UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2010

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission file number 333-123176

Marani Brands, Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada	20-2008579
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

13152 Raymer Street, Suite 1A

North Hollywood, CA 91605

(Address of Principal Executive Offices) (Zip Code)

(818) 503-5200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

The issuer had 170,806,026 shares of common stock outstanding as of March 24, 2010.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	F-1
	Consolidated Balance Sheets as of March 31, 2010 and June 30, 2009	F-2
	Consolidated Statements of Operations for the Three and Nine Months March 31, 2010 and 2009	F-3
	Consolidated Statements of Cash Flows for the Nine Months March 31, 2010 and 2009	F-4
	Notes to Consolidated Financial Statements	F-5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4T.	Controls and Procedures	9

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Submission of Matters to a Vote of Security Holders	19
Item 5.	Other Information	19
Item 6.	Exhibits	19

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The condensed financial statements of Marani Brands, Inc. included herein have been prepared in accordance with the instructions to quarterly reports for a smaller reporting company, as defined in Exchange Act Rule 12b-2, on Form 10-Q pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote data necessary for fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is therefore suggested that these financial statements be read in conjunction with the summary of significant accounting policies and notes to financial statements included in Marani Brands, Inc.'s Annual Report on Form 10-K for the year ended June 30, 2009.

In the opinion of management, all adjustments necessary in order to make the financial position, results of operations and changes in financial position at March 31, 2010, and for all periods presented, not misleading, have been made. The results of operations for the period ended March 31, 2010 are not necessarily indicative of the Company’s actual operating results for the full year ending June 30, 2010.

F-1

Marani Brands, Inc. and Subsidiaries

Consolidated Balance Sheets

	UNAUDITED March 31, 2010			June 30, 2009
Assets
Current Assets
Cash & Equivalents	$	1,020,734		$	1,116,460
Accounts Receivable		37,547			138,541
Inventory		32,140			170,518
Prepaid Expenses & Other Current Assets		37,165			30,130
Total Current Assets		1,127,586			1,455,649

Deposits		10,255			10,255

Total Assets	$	1,137,841		$	1,465,904


Liabilities & Stockholders' Equity (Deficit)
Current Liabilities
Accounts Payable	$	816,862		$	632,819
Accrued Expenses		520,168			453,816
Line of Credit		999,556			999,556
Notes Payable, net		684,586			330,495
Convertible Note Payable, net		36,924			-
Derivative Liability		130,131			246,501
Total Current Liabilities		3,188,227			2,663,187

Non-Current Liabilities
Notes Payable		-			124,680
Total Non-Current Liabilities		-			124,680

Total Liabilities	$	3,188,227		$	2,787,867

Commitments & Contingencies		-			-

Stockholders' Equity (Deficit)
Common Stock, $0.001 par value, 300,000,000 shares authorized; 170,806,026 and 181,401,796 shares issued and outstanding, respectively		170,806			181,402
Additional Paid-in Capital		17,374,564			22,825,893
Stock Subscriptions Payable		-			60,000
Accumulated Deficit		(19,595,756	)		(24,389,258	)
Total Stockholders' Equity (Deficit)		(2,050,386	)		(1,321,963	)

Total Liabilities & Stockholders' Equity (Deficit)	$	1,137,841		$	1,465,904

The accompanying notes are an integral part of these financial statements

F-2

Marani Brands, Inc. and Subsidiaries

Consolidated Statements of Operations

UNAUDITED

	For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,
	2010			2009			2010			2009
Sales	$	25,685		$	81,443		$	170,986		$	192,205

Cost of Sales		14,021			55,341			89,964			116,874

Gross Profit		11,664			26,102			81,022			75,331

Operating Expenses
Marketing and Sales Promotion		51,746			156,378			253,967			969,709
General & Administrative		461,704			537,776			(4,845,639	)		3,930,947
Total Operating Expenses		513,450			694,154			(4,591,672	)		4,900,656

Operating Income (Loss)	$	(501,786	)	$	(668,052	)	$	4,672,694		$	(4,825,325	)

Other Income (Expense)
Interest Income		2,469			7,390			12,166			22,473
Interest Expense		(42,952	)		(12,009	)		(100,419	)		(18,091	)
Derivative Expense		(37,440	)		-			209,061			-
Total Other Income (Expense)		(77,923	)		(4,619	)		120,808			4,382

Net Income (Loss) Before Income Taxes	$	(579,709	)	$	(672,671	)	$	4,793,502		$	(4,820,943	)

Provision for Income Taxes		-			-			-			-

Net Income (Loss)	$	(579,709	)	$	(672,671	)	$	4,793,502		$	(4,820,943	)

Net Income per Share
Basic	$	(0.00	)	$	(0.00	)	$	0.03		$	(0.04	)
Diluted	$	(0.00	)	$	(0.00	)	$	0.02		$	(0.04	)

Number of Shares Used in Per Share Calculations
Basic		167,288,526			174,556,796			178,018,115			137,303,398
Diluted		167,288,526			174,556,796			229,389,141			137,303,398

The accompanying notes are an integral part of these financial statements

F-3

Marani Brands, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

UNAUDITED

	For the Nine Months Ended
	March 31,
	2010			2009
Cash Flows from Operating Activities
Net Income (Loss)	$	4,793,502		$	(4,820,943	)

Adjustments to reconcile net loss to net cash used in operating activities:

Stock Based Compensation		(5,826,925	)		2,494,152
Derivative Expense		(209,061	)		-
Amortization of Debt Discounts		23,417			-
Allowance for Doubtful Accounts		(37,547	)		-
Depreciation & Amortization		-			1,005

Changes in operating assets and liabilities:
Accounts Receivable		138,541			(53,977	)
Inventory		138,378			(297,269	)
Other Current Assets		(7,035	)		25,000
Accounts Payable		184,043			255,476
Accrued Expenses		276,961			12,804

Net Cash Used in Operating Activities		(525,726	)		(2,383,752	)

Cash Flows from Financing Activities
Proceeds from Notes Payable		250,000			1,073,749
Proceeds from Convertible Note		150,000			-
Payments on Notes Payable		(20,000	)		-
Proceeds from Stock Subscriptions		50,000			-

Net Cash Provided by Financing Activities		430,000			1,073,749


Net Increase (Decrease) in Cash		(95,726	)		(1,310,003	)

Cash Beginning of Period		1,116,460			2,460,663

Cash End of Period	$	1,020,734		$	1,150,660

Supplemental Disclosure of Cash Flow Information:
Cash Paid during the period for interest	$	23,996		$	18,091
Cash Paid during the period for income taxes		-			-

Supplemental Disclosure of Non-Cash Items:
Common Stock issued for Conversion of Debt	$	255,000		$	-
Common Stock Issued for Subscriptions		110,000			-

The accompanying notes are an integral part of these financial statements

F-4

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 1 – Organization, Business & Operations

History

The Company was incorporated in Nevada on May 30, 2001, under the name Elli Tsab, Inc., which was subsequently changed to Patient Data Corporation, and thereafter to Fit for Business, Inc. On March 10, 2008, the Company changed its name from Fit for Business, Inc. to Marani Brands, Inc. On March 31, 2008, the common stock underwent a 1-for-250 reverse stock split, and commenced trading on the Over the Counter Bulletin Board under the new symbol “MRIB”.

Merger (see Note 4)

On March 11, 2008, the Company formed FFBI Merger Sub Corp., a California corporation, as its wholly-owned subsidiary. FFBI Merger Sub Corp. was formed by the Company for purpose of effectuating a merger transaction by and among the Company and FFBI Merger Sub Corp., on the one hand, and a California corporation known as Margrit Enterprises International, Inc. “(MEI”), on the other hand.

On April 4, 2008, the Company, FFBI Merger Sub Corp. and MEI executed, and on April 7, 2008 the parties closed, a three party Merger Agreement.

The acquisition of MEI by the Company was completed by the merger of the Company’s wholly-owned subsidiary, FFBI Merger Sub Corp. with and into MEI, with MEI remaining as the surviving entity and wholly-owned subsidiary of the Company. The net effect of these transactions is a reverse merger of the Company with MEI. MEI subsequently changed its name to Marani Spirits, Inc., and continues to be the operational arm of the Company.

Business and Products

Prior to the Company’s acquisition of MEI, our only business was that of its wholly-owned subsidiary, Fit for Business (Australia) Pty Limited, which is engaged in the development of overall wellness programs for the workplace in Australia.

Subsequent to the merger transaction with MEI, the Company’s primary business is the distribution of wine and spirit products manufactured in Armenia. In the future the Company may add alcohol beverage products manufactured in other countries.

Reverse Stock Split

Effective March 31, 2008, the Company’s common stock underwent a 1-for-250 reverse stock split. The Company retained the current par value of $0.001 per share for all shares of common stock. All references in the financial statements to the number of shares outstanding, per share amounts, and stock options data of the Company’s common stock have been restated to reflect the effect of the reverse stock split for all periods presented.

Note 2 - Going Concern and Management's Plans

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the company as a going concern. However, as of March 31, 2010 the Company has an accumulated deficit of $19,595,756. The Company’s current business plan requires additional funding beyond its anticipated cash flows from operations. These and other factors raise substantial doubt about the Company's ability to continue as a going concern.

