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CBR Brewing Co Inc · 10-Q · For 9/30/96

Filed On 11/14/96 · SEC File 33-26617-A · Accession Number 898430-96-5321

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

11/14/96  CBR Brewing Co Inc                10-Q        9/30/96    2:24                                     Donnelley R R & S..05/FA

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      22    123K 
 2: EX-27       Financial Data Schedule                                2      8K

10-Q · Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Exhibits and Reports on Form 8-K Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Noble Brewery Rmb
1	1st Page
2	Item 1. Financial Statements
"	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Item 6. Exhibits and Reports on Form 8-K
10	Rmb
13	Noble Brewery

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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 September 30, 1996                     

[ ]  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  33-26617A 
                      ----------

CBR BREWING COMPANY, INC. 
--------------------------------------------------- 
(Exact name of registrant as specified in its charter)

Florida                           65-0145422                  
------------------------------             ---------------------                
(State or other jurisdiction of            (I.R.S. Employer                     
incorporation or organization)             Identification Number)               

433 North Camden Drive, Suite 1200                                          
Beverly Hills, California                 90210                       
----------------------------------------       --------------------             
(Address of principal executive offices)       (Zip Code)                       

Registrant's telephone number, including area code: (310) 274-5172              

Not applicable  
----------------------------------------------------------------------- 
(Former name, former address and former fiscal year,  
if changed since last report.)  

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 1934 during   
the preceding 12 months, and (2) has been subject to such filing requirements   
for the past 90 days.                                                           

Yes     X                       No                
-------                        -------  

Common shares outstanding at September 30, 1996    Class A  5,000,013           
                                        Class B  3,000,000

Total sequentially numbered pages in this document : 22                         

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
------------------------------------------- 
INDEX 
----- 

PART I    FINANCIAL INFORMATION                                                 

Item 1  Financial Statements                                          

 Condensed Consolidated Balance Sheets (unaudited) -
September 30, 1996 and December 31, 1995          

       Condensed Consolidated Statements of Income (unaudited) -
   Three months and nine months ended September 30, 1996
and 1995                                          

Condensed Consolidated Statements of Cash Flows   
(unaudited) -                                     
Nine months ended September 30, 1996 and 1995     

  Notes to Condensed Consolidated Financial Statements
(unaudited) -                                     
   Three months and nine months ended September 30, 1996
and 1995                                          

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

PART II    OTHER INFORMATION                                                    

Item 6  Exhibits and Reports on Form 8-K                              

SIGNATURES                                                                      

2 

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) 

                                                        · Enlarge/Download Table

                                       September 30, 1996          December 31, 1995    
                                    -------------------------  -------------------------
                                        RMB           USD          RMB           USD    
                                    -----------   -----------  -----------    ----------
                                                                                        
ASSETS                                                                                  
Current assets:                                                                         
 Cash                                71,958,510     8,708,521   57,448,305     6,952,475
 Accounts receivable                157,288,888    19,035,325  158,677,644    19,203,394
 Inventories (Note 3)               128,771,379    15,584,095   56,838,801     6,878,712
 Prepayments, deposits and other                                                        
  receivables                         8,825,360     1,068,058    7,423,161       898,361
 Due from related companies          20,823,149     2,520,047   46,411,779     5,616,819
                                    -----------   -----------  -----------    ----------

Total current assets                387,667,286    46,916,046  326,799,690    39,549,761

Deferred tax assets                           -             -       48,444         5,863

Property, plant and equipment, net  245,080,276    29,659,963  197,308,264    23,878,527

Interest in an associated                                                               
 company (Note  5)                  198,003,452    23,962,659  222,742,476    26,956,611
                                    -----------   -----------  -----------    ----------

Total assets                        830,751,014   100,538,668  746,898,874    90,390,762
                                    ===========   ===========  ===========    ==========


(continued) 

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)  (CONTINUED)

                                                        · Enlarge/Download Table

                                       September 30, 1996         December 31, 1995    
                                    -------------------------  ------------------------
                                        RMB           USD          RMB          USD    
                                    -----------   -----------  -----------   ----------
                                                                                       
LIABILITIES AND                                                                        
SHAREHOLDERS' EQUITY                                                                   
Current liabilities:                                                                   
 Bank loans                          46,074,400     5,575,989   32,574,400    3,942,200
 Obligation under capital lease       2,799,965       338,856    5,634,848      681,937
 Deposits received from customers    69,048,813     8,356,385  123,817,626   14,984,585
 Accounts payable                                                                      
  and accrued liabilities           121,096,471    14,655,266   56,279,181    6,810,986
 Due to related companies            26,168,812     3,166,987   18,629,685    2,254,591
 Due to an associated company       164,518,178    19,910,224  154,185,606   18,659,761
 Sales taxes payable                 52,636,713     6,370,171   33,233,897    4,022,013
                                    -----------   -----------  -----------   ----------

Total current liabilities           482,343,352    58,373,878  424,355,243   51,356,073

Long term liabilities:                                                                 
 Deferred tax liabilities               701,555        84,903            -            -
 Shareholder's loan (Note 4)         73,794,948     8,930,769   73,794,948    8,930,769
 Obligation under capital lease      24,897,291     3,013,106   24,897,291    3,013,106
                                    -----------   -----------  -----------   ----------
Total long term liabilities          99,393,794    12,028,778   98,692,239   11,943,875

Minority interests                  108,975,597    13,188,382   96,474,719   11,675,508

Shareholders' equity :                                                                 
 Capital stock -  common stock                                                         
 Class A par value US$0.0001 each,                                                     
  90,000,000 shares authorized,                                                        
  5,000,013 shares outstanding            4,265           516        4,265          516
 Class B par value US$0.0001 each,                                                     
  10,000,000 shares authorized,                                                        
  3,000,000 shares outstanding            2,559           310        2,559          310
Additional paid-in capital          104,030,194    12,589,882  104,030,194   12,589,882
Statutory surplus and collective                                                       
 welfare funds                        2,159,610       261,359    2,159,613      261,359
Retained earnings                    33,841,643     4,095,563   21,180,042    2,563,239
                                    -----------   -----------  -----------   ----------

Total shareholders' equity          140,038,271    16,947,630  127,376,673   15,415,306
                                    -----------   -----------  -----------   ----------

Total liabilities                                                                      
 and shareholders' equity           830,751,014   100,538,668  746,898,874   90,390,762
                                    ===========   ===========  ===========   ==========


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

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 

                                                        · Enlarge/Download Table
                                                                                                   Three Months      Nine Months 
                                                                                                      Ended             Ended    
                                        Three Months Ended               Nine Months Ended         September 30,   September 30, 
                                        September 30, 1996              September 30, 1996             1995             1995     
                                   -----------------------------   -----------------------------    ------------    ------------ 
                                      RMB               USD            RMB              USD              RMB             RMB     
                                   ------------      -----------   ------------      -----------    ------------    ------------ 
                                                                                                    (As adjusted    (As adjusted 
                                                                                                     - Note 2)         - Note 2) 
                                                                                                                                 
