is on a month-to-month
                basis
                with the same payment terms. This leasing arrangement was terminated
                in
                May 2007. During the year ended June 30, 2007 total lease expense
                was
                approximately $359,000.





-
            
            Stockholders
                and Directors of the Company and of the Trust were provided wine
                during
                the years ended June 30, 2007 valued at
                $24,505.





-
            
            The
                Company had wine sales to entities related to various Stockholders,
                Officers and Directors totaling $4,734 during the year ended June
                30,
                2007.





-
            
            The
                Company has a receivable from one of the Unit Holders of the Trust
                related
                to consulting fees of approximately $10,553 as of June 30,
                2007.





-
            
            On
                January 1, 2006 Yarraman Australia entered into a consulting agreement
                with the Trustee 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 the Company is reduced to less than
                15%. Under this agreement the Company must pay the Trustee
                $100,000AUD (Australian Dollars) or approximately $82,100 USD (US
                Dollars)
                annually.  During the year ended June 30, 2007 the Company paid the
                Trustee approximately $126,860.




NOTE 7
      - LOANS
      PAYABLE - RELATED PARTY / DUE TO RELATED PARTY





-
            
            On
                December 21 2005, prior to the Exchange Agreement and in connection
                with
                the Asset Purchase, Yarraman Australia entered into a loan agreement
                with
                the Trust, the nominal holder of all of Yarraman Australia’s
                shares. The outstanding principal balance of this loan is $1,695,006.
                This loan advance is non-interest bearing. The loan is secured by
                the
                fixed assets of the Company, subordinated to all other loans of the
                Company collateralized by the fixed assets. A total of 50% of the
                loan
                payable, or $847,503, is to be repaid in thirty-six monthly installments
                commencing on the first business day of the twenty-fifth month following
                the loan agreement, or approximately February 1, 2008. On the thirty-sixth
                month of payment, in January 2011, the remaining 50% of the loan
                payable
                or $847,503 is due and payable. The initial repayment date of February
                2008 has been extended to June 30, 2008.




F-16




YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


On
      May 1,
      2006 Yarraman Australia entered into a loan agreement with the Trust in the
      principal amount of $763,920. Originally, this loan agreement had an
      interest rate of 8%, with the same repayment terms of the December 21, 2005
      loan. On May 25, 2006 the Trust extended to Yarraman Australia an additional
      $12,732, to be repaid in accordance with the same terms as the December 21,
      2005
      loan. This loan advance is also non-interest bearing.





As
      of
      June 30, 2008 loan advances totaling $2,471,658 and the $763,920 loan payable
      were converted into 6,559,524 shares of the Company common stock.





As
      the
      entire above loan advances, totaling $2,471,658 were non-interest bearing,
      the
      Company recorded an imputed interest of $871,307 which is recorded as discount
      on debt and a contribution of capital to the Company. This discount on debt
      is
      being amortized over the term that these loan advances are outstanding. During
      the year ended June 30, 2007, the Company amortized $214,392 of this discount
      on
      debt recorded as interest expense. All these loan advances are recorded as
      long-term debt.





The
      following is a reconciliation of the above loan advances as of June 30,
      2007:





December
                21, 2005 advance
            
            $
            1,695,006May
                1, 2006 advance
            
            
            763,920May
                25, 2006
            
            
            12,7322,471,658Discount
                on debt
            
            
            (936,953
            )1,534,705Amortization
                of discount on debt (balance sheet purposes)
            
            
            214,392$
            1,749,097








-
            
            As
                of June 30, 2007 the Company is indebted to a private company that
                is
                owned by one of the unit holders of the Company’s majority shareholder for
                $2,905,986, including accrued interest of $94,179. This related party
                has
                made various advances, loans and payments on behalf of the Company,
                all of
                which are unsecured, and due on demand. These advances and loans
                accrued
                interest on their outstanding balance ranging between 0% and 10%
                per
                annum.





On
      July
      1, 2007 these advances and loans, including additional loans and advances made
      subsequent to June 30, 2007, were restructured into one loan agreement for
      approximately $3,289,000. This new loan includes approximately $689,000 related
      to a sale of wine by the related party to the Company. This portion of the
      new
      loan is to be repaid commencing December 7, 2007 with receipts from the proceeds
      of the re-sale of this wine by the Company until it is repaid in full. The
      entire new loan accrues interest at 6.5% per annum. This new loan is secured
      by
      the fixed assets of the Company, subordinate to the loan from the commercial
      bank, such loan totaling $4,818,008 as of June 30, 2007. This new loan, together
      with outstanding interest, is to be repaid for any amounts still outstanding
      on
      September 30, 2008. As of June 30, 2008 AUD2,400,000, approximately
      US$2,037,000, of the above loan was converted into 5,440,476 shares of the
      Company’s common stock.