F-5

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 3 - Summary of Significant Accounting Policies

Interim financial statements

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended June 30, 2009 included in the Company’s Form 10-K filed on October 13, 2009. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of the Company’s financial position and results of operations. The operating results for the three and nine months ended March 31, 2010 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Recapitalization

The capital structure of the consolidated enterprise is that of MEI due to reverse recapitalization accounting. The financial statements presented are a continuation of MEI, the accounting acquirer, and not FFBI, the accounting acquiree. The recapitalization and capital structure is now different than that appearing in historical financial statements for FFBI.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Marani Brands, Inc. and its wholly subsidiaries Marani Spirits, Inc. and Great Hawk, Inc. (collectively the “Company”). All significant inter-company accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Inventories

Inventories are stated at the lower of cost or market. Cost is computed on a weighted-average basis, which approximates the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include finished spirit product and packaging.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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

F-6

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Property & equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over useful lives of 3 to 10 years. The cost of assets sold or retired and the related amounts of accumulated depreciation are removed from the accounts in the year of disposal. Any resulting gain or loss is reflected in current operations. Assets held under capital leases are recorded at the lesser of the present value of the future minimum lease payments or the fair value of the leased property. Expenditures for maintenance and repairs are charged to operations as incurred.

Impairment of long-lived assets

In July 2009, the Company adopted FASB ASC Topic 360, "Accounting for the Impairment or Disposal of Long-Lived Assets" (previously "SFAS 144"). This topic addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with this topic. This topic requires impairment losses 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.

Basic and Diluted Net Income per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants and convertible notes. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of stock warrants, stock options and convertible notes.

Stock-based compensation

In July 2009, the Company adopted FASB ASC Topic 718, "Share-Based Payment" (previously "SFAS 123(R)"). This topic requires that companies account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in their statements of operations. Under this topic, we are required to measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 718, "Share-Based Payment" (previously "SFAS 123(R)"). Under this topic Common stock issued to non-employees in exchange for services is accounted for based on the fair value of the services received.

Fair value of financial instruments

In July 2009, the Company adopted FASB ASC Topic 825, "Disclosures about Fair Value of Financial Instruments"(previously SFAS No. 107). This topic 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.

F-7

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Revenue recognition

Sales of products and related costs of products sold are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. These terms are typically met upon shipment of finished spirit products to the customer.

Allowance for doubtful accounts

We provide an allowance for estimated uncollectible accounts receivable balances based on historical experience and the aging of the related accounts receivable. As of March 31, 2010 and June, 2009, the Company has reserved $72,978 and $35,431 for doubtful accounts.

Advertising

The Company expenses advertising costs as incurred. Advertising costs for the nine months ended March 31, 2010 and 2009, were $20,222 and $144,326, respectively.

Income Taxes

In July 2009, the Company adopted FASB ASC 749 "Accounting for Income Taxes" (previously SFAS 109). Under this topic the Company accounts for income taxes using the liability method where deferred tax assets and liabilities are determined based on differences between their financial reporting and tax basis of assets and liabilities. The Company was not required to provide for a provision for income taxes for the periods ended March 31, 2010 and June 30, 2009, as a result of net operating losses incurred during the periods. As of March 31, 2010, the Company has available approximately $19,000,000 of net operating losses ("NOL") available for income tax purposes that may be carried forward to offset future taxable income, if any. These carryforwards expire in various years through 2026. At March 31, 2010 and June 30, 2009, the Company has a deferred tax asset of approximately $7,800,000 and $9,700,000 relating to the Company's net operating losses, respectively. The Company's deferred tax asset has been fully reserved by a valuation allowance since realization of its benefit is uncertain. The Company's ability to utilize its NOL carryforwards may be subject to an annual limitation in future periods pursuant to Section 382 of the Internal Revenue Code of 1986, as amended. In addition, other limitations may be imposed by the code by virtue of the acquisition outlined in Note 4.

The provision for income taxes using the federal and state tax rates as compared to the Company's effective tax rate is summarized as follows:

	March 31,			June 30,
		2010			2009

Statutory Federal Tax (Benefit) Rate		-34.00	%		-34.00	%
Statutory State Tax (Benefit) Rate		-5.83	%		-5.83	%
Effective Tax (Benefit) Rate		-39.83	%		-39.83	%

Valuation Allowance		39.83	%		39.83	%

Effective Income Tax		0.00	%		0.00	%

Significant components of the Company's deferred tax assets at March 31, 2010 and June 30, 2009, are as follows:

	March 31,			June 30,
	2010			2009
Net Operating Loss Carryforward	$	7,804,990		$	9,714,241

Valuation Allowance		(7,804,990	)		(9,714,241	)

Net Deferred Tax Asset	$	-		$	-

F-8

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Research and development costs

Expenditures for research & development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The Company incurred no research and development costs for the nine months ended March 31, 2010 and 2009.

Reclassifications

Certain items in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current period’s presentation. These reclassifications have no effect on the previously reported income (loss).

Recently Issued Accounting Pronouncements

The adoption of these accounting standards had the following impact on the Company’s statements of income and financial condition:

FASB ASC Topic 855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC Topic 855, which establishes general standards of accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth : (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This FASB ASC Topic should be applied to the accounting and disclosure of subsequent events. This FASB ASC Topic does not apply to subsequent events or transactions that are within the scope of other applicable accounting standards that provide different guidance on the accounting treatment for subsequent events or transactions. This FASB ASC Topic was effective for interim and annual periods ending after June 15, 2009, which was June 30, 2009 for the Corporation. The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.

FASB ASC Topic 105, “The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles”. In June 2009, the FASB issued FASB ASC Topic 105, which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this FASB ASC Topic, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature not included in the Codification will become non-authoritative. This FASB ASC Topic identify the sources of accounting principles and the framework for selecting the principles used in preparing the financial statements of nongovernmental entities that are presented in conformity with GAAP. Also, arranged these sources of GAAP in a hierarchy for users to apply accordingly. In other words, the GAAP hierarchy will be modified to include only two levels of GAAP: authoritative and non-authoritative. This FASB ASC Topic is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this topic did not have a material impact on the Company’s disclosure of the financial statements

FASB ASC Topic 320, “Recognition and Presentation of Other-Than-Temporary Impairments”. In April 2009, the FASB issued FASB ASC Topic 320 amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FASB ASC Topic does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The FASB ASC Topic shall be effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009, is not permitted. This FASB ASC Topic does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this FASB ASC Topic requires comparative disclosures only for periods ending after initial adoption. The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.

F-9

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

The Company is evaluating the impact that the following recently issued accounting pronouncements may have on its financial statements and disclosures.

FASB ASC Topic 860, “Accounting for Transfer of Financial Asset”., In June 2009, the FASB issued additional guidance under FASB ASC Topic 860, “Accounting for Transfer and Servicing of Financial Assets and Extinguishment of Liabilities", which improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Board undertook this project to address (i) practices that have developed since the issuance of FASB ASC Topic 860, that are not consistent with the original intent and key requirements of that statement and (ii) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. This additional guidance requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are required to provide financial statement users with greater transparency about transfers of financial assets and a transferor’s continuing involvement with transferred financial assets. This additional guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This additional guidance must be applied to transfers occurring on or after the effective date.

FASB ASC Topic 810, “Variables Interest Entities”. In June 2009, the FASB issued FASB ASC Topic 810, which requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: (i)The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (ii)The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. This FASB Topic requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity and eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both. This FASB ASC Topic shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited.

FASB ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting Standard Update. In September 2009, the FASB issued this Update to amendments to Subtopic 82010, “Fair Value Measurements and Disclosures”. Overall, for the fair value measurement of investments in certain entities that calculates net asset value per share (or its equivalent). The amendments in this Update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this Update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this Update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this Update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in GAAP on investments in debt and equity securities in paragraph 320-10-50-lB. The disclosures are required for all investments within the scope of the amendments in this Update regardless of whether the fair value of the investment is measured using the practical expedient. The amendments in this Update apply to all reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or non recurring basis and, as of the reporting entity’s measurement date, if the investment meets certain criteria The amendments in this Update are effective for the interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.

F-10

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

FASB ASC Topic 740, “Income Taxes”, an Accounting Standard Update. In September 2009, the FASB issued this Update to address the need for additional implementation guidance on accounting for uncertainty in income taxes. The guidance answers the following questions: (i) Is the income tax paid by the entity attributable to the entity or its owners? (ii) What constitutes a tax position for a pass-through entity or a tax-exempt not-for-profit entity? (iii) How should accounting for uncertainty in income taxes be applied when a group of related entities comprise both taxable and nontaxable entities? In addition, this Updated decided to eliminate the disclosures required by paragraph 740-10-50-15(a) through (b) for nonpublic entities. The implementation guidance will apply to financial statements of nongovernmental entities that are presented in conformity with GAAP. The disclosure amendments will apply only to nonpublic entities as defined in Section 740-10-20. For entities that are currently applying the standards for accounting for uncertainty in income taxes, the guidance and disclosure amendments are effective for financial statements issued for interim and annual periods ending after September 15, 2009.