Sales                               306,718,479       37,119,506    950,289,048      115,005,331     252,096,131     387,045,169 
Sales taxes                          (5,812,980)        (703,495)   (18,192,910)      (2,201,732)     (2,055,743)     (9,629,445)
                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Sales, net of sales taxes           300,905,499       36,416,011    932,096,138      112,803,599     250,040,388     377,415,724 

Cost of sales, including                                                                                                         
 inventory purchased from                                                                                                        
 related companies of                                                                                                            
 RMB 202,392,696; RMB                                                                                                            
 605,179,405; RMB 230,583,887                                                                                                    
 and RMB 257,401,545,                                                                                                            
 respectively; and royalty                                                                                                       
 fee paid to related company                                                                                                     
 of RMB 2,261,653; RMB 6,395,214;                                                                                                
 RMB 1,006,342 and RMB 2,531,863,                                                                                                
 respectively                      (255,919,347)     (30,971,723)  (787,903,498)     (95,353,201)   (219,288,307)   (325,726,815)

                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Gross profit                         44,986,152        5,444,288    144,192,640       17,450,398      30,752,081      51,688,909 

Selling and administrative                                                                                                       
 expenses, including advertising                                                                                                 
 expenses paid or payable to                                                                                                     
 related company of RMB                                                                                                          
 14,900,000; RMB 48,306,488;                                                                                                     
 RMB 4,380,000 and RMB 4,380,000,                                                                                                
 respectively                       (37,320,069)      (4,516,528)  (119,096,142)     (14,413,184)    (26,298,804)    (45,780,787)

                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Operating income                      7,666,083          927,760     25,096,498        3,037,214       4,453,277       5,908,122 
Foreign exchange gains                  374,708           45,348        534,459           64,681               -       1,552,106 

Other income (expense):                                                                                                          
Sales tax refund                              -                -              -                -               -       1,375,000 
Sales of scrap                                -                -              -                -               -         736,494 
Interest expense, including                                                                                                      
 interest expense paid or                                                                                                        
 payable to related companies                                                                                                    
 of RMB 2,778,908; RMB                                                                                                           
 9,378,620; nil and nil,                                                                                                         
 respectively                        (4,728,093)        (572,201)   (17,553,745)      (2,124,379)     (1,625,123)     (5,986,858)

                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Income before income taxes            3,312,698          400,907      8,077,212          977,516       2,828,154       3,584,864 
Income taxes                           (473,587)         (57,315)      (973,587)        (117,825)     (2,000,000)     (2,000,000)

                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Income before equity in                                                                                                          
 earnings of an associated                                                                                                       
 company                              2,839,111          343,592      7,103,625          859,691         828,154       1,584,864 

Equity in earnings                                                                                                               
 of an associated company             6,567,324          794,787     15,058,854        1,822,444      10,387,862      30,164,340 
                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Net income before minority                                                                                                       
 interests                            9,406,435        1,138,379     22,162,479        2,682,135      11,216,016      31,749,204 
Minority interests                   (5,417,228)        (655,601)    (9,500,878)      (1,149,810)     (6,372,559)    (16,696,385)
                                   ------------      -----------   ------------      -----------    ------------    ------------ 

Net income for the period             3,989,207          482,778     12,661,601        1,532,325       4,843,457      15,052,819 
                                   ============      ===========   ============      ===========    ============    ============ 

Net income per common share                0.50             0.06           1.58             0.19            0.61            1.88 
                                   ============      ===========   ============      ===========    ============    ============ 

Weighted average                                                                                                                 
 shares of common stock               8,000,013        8,000,013      8,000,013        8,000,013       8,000,013       8,000,013 
                                   ============      ===========   ============      ===========    ============    ============ 


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

5 

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

                                                        · Enlarge/Download Table

                                                              Nine Months Ended        Nine Months Ended   
                                                              September 30, 1996       September 30, 1995  
                                                          --------------------------   ------------------- 
                                                              RMB            USD               RMB         
                                                          -----------     ----------   ------------------- 
                                                                                       (As adjusted-Note 2)
                                                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                      
Net income                                                 12,661,601      1,532,325         15,052,819    

Adjustments to reconcile net income                                                                        
 to net cash provided by (used in) operating activities:                                                   
  Minority interests                                        9,500,878      1,149,810         16,696,385    
  Equity in earnings of an associated company             (15,058,854)    (1,822,444)       (30,164,340)   
  Depreciation and amortization                            20,582,444      2,490,917          9,323,888    
  Allowance for doubtful accounts                           2,131,251        257,927                  -    
  Income taxes                                              3,910,971        473,311                  -    
  Foreign exchange gains                                     (534,459)       (64,681)        (1,552,106)   
                                                          -----------     ----------        -----------    
                                                           33,193,832      4,017,165          9,356,646    

Changes in working capital:                                                                                
(Increase) Decrease in -                                                                                   
 Accounts receivable                                        1,388,756        168,069       (113,063,426)   
 Inventories                                              (71,932,578)    (8,705,383)       (36,832,603)   
 Prepayments, deposits and other receivables               (1,402,199)      (169,696)       (25,486,973)   
Increase (Decrease) in -                                                                                   
 Accounts payable and accrued liabilities                  64,817,290      7,844,280         36,322,823    
 Deposits received from customers                         (54,768,813)    (6,628,200)        30,271,130    
 Due to an associated company                              10,332,572      1,250,463                  -    
 Sales taxes payable                                       19,402,816      2,348,157         10,391,492    
                                                          -----------     ----------       ------------    
NET CASH PROVIDED BY (USED IN) OPERATING                                                                   
ACTIVITIES                                                  1,031,676        124,855        (89,040,911)   
                                                          -----------     ----------       ------------    
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                      
 Purchases of property, plant and equipment               (70,112,223)    (8,485,080)       (41,404,613)   
 Due from related companies                                25,588,630      3,096,772                  -    
 Dividend from an associated company                       39,797,878      4,816,396         28,644,569    
                                                          -----------     ----------       ------------    
NET CASH USED IN INVESTING ACTIVITIES:                     (4,725,715)      (571,912)       (12,760,044)   
                                                          -----------     ----------       ------------    
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                      
 Repayment of other loans                                           -              -         (8,000,000)   
 New other loans                                                    -              -          3,000,000    
 Increase in shareholder's loan                                     -              -          4,391,204    
 New bank loans                                            13,500,000      1,633,789          6,000,000    
 Due to related companies                                   7,539,127        912,396        208,047,851    
 Repayment of obligation under capital lease               (2,834,883)      (343,082)        (4,730,443)   
                                                          -----------     ----------       ------------    
NET CASH PROVIDED BY FINANCING ACTIVITIES                  18,204,244      2,203,103        208,708,612    
                                                          -----------     ----------       ------------    
Net increase in cash                                       14,510,205      1,756,046        106,907,657    

Cash at beginning of period                                57,448,305      6,952,475          7,397,927    
                                                          -----------     ----------       ------------    

Cash at end of period                                      71,958,510      8,708,521        114,305,584    
                                                          ===========     ==========       ============    