F-17




YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


Note 8
      - LONG-TERM
      DEBT





On
      December 21, 2005, prior to the Exchange Agreement and in connection with the
      Asset Purchase, Yarraman Australia assumed the loan facility that the Trust,
      the
      then nominal holder of all of Yarraman Australia’s shares, had with a financial
      institution located in Australia.  As of June 30, 2007 the total amount due
      under this facility, inclusive of interest, is $4,818,008. This loan facility
      requires 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 guaranteed by the Trust.




In
      March
      2008 this loan facility was extended through to December 2008 by the lender
      with
      the following changes in the loan agreement: Higher interest rate is to be
      16.50% per annum, lower interest rate is to be 10.50% per annum and if Yarraman
      notifies lender prior to 60 days of their intention to repay their will be
      no
      repayment fee.





NOTE 9
      - LEASES PAYABLE





As
      a part
      of the Asset Purchase agreement in December 16, 2005, the Company assumed
      capital lease obligation 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, 2007 are
      as
      follows:





Plant
                and equipment
            
            $
            370,324Less:
                Accumulated depreciation
            
            
            (77,619
            )$
            292,705





The
      future minimum lease payments under the capital lease and the net present value
      of the future minimum lease payments at June 30, 2007 are as
      follows:





Total
                minimum lease payments
            
            $
            345,929Amount
                representing interest
            
            
            (80,233
            )Present
                value of net minimum lease payments
            
            
            265,696Current
                portion
            
            
            (140,849
            )Long-term
                capital lease obligation
            
            $
            124,847




F-18


YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


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




Year
                endedJune
                30, 2008
            
            $
            140,849June
                30, 2009
            
            
            81,556June
                30, 2010
            
            
            43,291$
            265,696





NOTE 10
      - STOCKHOLDERS’
      EQUITY





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, the Company increased the number of authorized shares
      of
      its capital stock to 100,000,000 shares, of which ninety million (90,000,000)
      shares are Common Stock, par value of $0.001, and ten million (10,000,000)
      shares are Preferred Stock, par value of $0.001, which may be issued in one
      or
      more series or classes as designated by the Board of Directors, from time to
      time, without the approval of stockholders.


NOTE
        11 - COMMITMENTS
        AND CONTINGENCIES





Consulting
      Agreements





-
            
            On
                February 24, 2006 the Company entered into a consulting agreement
                with a
                company in New York to assist us to identify potential candidates
                for
                acquisition purposes and assist in the negotiation and execution
                of such
                transactions. As compensation the Company agreed to pay the firm a
                monthly, nonrefundable, fee of $6,500. In addition, the Company agreed
                to
                pay a transaction fee to this consultant that is based on a sliding
                percentage of any completed acquisition.  The original term of the
                contract was from March 1, 2006 until July 1, 2006, it was subsequently
                continued on a month-to-month basis. The total monthly fees paid
                under the
                agreement may be deducted from the total transaction fee. This agreement
                was terminated in April 2007. Total expenses under this agreement
                for the
                year ended June 30, 2007 were approximately
                $48,800.





-
            
            On
                September 7, 2006 the Company entered into an agreement with a firm
                in New
                York, New York to provide the following services: strategic advisory,
                development and evaluation financing or capital raising alternatives
                and
                merger and acquisition services.  As compensation the Company agreed
                to pay a retainer of $35,000, of which $10,000 has been paid to date,
                plus
                certain percentages of financing or capital that is raised and merger
                acquisitions completed.  The term of the contract is for six months,
                ending in February 2007.  The agreement was not renewed and the firm
                waived the remaining $25,000 retainer
                fee.





-
            
            On
                October 23, 2006 the Company entered into a consulting agreement
                with a
                firm in Australia for services in recruiting certain consultants
                and Board
                members for us, services in assisting the Company in establishing
                international distribution arrangements, and for services with a
                potential
                business merger.  Certain milestones were set in the contract. 
                Upon completion of each milestone an agreement was made for payment
                to the
                consultant in shares of the Company stock as
                follows:




F-19


YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


Milestone 1 - 50,000 shares of stock, or $100,000 in shares, whichever is
      greater


Milestone 2 - 50,000 shares of stock, or $100,000 in shares, whichever is
      greater


Milestone 3 - 100,000 shares of stock, or $200,000 in shares, whichever is
      greater





As
      of
      June 30, 2007 Milestones 1 has been completed. To date the Company has not
      issued any shares related to the achievement of this milestone. The Company
      has
      recorded a liability of $117,000 for 50,000 shares of stock to be issued under
      Milestone 1.