Note 4 – Merger

On April 4, 2008, the Company, FFBI Merger Sub Corp. and MEI executed, and on April 7, 2008 the parties closed, a three party Merger Agreement, which the parties implemented follows:

Merger of FFBI Merger Sub Corp. and MEI

·	By virtue of this statutory merger, the separate corporate existence of FFBI Merger Sub Corp. ceased, with MEI remaining as the surviving corporation.

·	The shares of FFBI Merger Sub Corp. held by the Company pre merger were converted into the shares of MEI and, post merger, the MEI conversion shares remain outstanding and continue to be held by the Company as shares of MEI

·	Since MEI was a company with an ongoing business, and since FFBI Merger Sub Corp. had no business operations and ceased to exist as a separate corporate entity, this merger transaction constituted a “forward merger”

Reverse Merger MEI and Marani Brands, Inc. (the Company)

·	Contemporaneous with the MEI – FFBI Merger Sub merger described above, MEI merged with the Company in a reverse merger. In this reverse merger, each share of MEI common stock held by its stockholders was automatically exchanged for shares of the Company, determined by a 10 for 1 exchange ratio

·	The Company issued 100,000,000 shares of its common stock to the stockholders of MEI in the exchange transaction set for the above, and the 10,000,000 shares of MEI then held by the Company as a result of the exchange transaction were cancelled.

·	The Company thereby holds 100% of the shares of MEI by virtue of the Company’s ownership of the MEI shares that it obtained as part of the merger of FFBI Merger Sub Corp. and MEI, which shares now represent all of the issued and outstanding shares of MEI.

·	On April 7, 2008, the Company sold its entire interest in its subsidiary, Fit For Business (Australia) Pty Limited ("FFB Australia"), to its former Chief Executive Officer.

·	Since MEI operated an ongoing business and since the Company had pre merger business operations that were not pursued by the Company post merger, this merger transaction constituted a “reverse merger”.

·	By virtue of this “reverse merger,” both MEI and the Company continue to have a separate existence, with MEI becoming a wholly owned subsidiary of the Company.

F-11

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Under the Merger Agreement, as additional consideration for the merger transactions, the Company issued, at Closing, the following: (i) 42,594,616 shares of the Company’s common stock to Purrell Partners, LLC, or its assigns (the "Purrell Group") and (ii) a Warrant to purchase 10,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share to the Purrell Group.

Following the Closing, the Company, in a private placement to investors, issued an aggregate of 15,120,000 shares of common stock, along with warrants to purchase an additional 15,120,000 shares of common stock at $0.35 per share.

On April 7, 2008, the Company exercised its option under the Subsidiary Acquisition Option Agreement, that was entered into in connection with the December 31, 2007 Stock Purchase Agreement, to sell its entire interest in its subsidiary, Fit For Business (Australia) Pty Limited ("FFB Australia"), to its former Chief Executive Officer, Mark Poulsen. Under the terms of this Agreement, if Mr. Poulsen complied with certain information and document requirements then no later than May 15, 2008, Mr. Poulsen will receive the Company’s entire interest in FFB Australia in exchange for Mr. Poulsen forfeiting his right to 250,000 shares of the Company’s common stock that he was otherwise entitled to receive in the event of a restructuring transaction and merger occurring prior to February 2009. Pursuant to the exercise of the Company’s options, FFB Australia was sold to Mr. Poulsen. As the FFB Australia subsidiary was not operational and had no tangible assets or liabilities at the time this agreement was exercised, and the exchange was for the forfeiture of Mr. Poulsen's right to receive 250,000 common shares, it was determined that no gain on this nonmonetary exchange should be recorded.

Recapitalization

Note 5 - Inventories

At March 31, 2010 and June 30, 2009, inventories are comprised of finished bottles/cases of Marani Vodka available for resale and in-transit totaling $32,140 and $170,518, respectively. As of March 31, 2010, the Company had deposits on inventory yet to be received totaling $30,130.

Note 6 – Accrued Expenses

At March 31, 2010 and June 30, 2009, accrued expenses consist of the following:

	March 31,		June 30,
	2010		2009
Accrued Payroll and Taxes	$	272,006	$	116,854
Deferred Officer Salaries		123,226		-
Credit Cards		36,001		38,260
Accrued Severance		-		255,000
Accrued Interest & Other		88,935		43,702
Total Accounts Payable and Accrued Expenses	$	520,168	$	453,816

F-12

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 7 – Line of Credit

In October 2008, the Company obtained a $1,000,000 credit line from Citibank collateralized by the cash in the Company’s money market account. At March 31, 2010 the balance due on this credit line was $999,556.

Note 8 – Notes Payable

The Company is obligated to a bank for an SBA loan. Terms indicate that the balance of $124,091 is due and payable in full September 2010. Interest is accrued and paid monthly at 8.25%.

In 2005, the Company received a $80,495 short term loan from Searchlight Financial carrying a 10% interest rate. Accrued interest totaling $34,183 is included in accrued expenses. In February 2010, the Company entered into a verbal agreement with Searchlight Financial to convert the outstanding loan principle and interest balance totaling into shares of Marani stock at $.10 per share.

In February 2009, the Company received a $200,000 loan from an investor payable based upon the Company receiving financing of $1,000,000 or in the event that the Company breaches one of the default provisions. This note carries an 8% annual interest with both principle and accrued interest payable at maturity. Accrued interest totaling $18,542 is included in accrued expenses.

In June 2009, the Company received a $50,000 loan from an investor payable based upon the Company receiving financing of $1,000,000 or in the event that the Company breaches one of the default provisions. This note carries an 8% annual interest with both principle and accrued interest payable at maturity. Accrued interest totaling $3,321 is included in accrued expenses.

On July 28, 2009, the Company obtained a short term loan in the principal amount of $200,000 from an individual lender. The loan is secured by all the Company's unsecured assets. The loan term matures on November 24, 2009, and the principal amount of the loan accrues simple interest at the rate of eight (8%) percent per annum. Interest is payable monthly in arrears and principal is payable in three monthly installments of five thousand ($5,000) dollars with a final payment of one hundred eighty five thousand ($185,000) dollars at maturity. Accrued interest totaling $6,921 is included in accrued expenses. On November 30, 2009, the Company and the Note holder agreed to extend the maturity date of the Note to May 31, 2010. Interest and principal payments shall continue, as provided in the Note, through the extended maturity date, with the final adjusted principal payment due at maturity. In consideration for the note holder to enter into several term extensions of the maturity date of the note, the Company issued 7,000,000 warrants to purchase the Company's common stock (5,000,000 warrants at $.07 expiring July 28, 2014 and 2,000,000 warrants at $.04 expiring December 1, 2014). Under FASB ASC Topic 815, “Derivatives and Hedging”, this note does not meet the definition of a “conventional debt instrument” due to the term extending feature which means that the warrants issued to extend the terms must be bifurcated from the debt and shown as a separate derivative liability. The Company recognized a derivative liability of $4,379 on July 28, 2009, with an offset to debt discount in the same amount. Accrued interest totaling $6,921 is included in accrued expenses.

In October 2009, the Company received a $50,000 loan from an investor payable May 16, 2010. This note carries an 8% annual interest with both principle and accrued interest payable at maturity. Accrued interest totaling $1,819 is included in accrued expenses.

F-13

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 9 – Convertible Notes

On December 21, 2009, the Company entered into a $50,000 convertible note with an investor. This note carries an 8% annual interest rate with both principle and accrued interest payable on September 23, 2010. The holder may convert all or any part of the unpaid principle balance after six months from the date of the note and prior to the later of (i) the maturity date and (ii) the date of payment. This note is convertible into fully paid and non-assessable shares of Common Stock at 65% of the average market price during the five trading day period ending one trading day prior to the date the conversion notice.

Under FASB ASC Topic 815, “Derivatives and Hedging”, this convertible note does not meet the definition of a “conventional convertible debt instrument” since the debt is not convertible into a fixed number of shares. The debt can be converted into common stock at a conversion price that is a percentage of the market price; therefore, the number of shares that could be required to be delivered upon “net-share settlement” is essentially indeterminate. Therefore, the convertible debenture is considered “non-conventional,” which means that the conversion feature must be bifurcated from the debt and shown as a separate derivative liability. The Company recognized a derivative liability of $32,114 on December 21, 2009, with an offset to debt discount in the same amount.

On February 1, 2010, the Company received a $100,000 one year loan (the “Loan”) from an institutional investor. The Loan is evidenced by a convertible note, which is convertible into the Company’s common stock at a conversion price of $0.04 per share for 180 days and thereafter at the lesser of (i) $0.04 per share or (ii) 75% of the average of the three lowest closing bid prices the Company’s common stock for the 20 trading days prior to the conversion date. In connection with the Loan, the Company also issued 4,500,000 shares of common stock to the institutional investor.

The Company also entered into a Common Stock Purchase Agreement with the same institutional investor, which established an equity line, pursuant to which the Company, in its discretion, may sell up to $7,500,000 worth of the Company’s common stock, subject to the terms and provisions of the Common Stock Purchase Agreement. The Company has entered into a Registration Rights Agreement with the institutional investor to register the common stock that may be sold pursuant to the Common Stock Purchase Agreement. The Company is obligated to file the registration statement for such shares within 60 days from February 1, 2010.