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

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

NOTE 1   --   ORGANIZATION AND BASIS OF PRESENTATION                            

Organization  -  CBR Brewing Company, Inc. (the "Company," which term shall     
------------                                                                    
include, when the context so requires, its subsidiaries and affiliates),        
formerly known as Natural Fuels, Inc. and National Sweepstakes, Inc., was       
originally incorporated as Video Promotions, Inc. on April 20, 1988 under the   
laws of the State of Florida.  The Company adopted its current name on March 15,
1995.                                                                           

Reverse Acquisition  -  For a period of time prior to December 16, 1994, the    
-------------------                                                             
business of the Company was devoted to seeking potential acquisition or merger  
opportunities.  On December 16, 1994, the Company acquired all of the           
outstanding shares of capital stock of High Worth Holdings, Ltd., a British     
Virgin Islands corporation ("Holdings"), from Oriental Win Holdings Ltd.        
("Oriental Win") and Goldchamp Ltd.  ('Goldchamp") in exchange for 3,960,000    
shares and 240,000 shares of the Company's Class A Common Stock issued to       
Oriental Win and Goldchamp, respectively, and 3,000,000 shares of the Company's 
Class B Common Stock issued to Oriental Win.  Subsequently, on October 14, 1996,
Oriental Win transferred the 3,960,000 shares of Class A common stock and the   
3,000,000 shares of Class B common stock to its shareholders.  As a result, West
Coast Star Enterprises Limited, as the 60% shareholder of Oriental Win, became  
the Company's controlling shareholder.  The shares of Class B Common Stock carry
two votes per share but are otherwise equivalent to the Class A Common Stock.   
In addition, the Company issued an aggregate of 600,000 shares of Class A Common
Stock to various parties for consulting services in connection with the         
acquisition.  The shares of Class A and Class B Common Stock issued in          
conjunction with the acquisition represent approximately 98.1% of the issued and
outstanding shares of the Company, after all shares were issued and a 1-for-22  
reverse stock split  which was effected on November 22, 1994.                   

The Company's subsidiaries and affiliates manage and control the production and 
sale of domestically-brewed Pabst Blue Ribbon beer in the People's Republic of  
China ("China" or the "PRC").  Holdings is a holding company that was formed    
solely to effect the acquisition of Zhaoqing Blue Ribbon High Worth Brewery,    
Ltd., a Sino-foreign joint venture ("High Worth JV"), which was registered in   
the PRC on July 2, 1994, in which Guangdong Blue Ribbon Group Co. Ltd.          
("Guangdong Blue Ribbon") owns a 40% interest and Holdings owns a 60% interest. 

High Worth JV owns a 100% interest in Zhaoqing Brewery, a PRC company, which is 
engaged in the brewery business in China.  Zhaoqing Brewery also owns a 40%     
interest in Zhaoqing Blue Ribbon Brewery Noble, Ltd., a Sino-foreign joint      
venture ("Noble Brewery"), which is also engaged in the brewery business in     
China.  Noble Brewery is a Sino-foreign equity joint venture enterprise         
registered in the PRC on October 8, 1993, in which Goldjinsheng Holding Ltd., an
unrelated party, and Zhaoqing Brewery hold 60% and 40% interests, respectively. 
Accordingly, the Company owns effective interests of 60% in Zhaoqing Brewery and
24% in Noble Brewery.  The brewery operations are located in Zhaoqing City,     
which is situated approximately 100 miles from Hong Kong in the Guangdong       
Province of China.                                                              

Substantially all of the beer currently sold by the Company is now marketed     
under the Pabst Blue Ribbon label.  During 1995, Zhaoqing Blue Ribbon Marketing 
Company, a PRC company  (the "Marketing Company"), was established to conduct   
the distribution, marketing and promotion of Pabst Blue Ribbon beer in China.   
Zhaoqing Brewery owns a 70% interest and Guangdong Blue Ribbon owns a 30%       
interest in the Marketing Company.  Zhaoqing Brewery and Noble Brewery commenced
the distribution of their production of Pabst Blue Ribbon beer through the      
Marketing Company during April 1995 and July 1995, respectively.                

Apart from the investment in High Worth JV which was partly financed by a loan  
from Oriental Win, Holdings has no other significant assets or liabilities.  On 
October 31, 1994, prior to the reverse acquisition effective December 16, 1994, 
High Worth JV acquired a 100% interest in Zhaoqing Brewery, including Zhaoqing  
Brewery's 40% interest in Noble Brewery, for approximately USD20,000,000.       
Prior to the acquisition of the Zhaoqing Brewery by High Worth JV, Zhaoqing     
Brewery was a wholly-owned subsidiary of Guangdong Blue Ribbon.                 

For accounting purposes, the acquisition of Holdings by the Company has been    
treated as a recapitalization of Holdings with Holdings as the acquiror (reverse
acquisition).  Accordingly, the historical financial statements prior to        
December 16, 1994 are those of Holdings.                                        

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Continued) 
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

NOTE 1   --   ORGANIZATION AND BASIS OF PRESENTATION (continued)                

The consolidated financial statements have been prepared in accordance with     
generally accepted accounting principles in the United States of America ("US   
GAAP").  The acquisition on October 31, 1994 of Zhaoqing Brewery, including     
Zhaoqing Brewery's 40% interest in Noble Brewery, has been accounted for under  
the purchase method of accounting.  Since High Worth JV had no operations prior 
to this acquisition, consolidated financial statements have been prepared       
commencing October 31, 1994, to reflect the post-acquisition consolidated       
results of the operations of Zhaoqing Brewery and Noble Brewery attributable to 
the Company.  The consolidated financial statements include the results of      
operations of Zhaoqing Brewery on a consolidated basis and Noble Brewery under  
the equity method of accounting for investments.  All material intercompany     
accounts and transactions are eliminated on consolidation.  The consolidated    
financial statements have been prepared on a going concern basis notwithstanding
that the Company has a net current liability position at December 31, 1995 and  
September 30, 1996, as Oriental Win, the Company's former principal shareholder,
and Guangdong Blue Ribbon, a related party, have undertaken to provide          
continuing financial support.                                                   

Foreign Currency Translation  -  In preparing the consolidated financial        
----------------------------                                                    
statements, the financial statements of the Company are measured using Renminbi 
("RMB") as the functional currency.  All foreign currency transaction are       
translated into RMB using the  applicable rates of exchange, quoted by the      
People's Bank of China (the "unified exchange rate").  Monetary assets and      
liabilities denominated in foreign currencies have been translated into RMB     
using the unified exchange rate prevailing at the balance sheet dates.  The     
resulting exchange gains or losses have been credited or charged to the         
statements of income for the periods in which they occur.                       

The Company's share capital is denominated in United States dollars ("USD") and 
the reporting currency is the RMB.  For financial reporting purposes, the USD   
share capital amounts have been translated into RMB at the applicable rates     
prevailing on the transaction dates.                                            

Translation of amounts from RMB into United States dollars ("USD") for the      
convenience of the reader has been made at the rate of exchange as quoted by the
People's Bank of China on September 30, 1996, of  USD1.00  =  RMB8.263.  No     
representation is made that the RMB amounts could have been, or could be,       
converted into USD at that rate or at any other rate.                           