In
      addition to the above, the Company has agreed to pay the consultant
      approximately $4,700 per month starting on November 1, 2006 and ending upon
      the
      completion of a potential business merger that was not completed. This agreement
      was terminated in June 2007. In connection with this agreement the Company
      has
      paid approximately $22,500 with regards to payment to this consultant.





In
      connection with the above mentioned business merger that was not completed,
      on
      December 21, 2006 the Company had submitted an offer to merge with Evans &
Tate, Ltd., a company publicly traded in Australia.  In March 2007 the
      merger was abandoned, and all conditional offers were terminated. Related to
      this acquisition the Company has incurred approximately $312,000 in expenses
      that have been expensed in the year ended June 30, 2007.





NOTE
      12 - INCOME
      TAXES





The
      Company accounts for income taxes under Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes” “SFAS 109”. Under SFAS 109 the
      Company is required to recognize the deferred tax assets and liabilities for
      both the expected impact of differences between the financial statements and
      the
      tax basis of assets and liabilities, and for the expected future tax benefit
      to
      be derived from tax losses and tax credit carry forwards. SFAS 109 additionally
      requires the establishment of a valuation allowance to reflect the likelihood
      of
      realization of deferred tax assets.





The
      Company’s subsidiary Yarraman Australia is governed by the income tax laws of
      Australia. Pursuant to the Australian tax code corporations are subject to
      tax
      at a statutory rate of 30%




F-20


YARRAMAN
        WINERY, INC. AND
        SUBSIDIARY
 **NOTES
        TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


The
      components of loss before income tax consist of the following:





U.S.
                Operations
            
            $
            225,162Australian
                Operations
            
            
            4,227,618$
            4,452,781





The
      table
      below summarizes the differences between the US statutory Federal rate and
      the
      Company’s effective tax rate as follows:




Income
                tax at Federal statutory rate
            
            
            34
            %U.S.
                tax rate in excess of foreign tax ratePermanent
                differences
            
            
            (1
            %)Temporary
                differences
            
            
            (5
            %)Valuation
                allowance for tax benefits not recognized
            
            
            (24
            %)-





The
      Company has a net operating loss (“NOL”) carryforward for United States income
      tax purposes at June 30, 2007 expiring through the year 2027. Management
      estimates their US NOL as of June 30, 2007 to be approximately $510,000. The
      utilization of the Company’s NOL’s may be limited because of a possible change
      in ownership as defined under Section 382 of Internal Revenue Code. The
      Company’s Australian operation has NOL carryfowards for Australian Income tax
      purposes at June 30, 2007 that are available to offset future income for an
      indefinite period. Management estimates their Australian NOL as of June 30,
      2007
      to be approximately $5,900,000.





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. The Company has recognized, a
      valuation allowance for those deferred tax assets for which it is more likely
      than not that realization will not occur. The Company’s deferred tax assets as
      of June 30, 2007 are as follows:





NOL
                carryforwards
            
            $
            1,940,000Valuation
                allowance
            
            
            (1,940,000
            )Deferred
                tax asset, net of allowance
            
            $
            -





**NOTE
      13 - SUBSEQUENT EVENT**





On
      September 5, 2008 the Company entered into an Implementation Agreement with
      Asia
      Distributions Limited (ADSL), a public company in the United Kingdom, whereby
      the two companies propose to merge by means of an offer to be made on behalf
      of
      Yarraman expected to consist of 63,330,000 shares Yarraman’s common stock, in
      exchange for the entire share capital of ADSL, issued and to be issued,
      including 30,676,000 shares of ADSL currently in issue and approximately
      2,143,358 shares of ADSL to be issued. The formal offer is to be made to ADSL
      shareholders prior to October 16, 2008.




Included
      and contemporaneous with the offer in the Implementation Agreement, the Company
      proposes to acquire assets owned by the Trust. The asset is a vineyard and
      related plant and equipment that Yarraman Australia previously leased from
      January 1, 2006 through May 31, 2007. The purchase price is expected to be
      approximately $11,000,000.




On
        July
        16, 2007 the Company sold 250,000 shares of common stock to Ian Long, President
        and Board Member, at $0.44 per share. The total sale of $110,000 will be
        recorded as a receivable and is payable in 60 equal monthly installments
        beginning in July 2007 and ending in June 2012.
 
 Subsequent
        to June 30, 2007 the Company issued 700,000 shares of common stock to various
        Officers, Directors and vendors in payment of services rendered. The Company
        recorded as an expense the value of the shares issued, $315,000, based on
        a per
        share price of $0.45.




F-21