In connection with these transactions, the Company issued to the institutional investor a warrant to purchase 4,000,000 shares of the Company’s common stock, having an exercise price of $0.001 per share, and a warrant to purchase 8,500,000 shares of the common stock, having an exercise price of $0.04 per share. The warrant for 4,000,000 shares of common stock contains a cashless exercise option in favor of the warrant holder.

Under FASB ASC Topic 815, “Derivatives and Hedging”, this convertible note does not meet the definition of a “conventional convertible debt instrument” since the debt is not convertible into a fixed number of shares. The debt can be converted into common stock at a conversion price that is a percentage of the market price; therefore, the number of shares that could be required to be delivered upon “net-share settlement” is essentially indeterminate. Therefore, the convertible debenture is considered “non-conventional,” which means that the conversion feature must be bifurcated from the debt and shown as a separate derivative liability. The Company recognized a derivative liability of $100,000 on February 1, 2010 with an offset to debt discount in the same amount.

F-14

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 10 – Warrants

The following is a summary of share purchase warrants for period ended March 31, 2010:

	Number of Warrants			Weighted Average Exercise Price
Outstanding June 30, 2008		29,620,000		$	0.320
Granted		-		$	-
Forfeited		-		$	-
Exercised		-		$	-
Outstanding June 30, 2009		29,620,000		$	0.320
Granted		19,500,000		$	0.022
Forfeited		-		$	-
Cancelled		(13,890,000	)	$	0.170
Exercised		-		$	-
Outstanding March 31, 2010		35,230,000		$	0.227

Expiry	Number of Warrants		Exercise Price
November 11, 2010		4,700,000	$	0.350
November 29, 2010		160,000	$	0.350
February 1, 2011		4,000,000	$	0.001
April 2, 2011		520,000	$	0.350
April 15, 2011		250,000	$	1.000
June 1, 2011		10,000,000	$	0.500
June 4, 2011		100,000	$	1.000
July 28, 2014		5,000,000	$	0.070
December 1, 2014		2,000,000	$	0.040
February 1, 2015		8,500,000	$	0.040
Total		35,230,000	$	0.227

The fair value of the share purchase warrants as of March 31, 2010 and June 30, 2009, was $50,312 and $246,501, respectively, which was determined using the Black-Scholes option value model with the following assumptions:

	March 31,			June 30,
	2010			2009
Expected Dividend Yield		0.00	%		0.00	%
Risk Free Interest Rate		3.00	%		3.00	%
Expected Volatility		66.00	%		60.00	%
Expected Life (in years average)		2.59			1.70

F-15

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Warrant and Share Cancellation-Purell

Purell and Margrit International Enterprises, Inc., which is now called Marani Spirits, Inc., are parties to a Consulting Agreement dated November 1, 2007 (the "Consulting Agreement"). Warrants (10,000,000) were issued in consideration of services, purportedly performed by Purell under the Consulting Agreement and related to the merger of a subsidiary of the Company in and to MEl, pursuant to which MEl became a wholly-owned subsidiary of the Company and the Shares were issued in anticipation of Purell assisting the Company with receiving approximately $10,000,000 of equity financing. However, no equity financing was arranged by Purell for the Company. Therefore the warrants were not validly issued since the Company did not receive adequate consideration for the issuance of those warrants.

In addition, it has come to the Company's attention that Purell is not a registered broker-dealer and therefore was not legally permitted to provide certain of the services set forth in a Consulting Agreement. In particular, since Purell was not a registered broker-dealer, the various agreements between Purell and the Company (including the Consulting Agreement) relating to Purell raising financing for the Company are voidable. In December 2009, the Company cancelled 21,297,309 common shares (issued May 30, 2009 valued at $.25) and 10,000,000 (issued October 1, 2007 at $.10) warrants issued to Purell pursuant to this agreement.

Warrant Cancellation-Continental Advisors

Continental Advisors (CA) acted as the placement agent for a private placement of Convertible Debentures issued by Margrit Enterprises International, Inc. pursuant to a Letter Agreement effective as of October 12, 2007. Pursuant to a merger which occurred a number of months after the day of the placement, a subsidiary of the Company merged with and into MEl and MEl became a wholly-owned subsidiary of the Company. As part of the Merger, the Warrants became exercisable into shares of the Company's Common Stock.

It has come to the Company's attention that CA was not fully licensed and authorized under applicable European securities regulations to serve as the placement agent in the Placement and therefore was not entitled to receive compensation for serving in that capacity. CA did not disclose those facts to the Company in the Letter Agreement. CA misrepresented to the Company, CA's authority to serve as the placement agent for the Placement. The Warrants were issued as compensation for CA's purported services in the Placement. Therefore, the Warrants should not have been issued to CA. In December 2009, the Company cancelled the 3,890,000 warrants issued (2,375,000 issued on May 1, 2008 at $.25 and 1,515,000 at issued on June 4, 2008 at $.35) pursuant to this agreement.

Note 11 - Stockholders’ Equity

Common Stock

Effective March 31, 2008, the Company’s common stock underwent a 1-for-250 reverse stock split. All references in the financial statements to the number of shares outstanding, per share amounts, and stock options data of the Company’s common stock have been restated to reflect the effect of the stock split for all periods presented.

Following the reverse stock split, the Company has authorized the issuance of up to 300,000,000 shares of Common Stock, at $0.001 par value. As of March 31, 2010, the Company had 170,806,026 shares of Common Stock issued and outstanding.

F-16

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

During the nine ended March 31, 2010, the Company cancelled 22,932,309 shares issued for services totaling ($5,945,137); issued 5,250,000 shares for services totaling $104,775; issued 1,125,000 shares for the conversion of debt totaling $255,000; and issued 5,961,539 shares for stock subscriptions totaling $110,000.

During the year ended June 30, 2008, the Company issued a total of 98,223,752 shares of which 41,179,121 shares were issued for cash totaling $7,814,000; 11,686,670 shares were issued to Officers for services totaling $140,240; 1,281,797 shares were issued for to non-affiliated parties for services totaling $82,449; 937,339 shares were issued to Marani shareholders in the reverse merger; and 43,138,825 shares for direct offering costs totaling $10,648,654.

Options

The options vest as to 25% of the underlying shares of common stock on the first anniversary date of the option grant and ratably each quarter thereafter during the next three years of the term. The options become fully vested and exercisable upon the Company’s termination of Ms. Eyraud’s employment under the terms of the Employment Agreement.

The following is a summary of stock options for period ended March 31, 2010:

	Number of Options		Weighted Average Exercise Price
Outstanding June 30, 2008		-	$	-
Granted		-	$	-
Forfeited		-	$	-
Exercised		-	$	-
Outstanding June 30, 2009		-	$	-
Granted		3,000,000	$	0.08
Forfeited		-	$	-
Exercised		-	$	-
Outstanding March 31, 2010		3,000,000	$	0.08

The fair value of these stock options at the date of grant was $108,987, which was determined using the Black-Scholes option value model with the following assumptions:

Expected Dividend Yield	0.00	%
Risk Free Interest Rate	3.00	%
Expected Volatility	60.00	%
Expected Life (in years average)	4.00

Compensation expense of $13,437 was recorded for the nine months ended March 31, 2010.

F-17

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 12– Commitments & Contingencies

Leases

On November 1, 2009, the Company entered into a three year lease for its 2,100 square feet at its corporate office space in North Hollywood, California at a monthly lease rate of $1,800 per month.

Agreements

On November 1, 2007, the Company entered into a consulting agreement with Purell Partners, LLC. to provide various strategic and other services. This agreement provides for the payment of a monthly retainer of $20,000 per month; the payment of commissions upon the completion of financing transactions and mergers and acquisitions, and revenue sharing with respect to sales of product introduced by Purell Partners. This consulting agreement has a term ending on October 31, 2010 subject to earlier termination as provided for therein. For the six months ended December 31, 2009 and 2008, the Company paid $0 and $100,000, respectively, to Purell Partners, LLC under this agreement.

On October 12, 2007, the Company entered into a consulting agreement with Continental Advisors, SA. to provide placement agent services in connection with a contemplated $10,000,000 financing through private placements. This agreement provides for the payment of commissions and provides warrant coverage upon the Company completing the private placements with investors introduced by Continental Advisors. For the six months ended December 31, 2009 and 2008, the Company paid $0 to Continental Advisors, SA under this agreement.