NOTE 2   --   COMMENTS                                                          

The accompanying condensed consolidated financial statements are unaudited but, 
in the opinion of the management of the Company, contain all adjustments        
necessary to present fairly the financial position at September 30, 1996, the   
results of operations for the three months and nine months ended September 30,  
1996 and 1995, and the changes in cash flows for the nine months ended September
30, 1996 and 1995.   These adjustments are of a normal recurring nature.  The   
consolidated balance sheet as of December 31, 1995 is derived from the Company's
audited financial statements.  Certain information and footnote disclosures     
normally included in financial statements that have been prepared in accordance 
with generally accepted accounting principles have been condensed or omitted    
pursuant to the rules and regulations of the Securities and Exchange Commission,
although management of the Company believes that the disclosures contained in   
these financial statements are adequate to make the information presented       
therein not misleading.  For further information, refer to the consolidated     
financial statements and notes thereto included in the Company's Annual Report  
on Form 10-K for the fiscal year ended December 31, 1995, as filed with the     
Securities and Exchange Commission.                                             

The results of operations for the three months and nine months ended September  
30, 1996 are not necessary indicative of the results of operations to be        
expected for the full fiscal year ending December 31, 1996.                     

The calculation of net income per share is based on the weighted average number 
of shares of Class A and Class B Common Stock issued and outstanding during each
respective period.                                                              

In conjunction with the audit of the Company's consolidated financial statements
as of and for the year ended December 31, 1995, the Company identified certain  
year-end adjustments properly allocable to prior 1995 interim periods, including
additional charges by Zhaoqing Brewery for the staff welfare fund and by the    
Marketing Company for the provision for doubtful accounts, accrued liability for
sales commissions and unrecorded renovation expenses.                           

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Continued) 
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

NOTE 2   --   COMMENTS (continued)                                              

With respect to Noble Brewery, an unconsolidated subsidiary, additional charges 
due to improper cut-offs, unrecorded expenses and account misclassifications    
resulted in an understatement of cost of sales and of selling, general and      
administrative expenses.  Accordingly, the Company has restated the accompanying
statements of income and cash flows for the three months amd nine months ended  
September 30, 1995 to reflect these adjustments.                                

                                                                · Download Table

                                        As Previously Reported    As Adjusted
                                        ----------------------    -----------
                                                   RMB                RMB    
                                               -----------        -----------
                                                                             
Three Months Ended September 30, 1995:                                       
-------------------------------------                                        
Sales, net of sales taxes                      250,040,388        250,040,388
Gross profit                                    30,752,081         30,752,081
Operating income                                 6,709,893          4,453,277
Net income                                       6,811,619          4,843,457
Net income per common share                           0.85               0.61


                                        As Previously Reported    As Adjusted
                                        ----------------------    -----------
                                                   RMB                RMB    
                                               -----------        -----------
                                                                             
Nine Months Ended September 30, 1995:                                        
-------------------------------------                                        
Sales, net of sales taxes                      377,845,714        377,415,724
Gross profit                                    51,870,004         51,688,909
Operating income                                10,703,709          5,908,122
Net income                                      21,853,725         15,052,819
Net income per common share                           2.73               1.88


NOTE 3   --   INVENTORIES                                                       

Inventories consisted of the following at September 30, 1996 and December 31,   
1995:                                                                           

                                                                · Download Table


                        September  30, 1996        December  31, 1995  
                      ------------------------   ----------------------
                          RMB          USD          RMB          USD   
                      -----------   ----------   ----------   ---------
                                                                       
Raw materials          23,670,127    2,864,592   14,154,395   1,712,985
Work in progress        6,091,372      737,186    3,713,686     449,436
Finished goods         99,009,880   11,982,317   38,970,720   4,716,291
                      128,771,379   15,584,095   56,838,801   6,878,712


NOTE 4   --   SHAREHOLDER'S LOAN                                                

The shareholder's loan of RMB 73,794,948 (USD8,930,769) at September 30, 1996   
and December 31, 1995 was provided by Oriental Win (the former controlling      
shareholder) in connection with the acquisition of High Worth JV by Holdings.   
The loan is denominated in USD, is unsecured, interest free and is not due and  
payable unless alternate long term debt or equity funds are available to the    
Company.                                                                        

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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Continued) 
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

NOTE 5   --   INTEREST IN AN ASSOCIATED COMPANY                                 

The unlisted investment consists of the Company's 40% equity interest in Noble  
Brewery held by a 60% owned subsidiary as follows:                              

                                                                · Download Table

                                                  RMB      
                                                           
Unlisted investment, at cost,                              
 October 31, 1994                              209,361,595 

The Company's share of earnings and                        
 dividends of an associated company:                       
 Earnings -                                                
  Two months ended December 31, 1994             7,812,392 
  For the year ended December  31, 1995         34,213,058 
  Three months ended March 31, 1996              4,011,244 
  Three months ended June 30, 1996               4,480,286 
  Three months ended September 30, 1996          6,567,324 
 Dividends -                                               
  Declared and paid during 1995                (28,644,569)
  Declared and paid during 1996                (39,797,878)
                                               ----------- 

Unlisted investment, September 30, 1996        198,003,452 
                                               =========== 


The condensed statements of operations of Noble Brewery for the three months and
nine months ended September 30, 1996 and 1995 are as follows:                   

                                                        · Enlarge/Download Table


                                                                                       Three Months    Nine Months 
                                                                                           Ended          Ended    
                               Three Months Ended             Nine Months Ended        September 30,  September 30,
                               September 30, 1996            September 30, 1996            1995            1995    
                           ----------------------------  ----------------------------  -------------   ----------- 
                               RMB               USD         RMB              USD            RMB           RMB     
                           -----------       ----------  -----------       ----------    -----------   ----------- 
                                                                                        (As adjusted  (As adjusted 
                                                                                          - Note 2)     - Note 2)  
                                                                                                                   

Sales, net of sales taxes  166,186,130       20,112,082  508,780,266       61,573,311    189,240,239   552,113,728 
                           ===========       ==========  ===========       ==========    ===========   =========== 

Net income                  20,730,412        2,508,824   55,898,583        6,764,926     25,969,655    75,410,850 
                           ===========       ==========  ===========       ==========    ===========   =========== 

The Company's share                                                                                                
  of net income after                                                                                              
  deduction of unrealised                                                                                          
  intercompany profit        6,567,324          794,787   15,058,854        1,822,444     10,387,862    30,164,340 
                           ===========       ==========  ===========       ==========    ===========   =========== 


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CBR BREWING COMPANY, INC. AND SUBSIDIARIES  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Continued) 
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

NOTE 6   --   MARKETING COMPANY                                                 

The Marketing Company was established during 1995 to conduct the distribution,  
marketing and promotion of Pabst Blue Ribbon beer in China.  The Marketing      
Company also sells mineral water and non-carbonated soft drinks bearing the Blue
Ribbon label produced by Guangdong Blue Ribbon.  Zhaoqing Brewery owns a 70%    
interest and Guangdong Blue Ribbon owns a 30% interest in the Marketing Company.
Zhaoqing Brewery and Noble Brewery commenced the distribution of their          
production of Pabst Blue Ribbon beer through the Marketing Company during April 
1995 and July 1995, respectively.  The consolidated financial statements include
the results of operations of the Marketing Company on a consolidated basis.     