Severance and Reappointment Agreements

On October 1, 2008, Margit Eyraud notified the Company of her intent to resign as Chief Executive Officer and President of the Company, effective October 1, 2008, while remaining Chairman of the Board of Directors. Ms. Eyraud served as Chief Executive Officer and President of the Company under an Employment Agreement, the term of which expires December 31, 2010. Contemporaneous with her resignation as reported above, the Company and Ms. Eyraud have agreed to an early expiration of the Employment Agreement, and have agreed to a severance package in connection with that early expiration. Under the terms of the severance package Ms. Eyraud shall receive a cash payment of four hundred five thousand dollars ($405,000), payable by the Company as follows:

·	One hundred fifty thousand dollars ($150,000) on October 1, 2008;

·	Seventy five thousand dollars ($75,000) on January 30, 2009;

·	Seventy five thousand dollars ($75,000) on March 31, 2009; and

·	One hundred five thousand dollars ($105,000) on June 30, 2009

F-18

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

In addition:

·	The Company shall pay all unreimbursed business expenses, upon submission by Ms. Eyraud;

·	Continuation of Ms. Eyraud’s health and life insurance coverage until December 31, 2010 at levels in place as of September 15, 2008;

·	The ten year stock options to purchase 5,000,000 shares of the Company’s common stock at $0.25 per share, granted to Ms. Eyraud pursuant to the Employment Agreement, are deemed fully vested immediately;

The existing Lock-up agreement governing the shares of the Company’s common stock beneficially owned by Ms. Eyraud shall continue pursuant to its terms, subject to revision, waiver or modification consistent with any revision, waiver or modification of other similar Lock-up agreements existing between the Company and third parties, including its management and affiliates;

·	The Company shall obtain releases of any guarantees Ms. Eyraud has executed to the favor of the Company; and

All indemnification agreements running in favor of Ms. Eyraud shall be maintained for a period of six (6) years, commencing October 2, 2008, and the Company shall assume the indemnification of Ms. Eyraud with respect to the activities of its wholly owned subsidiary, Marani Spirits, Inc., for a like period.

In connection with the reappointment of Ms. Eyraud as CEO and President Ms. Eyraud and the Company entered into an Employment Agreement dated as of August 1, 2009. The Employment Agreement provides for a four-year employment term and an initial base salary of $180,000 per annum, subject to upward adjustment annually based on the consumer price index. Under the Employment Agreement, the Board of Directors of the Company is to consider and propose to Ms. Eyraud a bonus compensation arrangement which will provide for an incentive bonus payable to Ms. Eyraud based upon the attainment by the Company of mutually agreeable criteria.

Under the Employment Agreement, the Company granted to Ms. Eyraud options to purchase 3,000,000 shares of common stock of the Company at a price equal to the closing price of the Company’s common stock on August 3, 2009. The options are to be issued pursuant to a stock option plan to be adopted by the Board of Directors and approved by the shareholders of the Company and shall by subject to such other terms as provided in the plan. The options vest as to 25% of the underlying shares of common stock on the first anniversary date of the option grant and ratably each quarter thereafter during the next three years of the term. The options become fully vested and exercisable upon the Company’s termination of Ms. Eyraud’s employment under the Employment Agreement without cause, the termination of such employment by Ms. Eyraud For good reason, or the Company’s termination of Ms. Eyraud’s employment due to death or disability. The options shall have a term of 10 years and may be exercised to the extent vested, (i) by Ms. Eyraud at any time during such 10-year period, if Ms. Eyraud’s employment is terminated without cause or for good reason or due to disability or if the employment term expires and Ms. Eyraud does not continue to be employed by the Company, (ii) by Ms. Eyraud’s personal representative within one (1) year following the date of Ms. Eyraud’s death, if Ms. Eyraud’s employment with the Company is terminated due to Ms. Eyraud’s death, and (iii) by Ms. Eyraud, if Ms. Eyraud’s employment terminates for any other reason (other than the expiration of the employment term) by Ms. Eyraud, within ninety (90) days following Ms. Eyraud’s termination of employment.

Arbitration

In October, 2009, Juggernaut Advertising, Inc. commenced arbitration proceedings against the Company seeking damages, including legal expenses and interest based upon an alleged breach of contract by the Company. In December 2009, an arbitrator ruled that the Company was required to pay Juggernaut $219,777 for monies owed under the contract, accrued interest, legal fees and costs. In addition, the arbitrator also determined that the Company should reimburse Juggernaut $5,849 in respect of costs of the arbitration that were previously paid by Juggernaut, based upon the arbitrator’s apportionment of the costs of the arbitration. The Company has accrued the entire $225,626 in accounts payable and accrued expenses and is in the process of evaluating whether or not to appeal the decision of the arbitrator.

F-19

Marani Brands Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

Note 13 – Subsequent Events

The Company has evaluated all subsequent events through May 24, 2010, the date this Quarterly Report on Form 10-Q was filed with the SEC. There were no recognized or unrecognized events that require disclosure as significant subsequent events.

F-20

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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. In some cases, forward-looking statements are identified by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” and similar expressions intended to identify forward-looking statements. Such statements include, without limitation, statements regarding:

	• fluctuations in exchange rates for our products procured for us in Armenia;
	• estimates of required capital expenditures;
	• fluctuations in the cost of distribution and/or marking in the United States;
	• our inability to meet growth projections;
	• our plans and expectations with respect to future introduction of new product;
	• our belief that we will have sufficient liquidity to finance operations into through 2009;
	• the amount of cash necessary to operate our business;
	• our ability to raise additional capital when needed;

	• general economic conditions; and
	• the anticipated future financial performance and business operations of our company.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Report. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Report to reflect any change in our expectations or any change in events, conditions, or circumstances on which any of our forward-looking statements are based or to conform to actual results. Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors discussed elsewhere in this Report. We qualify all of our forward-looking statements by these cautionary statements.

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended June 30, 2009 included in our Annual Report on Form 10-K for the year ended June 30, 2009.

Overview

Our current business is the distribution of wine and spirit products manufactured in Armenia. In the future we may add alcohol beverage products manufactured in other countries.

Our signature product is Marani Vodka, a premium vodka which is manufactured exclusively for us in Armenia. Marani Vodka is made from winter wheat harvested in Armenia, distilled three times, aged in oak barrels lined with honey and skimmed dried milk, then filtered twenty-five times. Bottling of the product occurs at the Eraskh distillery in Armenia. Our vodka was awarded the gold medal in the International Spirit Competition, held in San Francisco, California, in both 2004 and 2007, the 5 Diamond Award by the American Academy of Hospitality and Sciences in March 2008, and was officially launched in August 2006.

At this time, and management believes for the foreseeable future, all of the Company’s products will come from a single supplier, Erashk Winery, Ltd. The Company has an Exclusive Distribution Agreement with Erashk Winery Ltd., an Armenian manufacturer of wine and other spirits, to purchase, inventory, promote, and resell any of its products world-wide. The agreement was renewed on May 3, 2007, and continues until November 26, 2012 and is subject to automatic five (5) year renewals.

The Company is a client of Southern Wine & Spirits of America, Inc. ("Southern"), the largest alcoholic beverage distributor in the United States. Through Southern, the Company’s Marani Vodka is being distributed in Nevada, California and Pennsylvania. In addition, our product is being distributed by QV Distribution in Arizona, and by Wine Bauer in Illinois.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). In connection with the preparation of the financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosure. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time the financial statements are prepared. On a regular basis, management reviews our accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 3 of the notes to financial statements. Certain critical policies are presented below.

Stock Based Compensation

In July 2009, we adopted FASB ASC Topic 718, "Share-Based Payment" (previously "SFAS 123(R)"). This topic requires that companies account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in their statements of operations. Under this topic, we are required to measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.

We account for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 718, "Share-Based Payment" (previously "SFAS 123(R)"). Under this topic Common stock issued to non-employees in exchange for services is accounted for based on the fair value of the services received.

Fair Value of Financial Instruments

In July 2009, we adopted FASB ASC Topic 825, "Disclosures about Fair Value of Financial Instruments"(previously SFAS No. 107). This topic 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.

Results of Operations for the Three and Nine Months Ending March 31, 2010 Compared to March 31, 2009

Revenues

Period Ending March 31	2010		2009
Revenues (3 months)	$	25,685	$	81,443
Revenues (9 months)	$	170,986	$	192,205

The increase in our revenues for the nine months ending March 31, 2010 reflects our ongoing efforts to grow this business, including a major rebranding of the Marani Vodka product, the development and augmentation of our internal sales force, securing additional distributors, expanding our product offering, increasing our volume per outlet and driving further penetration of our products into our current customer base, including a major advertising campaign initiated in prior reporting periods.

Cost of Sales

Period Ending March 31	2010		2009
Costs (3 month)	$	14,021	55,341
Costs (9 months)	$	89,964	116,874

The increase in cost of sales and cost of sales as a percentage of revenues are the result of the increase in sales concomitant with the continued development of our core business.

Operating Expenses

Period Ending March 31	2010			2009
Marketing and Advertising (3 months)	$	51,746			156,378
Marketing and Advertising (9 months)	$	253,967			969,709

General & administrative (3months)	$	461,704			537,776
General & administrative (9 months)	$	(4,845,639	)		3,930,947

Total (3months)	$	513,450			694,154
Total (9 months)	$	(4,591,672	)		4,900,656

Marketing and Advertising

The decrease in marketing and advertising expenses is the result of the lack of adequate funds to maintain the prior period aggressive levels of marketing and sales promotion. We expect, however, that marketing and advertising expenses will increase with additional funding and resultant sales growth.

General and Administrative

Included in our general and administrative expenses are payroll for employees, travel for market development and financing activities, compensation for our restructured executive management, accounts payable and accrued expenses. The significant decrease in total general and administrative expenses is primarily the result of the December 2009 cancellation of 21,297,309 shares of common stock, issued May 30, 2008 to Purell Partners as compensation for financing activities. Total general and administrative expenses are expected to increase in the following quarters as we continue to build the Company's infrastructure to expand our business.

Other Income (Expense)

Period Ending March 31	2010			2009
Interest income (3 months)	$	2,469			7,390
Interest income (9 months)	$	12,166			22,473

Interest expense (3 months)	$	(452,952	)		(12,009	)
Interest expense(9 months)	$	(100,419	)		(18,091	)

Derivative expense (3 months)		(34,440	)		-
Derivative expense (9 months)		209,061			-

Total Other Income (Expense) (3months)	$	(77,923	)		(4,619	)
Total Other Income (Expense) (9 months)	$	120,808			4,382

The increase in interest expense over the nine months ending March 31, 2010 is primarily the result of our pay down of our debt obligations under a long term SBA loan at an interest rate of 8.25%, and our accrual of interest on three short term notes in the aggregate principal amount $450,000, each having an interest rate of 8%.

We recorded a derivative expense of $209,061 for the nine months ending March 31, 2010, based upon the relative fair values of our share purchase warrants outstanding as of March 31, 2010 and June 30, 2009 respectively, as set forth in Note 10.

Net Income (Loss)

Period Ending March 31	2010			2009
Net Income (Loss) (3 months)	$	(579,709	)		(672,671	)
Net Income (Loss) (9 months)		4,793,502			(4,820,943	)

Our net income over the nine months ending March 31, 2010 resulted from a significant decrease in total general and administrative expenses as the result of the cancellation of 1,635,000 shares of our common stock issued in payment of $620,810 for outsourced services, which payments were reported as a general and administrative expense in the last two quarters of our 2009 fiscal year ending June 30, 2009.

Income (Loss) per Common Share Applicable to Common Stockholders

Our basic income/loss per common share applicable to common stockholders for the nine months ending March 31, 2010 and the same period in 2009 was $0.03 and $(0.04), respectively. We have treated all potential common share issuances resulting from the exercise of options and warrants as having an antidilutive impact on earnings per share.

The number of common shares used in our per share calculations decreased from 180,891,796 for the period ending June 30, 2009 to 170,806,026 for the period ending March 31, 2010.

Liquidity and Capital Resources

Working Capital Needs and Major Cash Expenditures

Our footnotes contain an explanatory paragraph that indicates that, with the exception of the last two reporting periods, we have continuing losses from operations, and our working capital is insufficient to meet our planned business objectives. This report also states that, because of these losses, there is substantial doubt about our ability to continue as a going concern. This report and the existence of these recurring losses from operations may make it more difficult for us to raise additional debt or equity financing needed to run our business, and are not viewed favorably by analysts or investors. Furthermore, if we are unable to raise a significant amount of proceeds from private placements, public offerings or other financings, this may cause our cessation of business resulting in investors losing the value of their investment in us.

A major factor in the Company’s net losses, as set forth above, was the recent investments by the Company in expanded operations and a marketing campaign relating to its primary product, Marani Vodka. Management believes that these expenses are necessary to expand the business of the Company.

We currently have reduced our monthly working capital needs to approximately $75,000. This amount is expected to increase going forward, primarily due to the following factors:

	• expansion of our administrative and operational infrastructure in connection with anticipated increase in our business activities, and
	• continued expansion of our marketing and sales programs.

External Sources of Liquidity:

During the nine months ended March 31, 2010, we received proceeds of $50,000 from the sale of common stock and $300,000 proceeds from notes payable and a convertible note.

In October 2008, the Company obtained a $1,000,000 credit line from Citibank collateralized by the cash in the Company’s money market account. At March 31, 2010, the balance due on this credit line was $999,556.

To date, we have relied on funding from investors, our officers and directors, and our limited sales to fund operations. To date, we have generated little revenue and have extremely limited cash liquidity and capital resources. Our future capital requirements will depend on many factors, including our ability to market our products successfully, cash flow from operations, and our ability to obtain financing in the capital markets. Our business plan requires additional funding beyond our anticipated cash flow from operations. Consequently, although we currently have no specific plans or arrangements for financing, we intend to raise funds through private placements, public offerings or other financings. Any equity financings would result in dilution to our then-existing stockholders. Sources of debt financing may result in higher interest expense and may expose the Company to liquidity problems. Any financing, if available, may be on unfavorable terms. If adequate funds are not obtained, we may be required to reduce or curtail operations, since we anticipate that our existing capital resources will not be adequate to satisfy our operating expenses and capital requirements going forward. However, this estimate of expenses and capital requirements may prove to be inaccurate.

Information About Our Cash Flows for the Nine Month Period Ending March 31, 2010 Compared to March 31, 2009

Net Cash provided by (used in):	2010			2009
Operating activities	$	(525,726	)		(2,383,752	)
Financing activities	$	430,000			1,073,749

Cash provided by or used in our operating, investing and financing activities during the nine months ending March 31, 2010 is the result of the continuation of the change and growth of our core business after the April 2008 merger transaction. The net decrease in cash used in operating activities of is due primarily to our net income in the nine month period ending March 31, 2010 compared to a net loss for the same period in 2009. The net income for the 2010 period was primarily attributable to the cancellation of 1,635,000 shares of our common stock issued in payment of $620,810 for outsourced services, which payments were reported as a general and administrative expense in the last two quarters of our 2009 fiscal year ending June 30, 2009. Changes in accounts payable contributed to a decrease in cash used by operating activities in 2010, as compared to 2009. Cash flows generated by our operating activities were inadequate to cover our cash disbursement needs for the period ending March 31, 2010, and we had to rely on private financing to cover operating expenses.

Net cash provided by our financing activities deceased for the period ending March 31, 2010. The decrease in 2010 is attributed to the decrease in available financing during the 2010 period.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Effects of Inflation

We believe that inflation has not had any material effect on our net sales and results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and 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 amended (“Exchange Act”), as of September 30, 2009. Disclosure controls and procedures are those controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our Exchange Act filings is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and forms, and (2) accumulated and communicated to management, including our Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

We have conducted a review Items 307 and 308(a) of Regulation S-K, and Rule 13a-15, as well as the Commission’s Final Rule “Management's Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports” in connection with the effectiveness of our Disclosure Controls and Procedures and Internal Controls over Financial Reporting as of the period ended March 31, 2010 and any remediation plans that have or will be initiated, as applicable.

Based on that evaluation and review, the Chief Executive Officer and Principal Accounting Officer concluded that, as the period ended March 31, 2010, our disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Management, including our Chief Executive Officer and Principal Accounting Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a – 15(f). Management conducted an assessment as the period ended March 31, 2010 of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, management concluded that our internal controls over financial reporting were not effective as of the period ended March 31, 2010, based on criteria in Internal Control – Integrated Framework issued by the COSO.

For the period ended March 31, 2010, we identified certain material weaknesses of the effectiveness of our internal controls over financial reporting for which we are implementing remedial procedures, as follows:

Material Weakness

We have examined our financial and transactional information collection processes, and have determined that, where events during the reporting period have delayed the collection process and the immediate “closing” of our financial position for the reporting period, we have not had appropriate time to make effective decisions regarding the accuracy of our required disclosures.

Remediation

Based on the review and analysis set forth above, we have concluded that our controls and procedures needed to be revised to ensure that the information required to be disclosed by us in the reports we file is timely accumulated and communicated to management to allow for considered and appropriate decisions regarding both the collection of information and an analysis of the accounting treatment afforded the information collected. . In response to this conclusion, we have designed and implemented processes of collecting financial and transactional information on a more expeditious and priority basis, with the goal of “closing” our quarterly and annual financial positions to allow for the timely analysis, review and audits by our auditors, and management’s decisions regarding our required informational and accounting treatment disclosures.

These processes include the calendaring of target dates for the following:

• collection of financial information

• analysis of the completeness of information collected

• review and analysis of debt

• review and analysis of assets

• review and analysis of revenues

• review and analysis of expenses, by category

• review and analysis of our statement of equity

• finalization of general ledger and subsidiary reports for the reporting period

• reconciliation of reports

• review and analysis of events subsequent to the closing of the last reporting period, and

• preparation of preliminary and final financial statements for review or audit by our auditors

These processes will also include where appropriate the increased and early utilization of accounting and legal service providers to resolve any matters concerning disclosure or accounting issues.

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

Changes in internal controls

We have designed and implemented processes of collecting financial and transactional information on a more expeditious basis with the goal of “closing” our quarterly and annual financial positions to allow for timely analysis, review and audits by our auditors and management decisions regarding our required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Our former subsidiary, Fit For Business (Australia) Pty. Ltd. is plaintiff in legal proceedings against one of our licensees, L.R. Global Marketing Pty. Ltd, for outstanding licensing fees owed in the amount of $443,263. The subsidiary was recently sold, as detailed in Note 1 to our Consolidated financial Statements 1 above, and to the knowledge of management, Marani Brands has no further interests or liabilities stemming from this proceeding as of the time of this filing.

Other than these claims, the Company is not a party to any pending legal proceeding. We are not aware of any contemplated proceeding by a governmental authority. Also, we do not believe that any director, officer, or affiliate, any owner of record or beneficially of more than five per cent (5%) of the outstanding common stock, or security holder, is a party to any proceeding in which he or she is a part adverse to us or has a material interest adverse to us.

Item 1A. Risk Factors

If we are unable to meet our future capital needs, we may be required to reduce or curtail operations.