The Marketing Company commenced operations on April 1, 1995.  The commencement  
of the Marketing Company's operations, which are presented on a consolidated    
basis, resulted in a significant change in the Company's operating structure and
income statement presentation during 1995.   Accordingly, a comparison of       
results of operations for the nine months ended September 30, 1996 to results of
operations for the nine months ended September 30, 1995, is not necessarily     
meaningful.                                                                     

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ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                       
CONDITION AND RESULTS OF OPERATIONS                             

Overview:                                                                       

Effective December 16, 1994, the Company acquired Holdings, which, through its
subsidiaries and affiliates, manages and controls the production and sale of    
domestically-brewed Pabst Blue Ribbon beer in China.  Holdings is a holding     
company which was formed solely to effect the acquisition of a 60% interest in  
High Worth JV.  On October 31, 1994, High Worth JV acquired a 100% interest in  
Zhaoqing Brewery, including Zhaoqing Brewery's 40% interest in Noble Brewery.   

The acquisition of Zhaoqing Brewery, including Zhaoqing Brewery's 40% interest
in Noble Brewery, has been accounted for under the purchase method of           
accounting. The consolidated financial statements include the results of        
operations of Zhaoqing Brewery on a consolidated basis and Noble Brewery under  
the equity method of accounting for investments, commencing October 31, 1994, to
reflect the post-acquisition consolidated results of operations of Zhaoqing     
Brewery and Noble Brewery attributable to the Company.                          

For accounting purposes, the acquisition of Holdings by the Company has been  
treated as a recapitalization of Holdings with Holdings as the acquiror (reverse
acquisition). Accordingly, the historical financial statements prior to December
16, 1994 are those of Holdings.                                                 

 During 1995, the Marketing Company was established to conduct the distribution,
marketing and promotion of Pabst Blue Ribbon beer in China. The Marketing       
Company also sells mineral water and non-carbonated soft drinks bearing the Blue
Ribbon label produced by Guangdong Blue Ribbon. Zhaoqing Brewery owns a 70%     
interest and Guangdong Blue Ribbon owns a 30% interest in the Marketing Company.
Zhaoqing Brewery and Noble Brewery commenced the distribution of their          
production of Pabst Blue Ribbon beer through the Marketing Company during April 
1995 and July 1995, respectively. The Marketing Company generally requires a 50%
cash deposit from its customers as security. However, for those customers       
located in Guangdong Province, the deposit policy has been replaced by cash-on- 
delivery or pre-approved credit terms. The consolidated financial statements    
include the results of operations of the Marketing Company on a consolidated    
basis.                                                                          

Business:                                                                       

Pabst Blue Ribbon beer is distributed and sold throughout China. In general,  
the beer market in China is still undergoing a rapid growth stage. There is a   
substantial difference in the price at which local or regional beer is sold in  
China as compared to the price of foreign or premium brands of beer. On average,
a 640 ml. bottle of local or regional beer would typically sell for 1 - 2 RMB,  
as compared to a foreign or premium beer which would sell for 4 - 6 RMB.        

The beer industry in China is seasonal, with sales at their lowest in the     
months of October and November, and at their highest in the months of March     
through September.                                                              

The Company's brewing facilities consist of the following :                   

 Zhaoqing Brewery:  The original facilities of Zhaoqing Brewery were constructed
----------------                                                              
between 1978 and 1980 with annual production capacity based on old brewing      
technology of 50,000 metric tons or 425,000 barrels of beer. With the           
implementation of the new brewing technology and the purchase of additional     
equipment, Zhaoqing Brewery reached an annual production capacity of 100,000    
metric tons or 850,000 barrels by the end of 1995. Prior to March 1995, Zhaoqing
Brewery had produced exclusively domestic brands of beer. In mid-1994, with the 
assistance of Pabst Brewing Company, Zhaoqing Brewery commenced the conversion  
and refinement of its original facilities and adopted a new brewing technology  
in order to produce beer under the Pabst Blue Ribbon label. During March 1995,  
Zhaoqing Brewery discontinued production of all domestic brands and commenced   

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exclusive production of Pabst Blue Ribbon beer on a full-scale basis.  However, 
beer that does not meet Pabst Blue Ribbon quality standards is generally        
packaged and distributed as local brand beer.                                   

Noble Brewery:  The original facilities of Noble Brewery were constructed     
-------------                                                                 
between 1988 and 1990 with annual production capacity of approximately 80,000   
metric tons or 680,000 barrels of beer. During July 1994, a second brewing      
facility was completed, which increased annual production capacity by an        
additional 120,000 metric tons or 1,020,000 barrels of beer. The second brewing 
facility commenced full-scale production during late 1994. Noble Brewery has    
produced Pabst Blue beer exclusively since it commenced operations.             

Consolidated Results of Operations :                                            

Zhaoqing Brewery and Noble Brewery commenced distribution of their production 
of Pabst Blue Ribbon beer through the Marketing Company during April 1995 and   
July 1995, respectively. The commencement of the Marketing Company's operations,
which are presented on a consolidated basis, resulted in a significant change in
the Company's operating structure and income statement presentation during 1995.
Accordingly, a comparison of result of operations for the nine months ended     
September 30, 1996 to results of operations for the nine months ended September 
30, 1995 is not necessarily meaningful.                                         

Three Months Ended September 30, 1996 and 1995  -                               

Sales: During the three months ended September 30, 1996, Zhaoqing Brewery     
produced 23,443 metric tons and sold 23,412 metric tons of beer, of which 504   
metric tons (2.2%) were local brand beer and 22,908 metric tons (97.8%) were    
Pabst Blue Ribbon beer. During the three months ended September 30, 1995,       
Zhaoqing Brewery produced 10,338 metric tons and sold 11,630 metric tons, of    
which 1,396 metric tons (12.0%) were local brand beer and 10,234 metric tons    
(88.0%) were Pabst Blue Ribbon beer. As a result of increased demand for Pabst  
Blue Ribbon beer, in conjunction with the implementation of the new brewing     
technology and the installation of new equipment to increase the production     
capacity at the end of 1995, total beer sold increased by 11,782 metric tons or 
101.3% from 1995 to 1996.                                                       

 During the three months ended September 30, 1996, Noble Brewery produced 45,946
metric tons and sold 42,587 metric tons of beer, as compared to 35,047 metric   
tons of beer produced and 36,793 metric tons of beer sold for the three months  
ended September 30, 1995. As a result of increased demand for Pabst Blue Ribbon 
beer, total beer sold increased by 5,794 metric tons or 15.7% from 1995 to 1996.

For the three months ended September 30, 1996, net sales, all of which were   
conducted through the Marketing Company, were RMB 300,905,499, of which RMB     
273,815,456 (91.0%) were attributable to beer sales and RMB 27,090,043 (9.0%)   
were attributable to the sales of mineral water, non-carbonated soft drinks and 
red wine. During the three months ended September 30, 1996, the Marketing       
Company purchased RMB 177,212,319 of beer products from Noble Brewery for       
resale, and RMB 25,180,377 of mineral water, non-carbonated soft drinks and red 
wine from Guangdong Blue Ribbon for resale. Approximately 99.6% of total beer   
sales during the three months ended September 30, 1996 were provided from the   
sale and distribution of products under the Pabst Blue Ribbon brand name. For   
the three months ended September 30, 1995, net sales, all of which were         
conducted through the Marketing Company, were RMB 250,040,388, of which RMB     
218,035,218 (87.2%) were attributable to beer sales and RMB 32,005,170 (12.8%)  
were attributable to the sales of mineral water and non-carbonated soft drinks. 

 Gross Profit: For the three months ended September 30, 1996, total gross profit
was RMB 44,986,152 or 15.0% of total net sales, and consisted of gross profit   
from beer sales of RMB 43,076,486 or 15.7% of net sales of beer and gross profit
from sales of mineral water, non-carbonated soft drinks and red wine of RMB     
1,909,666 or 7.0% of net sales of mineral water, non-carbonated soft drinks and 
red wine. For the three months ended September 30, 1995, total gross profit was 
RMB 30,752,081 or 12.3% of total net sales and consisted of gross profit from   
beer sales of RMB 29,022,614 or 13.3% of net sales of beer and gross profit from
sales of mineral water and non-carbonated soft drinks of RMB 1,729,467 or 5.4%  
of net sales of mineral water and non-carbonated soft drinks.                   

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The Company expects continuing pressure on its gross profit during 1996 as a  
result of the following factors: (1) a general softening of consumer demand in  
China, caused in substantial part by the central government of China's          
regulatory controls and economic policies; (2) increasing competition from      
foreign premium brand beers; and (3) an increase in 1996 raw material and       
packaging costs in excess of 10%. The Company has not been able to fully pass on
to its customers the increased raw material and packaging costs, but in an      
effort to reduce product costs, the Company introduced a bottle recycling       
program in early 1996.                                                          

 During July 1996, Renhe Trading Company, a trading company located in Shenzhen,
PRC, commenced importing and distributing U.S.-brewed Pabst Blue Ribbon beer in 
Southern China, and has advertised widely throughout Southern China that Pabst  
Brewing Company USA has granted it the exclusive right to distribute U.S.-brewed
Pabst Blue Ribbon beer in China.  Pabst Brewery Company USA has officially      
denied granting such authorization.                                             

The Company and its joint venture partner, Guangdong Blue Ribbon, which is the
exclusive license holder of the Pabst Blue Ribbon brand in China, have jointly  
taken actions to stop the importation of U.S.-brewed Pabst Blue Ribbon beer by  
making successful applications to the head offices of the Custom Bureau and the 
Industrial and Commercial Bureau in Beijing for protection of the trademark and 
the exclusive license rights.  During September 1996, the head office of the    
Custom Bureau officially notified all Provincial Custom Departments to          
confiscate all imported Pabst Blue Ribbon beer.  In addition, the Industrial and
Commercial Bureau has instructed its provincial branches to confiscate the      
imported U.S.-brewed Pabst Blue Ribbon beer appearing in the retail market.     
Accordingly, the influx of imported U.S.-brewed Pabst Blue Ribbon beer has been 
substantially reduced.  However, there can be no assurances that this problem   
will not reoccur in the future.  Guangdong Blue Ribbon intends to commence legal
proceedings against Renhe Trading Company for the damages caused by its         
importation activities.                                                         

Selling and Administrative Expenses:  For the three months ended September 30,
1996, selling and administrative expenses were RMB 37,320,069 or 12.4% of net   
sales, consisting of selling expenses of RMB 29,142,163 and general and         
administrative expenses of RMB 8,177,906.  Selling expenses include costs       
relating to the advertising, promotion, marketing and distribution of Pabst Blue
Ribbon beer in China, and have been incurred in conjunction with the increase in
the production capacity of Zhaoqing Brewery and the increase in sales volume.   
For the three months ended September 30, 1996, the Company recorded an allowance
for doubtful  accounts of RMB 801,251 to provide for estimated losses on        
accounts receivable for the period.                                             

During 1995, the Marketing Company was established to market the Pabst Blue   
Ribbon beer produced by Zhaoqing Brewery and Noble Brewery throughout China.    
The Marketing Company assumed the responsibility for marketing Zhaoqing         
Brewery's production of Pabst Blue Ribbon beer in April 1995, and has incurred  
most of the selling expenses since that date.  General and administrative costs 
include the costs associated with the operation of the Company's executive      
offices, and the legal and accounting costs associated with the operation of a  
public company.                                                                 

As a result of softening consumer demand and increasing competition from      
foreign premium brand beers, the Company has implemented a substantially        
expanded advertising and promotional program in 1996 in order to stimulate      
consumer demand and maintain the market position of Pabst Blue Ribbon beer in   
China.                                                                          

Operating Income: For the three months ended September 30, 1996, operating    
income was RMB 7,666,083 or 2.5% of net sales. For the three months ended       
September 30, 1995, operating income was RMB 4,453,277 or 1.8% of net sales.    

Interest Expense: For the three months ended September 30, 1996, interest     
expense increased by RMB 3,102,970 or 190.9% to RMB 4,728,093, as compared to   
RMB 1,625,123 for the three months ended September 30, 1995. Interest expense   
increased in 1996 as compared to 1995 as a result of the increase in bank loans,
capital lease obligations and amounts payable to Guangdong Blue Ribbon as a     
result of its advances for the expansion of Zhaoqing Brewery.                   

 Income Taxes: For the three months ended September 30, 1996, income tax expense
was RMB 473,587. Although the Zhaoqing Brewery's operations in China were       
subject to a tax holiday in 1996, deferred income tax                           

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expense of RMB 250,000 was recorded for the three months ended September 30,    
1996 as a result of temporary timing differences with respect to accelerated    
depreciation of property, plant and equipment during the tax exemption period.  
In addition, for the three months ended September 30, 1996, the Company recorded
RMB 223,587 for the local income tax expense of the Marketing Company's         
operations. For the three months ended September 30, 1995, deferred income tax  
expense of RMB 2,000,000 was recorded.                                          

Net Income: As a result of decreased sales and earnings of Noble Brewery,     
increased selling expenses incurred by the Marketing Company, and increased     
interest expense, net income decreased to RMB 3,989,207 for the three months    
ended September 30, 1996, as compared to RMB 4,843,457 for the three months     
ended September 30, 1995.                                                       

Nine Months Ended September 30, 1996 and 1995  -                                

Sales:  During the nine months ended September 30, 1996, Zhaoqing Brewery     
produced 66,483 metric tons and sold 66,432 metric tons of beer, of which 1,526 
metric tons (2.3%) were local brand beer and 64,906 metric tons (97.7%) were    
Pabst Blue Ribbon beer.  During the nine months ended September 30, 1995,       
Zhaoqing Brewery produced 34,155 metric tons and sold 37,471 metric tons, of    
which 10,237 metric tons (27.3%) were local brand beer and 27,234 metric tons   
(72.7%) were Pabst Blue Ribbon beer. As a result of increased demand for Pabst  
Blue Ribbon beer, in conjunction with the implementation of the new brewing     
technology and the installation of new equipment to increase the production     
capacity at the end of 1995, total beer sold increased by 28,961 metric tons or 
77.3% from 1995 to 1996.  Of the 11,388 metric tons of local brand beer produced
in 1995, 10,237 metric tons (89.9%) were produced during the nine months ended  
September 30, 1995.                                                             