To date, we have relied on funding from investors, our officers and directors, and our limited sales to fund operations. Our future capital requirements will depend on many factors, including our ability to market our products successfully, cash flow from operations, and our ability to obtain financing in the capital markets. Our business plan requires additional funding beyond our anticipated cash flow from operations. Consequently, we intend to raise funds through private placements, public offerings or other financings to fund our future capital requirements, including the potential acquisition of Eraskh Winery, Ltd., the current single supplier of our products. Any equity financings would result in dilution to our then-existing stockholders. Sources of debt financing may result in higher interest expense and may expose us to liquidity problems. Any financing, if available, may be on unfavorable terms. If adequate funds are not obtained, we may be required to reduce or curtail operations, since we anticipate that our existing capital resources will be adequate to satisfy our operating expenses and capital requirements going forward.

We have a limited operating history and limited historical financial information upon which you may evaluate our performance.

You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, have a limited operating history. We may not successfully address these risks and uncertainties or successfully market our existing products or successfully introduce and market new products. If we fail to do so, it could materially harm our business, adversely impact our financial performance and impair the value of our common stock. Even if we accomplish these objectives, we may not generate the positive cash flows or profits we anticipate in the future. Our operating subsidiary, Marani Spirits, Inc., has generated little revenue since it commenced operations. Unanticipated problems, expenses and delays are frequently encountered in establishing and developing new products in the beverage alcohol industry. These include, but are not limited to, inadequate funding, lack of consumer acceptance, competition, product development, and inadequate sales and marketing. Any one of these potential problems could have a materially adverse effect upon our results of operations and financial condition. No assurance can be given that we can or will ever operate profitably.

We rely on third-party suppliers and distilleries to provide raw materials for and to produce our products, and we have limited control over these suppliers and distilleries and may not be able to obtain quality products on a timely basis or in sufficient quantity.

All of our wine and spirits are currently produced by Eraskh, an unaffiliated producer, based in Armenia. There can be no assurance that there will not be a significant disruption in the supply of wheat and other raw materials from current sources or, in the event of a disruption, that Eraskh would be able to locate alternative sources of materials of comparable quality at an acceptable price, or at all. In addition, we cannot be certain that Eraskh will be able to fill our orders in a timely manner. There can be no assurance that we will be able to enter into arrangements with other manufacturers for new products. If we experience significant increased demand for any of our products, or need to replace our existing distiller, there can be no assurance that additional supplies of raw materials or additional distilling capacity will be available when needed on terms that are acceptable to us, or at all, or that any supplier or distiller would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new distilling or raw material sources, we may encounter delays in production and added costs as a result of the time it takes to train our new distillers in our methods, products and quality control standards. Any delays, interruption or increased costs in the supply of raw materials or production of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues both in the short and long-term.

We have entered into a Letter of Intent (the “LOI”) to acquire Eraskh. There can be no assurance that we will enter into a definitive agreement to acquire the distillery as contemplated by the LOI or that the distillery will be acquired. In addition, there can be no assurance that our suppliers and distillers will continue to source raw materials and to produce products that are consistent with our standards. We may in the future receive shipments of product that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of revenues which could have a material adverse affect upon our results of operations and financial condition.

Competition could have a material adverse effect on our business.

We are in a highly competitive industry and the dollar amount and unit volume of our sales could be negatively affected by our inability to maintain or increase prices, changes in geographic or product mix, a general decline in beverage alcohol consumption or the decision of wholesalers, retailers or consumers to purchase competitive products instead of our products. Wholesaler, retailer and consumer purchasing decisions are influenced by, among other things, the perceived absolute or relative overall value of our products, including their quality or pricing, compared to competitive products. Unit volume and dollar sales could also be affected by pricing, purchasing, financing, operational, advertising or promotional decisions made by wholesalers, state and provincial agencies, and retailers which could affect their supply of, or consumer demand for, our products. We could also experience higher than expected selling, general and administrative expenses if we find it necessary to increase the number of our personnel or our advertising or promotional expenditures to maintain our competitive position or for other reasons.

Nearly all of our significant competitors have greater market presence, marketing capabilities as well as greater financial, technological and personnel resources than we do. In spirits, the major global competitors are Diageo, Pernod Ricard, Bacardi and Brown-Forman, each of which has many brands in many market segments, including vodka, which give them the ability to leverage their marketing relationship. In addition, we face competition from local and regional companies in the United States and world-wide.

An increase in excise taxes or government regulations could have a material adverse effect on our business.

The U.S. and certain other countries in which we operate impose excise and other taxes on beverage alcohol products in varying amounts which are subject to change. Significant increases in excise or other taxes on beverage alcohol products could materially and adversely affect our results of operations and financial condition. Many states in the United States have considered proposals to increase, and some of these states have increased, state alcohol excise taxes. In addition, federal, state, local and foreign governmental agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, trade and pricing practices, permitted and required labeling, advertising and relations with wholesalers and retailers. Certain federal, state and foreign regulations also require warning labels and signage. New or revised regulations or increased licensing fees, requirements or taxes could also have a material adverse effect on our financial condition and results of operations.

We rely on the performance of wholesale distributors, major retailers and chains for the success of our business.

We currently sell our products principally to wholesalers for resale to retail outlets including grocery stores, package liquor stores, chain and boutique hotels, bars and restaurants. In the future, in addition to selling our products to wholesalers, we may we sell our products directly to major retailers and chains. The replacement or poor performance of our major wholesalers, retailers or chains could materially and adversely affect our results of operations and financial condition. Our inability to collect accounts receivable from our limited number of major wholesalers, retailers or chains could also materially and adversely affect our results of operations and financial condition Selling to major wholesalers and large retailers results in concentration of our accounts receivable, and the bankruptcy or insolvency of any such wholesaler or retailer could impact the collectability a large amount of our receivables and could adversely affect our financial condition.

The beverage alcohol distribution industry is being affected by the trend toward consolidation in the wholesale and retail distribution channels, particularly in Europe and the U.S. If we are unable to successfully adapt to this changing environment, our revenues, share of sales and volume growth could be negatively affected. In addition, wholesalers and retailers of our products offer products of other companies which compete directly with our products for retail shelf space and consumer purchases. It is possible that, wholesalers or retailers may give higher priority to products of our competitors. In the future, our wholesalers and retailers may not continue to purchase our products or provide our products with adequate levels of promotional support.

Our business could be adversely affected by a decline in the consumption of products we sell.

Since 1995, there have been modest increases in consumption of beverage alcohol in most geographic markets. In the past, however, in which there were substantial declines in the overall per capita consumption of beverage alcohol products in the U.S. and other markets in which we participate. A limited or general decline in consumption in one or more of our product categories could occur in the future due to a variety of factors, including:

·	A general decline in economic conditions;
·	Increased concern about the health consequences of consuming beverage alcohol products and about drinking and driving;
·	A general decline in the consumption of beverage alcohol products in on-premise establishments;
·	A trend toward a healthier diet including lighter, lower calorie beverages such as diet soft drinks, juices, energy and vitamin drinks and water products;
·	The increased activity of anti-alcohol groups; and
·	Increased federal, state or foreign excise or other taxes on beverage alcohol products.

We must continue to introduce new products in order to stay competitive.

Our success depends, in large part, on our ability to effectively brand and market our Marani Vodka, and develop new products for the marketplace. Marani Vodka is our only product at this time. The launch and ongoing success of new products are inherently uncertain especially with regard to the ultimate appeal to, and acceptance of, new products by consumers. The launch of new products can give rise to a variety of costs and an unsuccessful launch, among other things, can affect consumer perception of existing brands as well as our results of operations and financial condition.

Our operations subject us to risks relating to currency rate fluctuations, interest rate fluctuations and geopolitical uncertainty which could have a material adverse effect on our business.

We or do business in different countries throughout the world and, therefore, are subject to risks associated with currency fluctuations. We are also exposed to risks associated with interest rate fluctuations. We intend to manage our exposure to foreign currency and interest rate risks through various means including possible utilizing derivative instruments. We, however, could experience changes in our ability to hedge against or manage fluctuations in foreign currency exchange rates or interest rates and, accordingly, there can be no assurance that we will be successful in reducing those risks. We could also be affected by nationalizations or unstable governments or legal systems or intergovernmental disputes. These currency, economic and political uncertainties could have a material adverse effect on our results of operations and financial condition.

Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business.

There has been increased public attention directed at the beverage alcohol industry, which we believe is due to concern over problems related to alcohol abuse, including drinking and driving, underage drinking and health consequences from the misuse of alcohol. Several beverage alcohol producers have been sued in several courts regarding alleged advertising practices relating to underage consumers. Adverse developments in these or similar lawsuits or a significant decline in the social acceptability of beverage alcohol products that results from these lawsuits could have a material adverse affect on our results of operations and financial condition.

We depend upon our trademarks and proprietary rights, and any failure to protect our intellectual property rights or any claims that we are infringing upon the rights of others may adversely affect our competitive position.

Our future success depends significantly on our ability to protect our current brand and future brands and products, to the extent developed, and to defend our intellectual property rights. We have registered the trademark Marani® in the United States for distilled spirits and brandy and we have filed trademark applications seeking to protect the Marani trademark in certain countries outside the United States. We know that a third-party that markets and sells wine products has trademarked the Marani name in numerous countries outside of the United States and has registered the name Marani in a number of countries. We are in the process of negotiating an agreement with that third party which would, if entered into, allow to each company to use the Marani trademark in connection with its respective products on a world-wide basis. There can be no assurance that we will be able to reach an agreement with that third party which, if no agreement is entered into, could prevent us from using the Marani trademark in certain jurisdictions. There can be no assurance that we will be able to protect the intellectual property rights associated with new products that we introduce. There is also a risk that we could, by omission, fail to timely renew one of our trademarks or that our competitors will challenge, invalidate or circumvent any existing or future trademarks issued to, or licensed by, us.

An increase in the cost of energy or materials could affect our profitability.

We have experienced significant increases in energy costs, and energy costs could continue to rise, which would result in higher transportation, freight and other operating costs. There have also been increases in commodities necessary for our products, such as wheat. Our future operating expenses and margins will be dependent on our ability to manage the impact of cost increases. We cannot guarantee that we will be able to pass along such increased costs to our customers through increased prices.

Changes in accounting standards and taxation requirements could affect our financial results.

New accounting standards or pronouncements that may become applicable to us from time to time, or changes in the interpretation of existing standards and pronouncements, could have a significant effect on our reported results for the affected periods. We may become subject to income tax in numerous jurisdictions as we attempt to expand our sales to outside of the United States. In addition, our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions in which we operate. Increases in income tax rates could reduce our after-tax income from affected jurisdictions, while increases in indirect taxes could affect our products’ affordability and therefore reduce our sales.

The loss of key executives and failure to attract qualified management could limit our growth and negatively impact our results of operations.

We depend highly upon our senior management team, primarily Ms. Margrit Eyraud, our Chairman, President and Chief Executive Officer, and other members of our senior management. As our operations grow, we will need to expand our management to include people skilled and experienced in the distribution of beverage alcohol products. At this time, we do not know of the availability of such experienced management personnel or how much it may cost to attract and retain such personnel. The loss of the services of any member of senior management or the inability to hire experienced personnel as outlined above could have a material adverse effect on our results of operations and financial condition.

We may not be able to effectively manage our growth and operations, which could materially and adversely affect our business.

We may experience rapid growth and development in a relatively short period of time by aggressively marketing our products. The management of this growth will require, among other things, continued development of our financial and management controls and management information systems, stringent control of costs, increased marketing activities, the ability to attract and retain qualified management personnel and the training of new personnel. We intend to hire additional personnel in order to manage our expected growth and expansion. Failure to successfully manage our possible growth and development could have a material adverse effect on our results of operations and financial condition.

If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect on our business.

An effective internal control environment is necessary for us to produce reliable financial reports and is an important part of our effort to prevent financial fraud. We are required to periodically evaluate the effectiveness of the design and operation of our internal controls over financial reporting. Based on these evaluations, we may conclude that enhancements, modifications or changes to internal controls are necessary or desirable. While management evaluates the effectiveness of our internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override and failure of human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. If we fail to maintain an effective system of internal controls, or if management or our independent registered public accounting firm discovers material weaknesses in our internal controls, we may be unable to produce reliable financial reports or prevent fraud, which could have a material adverse effect on our business, including subjecting us to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission. Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit our access to capital.

Our common stock may be affected by limited trading volume and may fluctuate significantly.

There has been a limited public market for our common stock and there can be no assurance an active trading market for our common stock will develop. This could adversely affect the ability of our shareholders’ ability to sell our common stock in short time periods or possibly at all. Our common stock has experienced and is likely to experience significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. The price of our common stock could fluctuate significantly in the future based upon any number of factors such as: general stock market trends; announcements of developments related to our business; fluctuations in our operating results; announcements of technological innovations, new products or enhancements by us or our competitors; general conditions in the markets we serve; general conditions in the U.S. and/or global economies; developments in patents or other intellectual property rights; and developments in our relationships with our customers and suppliers. Substantial fluctuations in our stock price could significantly reduce the price of our common stock.

Our common stock is traded on the "Over-the-Counter Bulletin Board," which may make it more difficult for investors to resell their shares due to suitability requirements.

Our common stock is currently traded on the Over the Counter Bulletin Board (OTCBB) where we expect it to remain in the foreseeable future. Broker-dealers often decline to trade in OTCBB stocks given the market for such securities are often limited, the stocks are more volatile, and the risk to investors is greater. In addition, OTCBB stocks are often not eligible to be purchased by mutual funds and other institutional investors. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.

The Company’s common stock trades on the OTC Bulletin Board. At present there is limited trading volume for our common stock. There can be no assurance that an investor will be able to liquidate his or her investment without considerable delay, if at all. Given the limited trading in our common stock, the price of our common stock may be highly volatile. Factors discussed herein may have a significant impact on the market price of the shares of our common stock. Moreover, due to the relatively low price of our common stock, many brokerage firms may not effect transactions in our common stock. Rules enacted by the Securities and Exchange Commission increase the likelihood that many brokerage firms will not participate in a potential future market for our common stock. Those rules require, as a condition to brokers effecting transactions in certain defined securities (unless such transaction is subject to one or more exemptions), that the broker obtain from its customer or client a written representation concerning the customer’s financial situation, investment experience and investment objectives. Compliance with these procedures tends to discourage most brokerage firms from participating in the market for certain low-priced securities.

Our common stock is governed under The Securities Enforcement and Penny Stock Reform Act of 1990.

The Securities Enforcement and Penny Stock Reform Act of 1990 require additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Securities and Exchange Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on NASDAQ and any equity security issued by an issuer that has (i) net tangible assets of at least $2,000,000, if such issuer has been in continuous operation for three years, (ii) net tangible assets of at least $5,000,000, if such issuer has been in continuous operation for less than three years, or (iii) average annual revenue of at least $6,000,000, if such issuer has been in continuous operation for less than three years. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

The forward looking statements contained in this Report may prove incorrect.

This report contains certain forward-looking statements, including among others: (i) anticipated trends in our financial condition and results of operations; (ii) our business strategy for expanding distribution, directly manufacturing products based upon the possible acquisition of Eraskh; and (iii) our ability to distinguish our products and services from our current and future competitors. These forward-looking statements are based largely on our management’s current expectations and are subject to a number of risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, and the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are only predictions and involve known and unknown risks and uncertainties, including the risks outlined under “Risk Factors” and elsewhere in this prospectus.

Actual results could differ materially from these forward-looking statements. In addition to the other risks described elsewhere in this “Risk Factors” discussion, important factors to consider in evaluating such forward-looking statements include: (i) changes to external competitive market factors or in our internal budgeting process which might impact trends in our results of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute its strategy due to unanticipated changes in the web development and web hosting industry; and (iv) various competitive factors that may prevent us from competing successfully in the marketplace. In light of these risks and uncertainties, many of which are described in greater detail elsewhere in this “Risk Factors” discussion, there can be no assurance that the events predicted in forward-looking statements contained in this prospectus will, in fact, transpire.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievement. We are not under any duty to update any of the forward-looking statements after the date of this prospectus to conform these statements to actual results, unless required by law

IN ADDITION TO THE FOREGOING RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS THAT ARE NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT OTHER IMPORTANT RISKS COULD ARISE.

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

During the nine months ended March 31, 2010, the Company cancelled 1,635,000 shares issued for services totaling $620,810; issued 1,125,000 shares for the conversion of debt totaling $255,000; and received $50,000 under a stock purchase agreement under which a total of 2,500,000 shares were be issued to an accredited investor subsequent to September 30, 2009.

In connection with the reappointment of Ms. Eyraud as CEO and President Ms. Eyraud and the Company entered into an Employment Agreement dated as of August 1, 2009, The Company granted to Ms. Eyraud options to purchase 3,000,000 shares of common stock of the Company at a price equal to the closing price of the Company’s common stock on August 3, 2009. The options vest as to 25% of the underlying shares of common stock on the first anniversary date of the option grant and ratably each quarter thereafter during the next three years of the term. The options become fully vested and exercisable upon the Company’s termination of Ms. Eyraud’s employment under the terms of the Employment Agreement.

During the nine months ended March 31, 2010, the Company cancelled 22,932,309 shares issued for services totaling ($5,945,137); issued 1,125,000 shares for the conversion of debt totaling $255,000; and issued 5,961,539 shares for stock subscriptions totaling $110,000.

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number		DESCRIPTION
31.1		Certification of CEO, Rules 13a-14(a) & 15d-14(a), filed herewith
31.2		Certification of CAO, Rules 13a-14(a) & 15d-14(a) filed herewith
32.1		Certifications of CEO, 18 U.S.C. Sec. 1350, filed herewith
32.2		Certifications of CFO, 18 U.S.C. Sec. 1350, filed herewith

SIGNATURES

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

Marani Brands, Inc.

(Registrant)

Date: May 24, 2010

By: /s/ Margrit Eyraud

Margrit Eyraud

Chief Executive Officer, President

Director

Date: May 24, 2010

By: /s/ Valerie Cordy

Valerie Cordy

Principal Accounting Officer

Marani Brands, Inc. 10-Q