 During the nine months ended September 30, 1996, Noble Brewery produced 124,946
metric tons and sold 121,633 metric tons of beer, as compared to 127,891 metric 
tons of beer produced and 119,270 metric tons of beer sold for the nine months  
ended September 30, 1995.  Total beer sold increased by 2,363 metric tons or    
2.0% from 1995 to 1996, as a result of the regulation of sales by the Marketing 
Company, which purchases beer from the two breweries in accordance with their   
respective production capacities.                                               

For the nine months ended September 30, 1996, net sales, all of which were    
conducted through the Marketing Company, were RMB 932,096,138, of which RMB     
861,982,510 (92.5%) were attributable to beer sales and RMB 70,113,628 (7.5%)   
were attributable to the sales of mineral water, non-carbonated soft drinks and 
red wine. During the nine months ended September 30, 1996, the Marketing Company
purchased RMB 540,238,236 of beer products from Noble Brewery for resale, and   
RMB 64,941,169 of mineral water, non-carbonated soft drinks and red wine from   
Guangdong Blue Ribbon for resale.  Approximately 99.7% of total beer sales      
during the nine months ended September 30, 1996 were provided from the sale and 
distribution of products under the Pabst Blue Ribbon brand name.   For the nine 
months ended September 30, 1995, net sales were RMB 377,415,724, of which RMB   
320,803,365 (85.0%) were attributable to beer sales and RMB 56,612,359 (15.0%)  
were attributable to the sales of mineral water and non-carbonated soft drinks. 

 Gross Profit:  For the nine months ended September 30, 1996, total gross profit
was RMB 144,192,640 or  15.5% of total net sales, and consisted of gross profit 
from beer sales of RMB 139,020,181 or 16.1% of net sales of beer and gross      
profit from sales of mineral water, non-carbonated soft drinks and red wine of  
RMB 5,172,459 or 7.4% of net sales of mineral water, non-carbonated soft drinks 
and red wine. For the nine months ended September 30, 1995, total gross profit  
was RMB 51,688,909 or 13.7% of total net sales and consisted of gross profit    
from beer sales of RMB 48,849,839 or 15.2% of net sales of beer and gross profit
from sales of mineral water and non-carbonated soft drinks of RMB 2,839,070 or  
5.0% of net sales of mineral water and non-carbonated soft drinks.              

The Company expects continuing pressure on its gross profit during 1996 as a  
result of the following factors: (1) a general softening of consumer demand in  
China, caused in substantial part by the central government of China's          
regulatory controls and economic policies; (2) increasing competition from      
foreign premium brand beers; and (3) an increase in 1996 raw material and       
packaging costs in excess of 10%.  The Company has not been able to fully pass  
on to its customers the increased raw material and packaging costs, but in an   
effort to reduce product costs, the Company introduced a bottle recycling       
program in early 1996.                                                          

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 During July 1996, Renhe Trading Company, a trading company located in Shenzhen,
PRC, commenced importing and distributing U.S.-brewed Pabst Blue Ribbon beer in 
Southern China, and has advertised widely throughout Southern China that Pabst  
Brewing Company USA has granted it the exclusive right to distribute U.S.-brewed
Pabst Blue Ribbon beer in China.  Pabst Brewery Company USA has officially      
denied granting such authorization.                                             

The Company and its joint venture partner, Guangdong Blue Ribbon, which is the
exclusive license holder of the Pabst Blue Ribbon brand in China,  have jointly 
taken actions to stop the importation of U.S.-brewed Pabst Blue Ribbon beer by  
making successful applications to the head offices of the Custom Bureau and the 
Industrial and Commercial Bureau in Beijing for protection of the trademark and 
the exclusive license rights.  During September 1996, the head office of the    
Custom Bureau officially notified all Provincial Custom Departments to          
confiscate all imported Pabst Blue Ribbon beer.  In addition, the Industrial and
Commercial Bureau has instructed its provincial branches to confiscate the      
imported U.S.-brewed Pabst Blue Ribbon beer appearing in the retail market.     
Accordingly, the influx of imported U.S.-brewed Pabst Blue Ribbon beer has been 
substantially reduced. However, there can be no assurances that this problem    
will not reoccur in the future. Guangdong Blue Ribbon intends to commence legal 
proceedings against Renhe Trading Company for the damages caused by its         
importation activities.                                                         

Selling and Administrative Expenses:  For the nine months ended September 30, 
1996, selling and administrative expenses were RMB 119,096,142 or 12.8% of net  
sales, consisting of selling expenses of RMB 84,158,443 and general and         
administrative expenses of RMB 34,937,699.  Selling expenses include costs      
relating to the advertising, promotion, marketing and distribution of Pabst Blue
Ribbon beer in China, and have been incurred in conjunction with the increase in
the production capacity of Zhaoqing Brewery and the increase in sales volume.   
For the nine months ended September 30, 1996, the Company recorded an allowance 
for doubtful  accounts of RMB 2,131,251 to provide for estimated losses on      
accounts receivable for the period.                                             

During 1995, the Marketing Company was established to market the Pabst Blue   
Ribbon beer produced by Zhaoqing Brewery and Noble Brewery throughout China.    
The Marketing Company assumed the responsibility for marketing Zhaoqing         
Brewery's production of Pabst Blue Ribbon beer in April 1995, and has incurred  
most of the selling expenses since that date.  General and administrative costs 
include the costs associated with the operation of the Company's executive      
offices, and the legal and accounting costs associated with the operation of a  
public company.                                                                 

As a result of softening consumer demand and increasing competition from      
foreign premium brand beers, the Company has implemented a substantially        
expanded advertising and promotional program in 1996 in order to stimulate      
consumer demand and maintain the market position of Pabst Blue Ribbon beer in   
China.                                                                          

Operating Income:  For the nine months ended September 30, 1996, operating    
income was RMB 25,096,498 or  2.7% of net sales.   For the nine months ended    
September 30, 1995,  operating income was RMB 5,908,122 or 1.6% of net sales.   

Interest Expense:  For the nine months ended September 30, 1996, interest     
expense increased by RMB 11,566,887 or 193.2% to RMB 17,553,745, as compared to 
RMB 5,986,858 for the nine months ended September 30, 1995.   Interest expense  
increased in 1996 as compared to 1995 as a result of the increase in bank loans,
capital lease obligations and amounts payable to Guangdong Blue Ribbon as a     
result of its advances for the expansion of Zhaoqing Brewery.                   

 Income Taxes:  For the nine months ended September 30, 1996, income tax expense
was RMB 973,587.  Although the Zhaoqing Brewery's operations in China were      
subject to a tax holiday in 1996, deferred income tax expense of RMB 750,000 was
recorded for the nine months ended September 30, 1996 as a result of temporary  
timing differences with respect to accelerated depreciation of property, plant  
and equipment during the tax exemption period.  In addition, for the nine months
ended September 30, 1996, the Company recorded RMB 223,587 for the local income 
tax expense of the Marketing Company's operations.  For the nine months ended   
September 30, 1995, deferred income tax expense of RMB 2,000,000 was recorded.  

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Net Income:  As a result of decreased sales and earnings of Noble Brewery,    
increased selling expenses incurred by the Marketing Company and increased      
interest expense, net income decreased to RMB 12,661,601 for the nine months    
ended September 30, 1996,  as compared to RMB 15,052,819 for the nine months    
ended September 30, 1995.                                                       

Noble Brewery:                                                                  
-------------                                                                   

Three Months Ended September 30, 1996  and 1995  -                              

Sales:  For the three months ended September 30, 1996 and 1995, net sales were
RMB 166,186,130 and RMB 189,240,239, respectively.                              

Gross Profit:  For the three months ended September 30, 1996 and 1995, gross  
profit was RMB 36,443,517 or 21.9% of net sales and RMB 39,840,815 or 21.1% of  
net sales, respectively.                                                        

Selling and Administrative Expenses:  For the three months ended September 30,
1996, selling and administrative expenses totalled RMB 11,753,658 or 7.1% of net
sales, consisting of selling expenses of RMB 5,290,666 and general and          
administrative expenses of RMB 6,462,992.  For the three months ended September 
30, 1995, selling and administrative expenses totalled RMB 13,530,035 or 7.1% of
net sales, consisting of selling expenses of RMB 9,184,023 and general and      
administrative expenses of RMB 4,346,012.   Selling expenses include costs      
relating to the advertising, promotion, marketing and distribution of Pabst Blue
Ribbon beer in China and were incurred in conjunction with the increase in the  
production capacity of Noble Brewery.                                           

During 1995, the Marketing Company was established to market the Pabst Blue   
Ribbon beer produced by Zhaoqing Brewery and Noble Brewery throughout China.    
The Marketing Company assumed the responsibility for marketing Noble Brewery's  
production of Pabst Blue Ribbon beer in July 1995.                              

Operating Income:  For the three months ended September 30, 1996 and 1995,    
operating income was RMB 24,689,859 or 14.9% of net sales and RMB 26,310,780 or 
13.9% of net sales, respectively.                                               

Income Taxes:  The two-year income tax holiday for Noble Brewery expired on   
December 31, 1995.  In 1996, Noble Brewery is required to pay local income tax  
at half the normal rate of 33% on its profit as determined in accordance with   
PRC accounting standards applicable to Noble Brewery.   Accordingly, RMB        
4,477,400 has been recorded as income tax expense for the three months ended    
September 30, 1996.                                                             

Net Income:  As a result of decreased sales, and increased administrative     
expenses and income tax expense, partially offset by decreased selling expenses,
net income decreased to RMB 20,730,412 or 12.5% of net sales for the three      
months ended September 30, 1996,  as compared to RMB 25,969,655 or 13.7% of net 
sales for the three months ended September 30, 1995.                            

Nine Months Ended September 30, 1996  and 1995  -                               

Sales:  For the nine months ended September 30, 1996 and 1995, net sales were 
RMB 508,780,266 and RMB 552,113,728, respectively.                              

Gross Profit:  For the nine months ended September 30, 1996 and 1995, gross   
profit was RMB 106,325,230 or 20.9% of net sales and RMB 129,921,929 or 23.5% of
net sales, respectively.                                                        

Selling and Administrative Expenses:  For the nine months ended September 30, 
1996, selling and administrative expenses totalled RMB 36,212,574 or 7.1% of net
sales, consisting of selling expenses of RMB 12,535,121 and general and         
administrative expenses of RMB 23,677,453.  For the nine months ended September 
30, 1995, selling and administrative expenses totalled RMB 50,649,896 or 9.2% of
net sales, consisting of selling expenses of RMB 28,143,454 and general and     
administrative expenses of RMB 22,506,442.   Selling expenses include costs     
relating to the advertising, promotion, marketing and distribution of Pabst Blue
Ribbon beer in China and were incurred in conjunction with the increase in the  
production capacity of Noble Brewery.                                           

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During 1995, the Marketing Company was established to market the Pabst Blue   
Ribbon beer produced by Zhaoqing Brewery and Noble Brewery throughout China.    
The Marketing Company assumed the responsibility for marketing Noble Brewery's  
production of Pabst Blue Ribbon beer in July 1995.                              

Operating Income:  For the nine months ended September 30, 1996 and 1995,     
operating income was RMB 70,112,656 or 13.8% of net sales and RMB 79,272,033 or 
14.4% of net sales, respectively.                                               

Income Taxes:  The two-year income tax holiday for Noble Brewery expired on   
December 31, 1995.  In 1996, Noble Brewery is required to pay local income tax  
at half the normal rate of 33% on its profit as determined in accordance with   
PRC accounting standards applicable to Noble Brewery.   Accordingly, RMB        
14,251,007 has been recorded as income tax expense for the nine months ended    
September 30, 1996.                                                             

Net Income:  As a result of decreased sales and gross margin, and increased   
administrative expenses and income tax expense, partially offset by decreased   
selling expenses, net income decreased to RMB 55,898,583 or 11.0% of net sales  
for the nine months ended September 30, 1996, as compared to RMB 75,410,850 or  
13.7% of net sales for the nine months ended September 30, 1995.                

Consolidated Financial Condition  -   September 30, 1996 :                      

Liquidity and Capital Resource - For the nine months ended September 30, 1996,
the Company's operations provided cash resources of RMB 1,031,676.  The         
Company's cash balance increased by RMB 14,510,205 to RMB 71,958,510 at         
September 30, 1996, as compared to RMB 57,448,305 at December 31, 1995.  The    
Company's net working capital deficit decreased by RMB 2,879,487 to RMB         
94,676,066 at September 30, 1996, as compared to RMB 97,555,553 at December 31, 
1995, and the Company's current ratio at September 30, 1996 was  0.80: 1, as    
compared to 0.77 : 1 at December 31, 1995.                                      

The Company's inventories increased by RMB 71,932,578 or 126.6% to RMB        
128,771,379 at September 30, 1996, as compared to RMB 56,838,801 at December 31,
1995.  Such increase resulted from the expansion of production to meet the      
growth in market demand for beer products, and consisted primarily of an        
increase in finished goods in order to satisfy expected market demand during the
peak season from July to September.  This increase was also due to the influx of
U.S.-brewed Pabst Blue Ribbon beer imported by Renhe Trading Company since July 
1996, which interferred with the sales effort of the Marketing Company and      
disrupted the scheduled production timetable.  Even though the influx of        
imported U.S.-brewed Pabst Blue Ribbon beer has been substantially reduced, it  
is expected to take some time for the Marketing Company to re-capture sales and 
reduce inventory levels.                                                        

The amounts due from related companies mainly represented receivable balances 
from Guangdong Blue Ribbon and its affiliated companies.  The amounts due from  
related companies decreased by RMB 25,588,630 or 55.1% to RMB 20,823,149 at     
September 30, 1996, as compared to RMB 46,411,779 at December 31, 1995.  The    
decrease was primarily due to the increase in payments by Gunagdong Blue Ribbon 
and the increase in transaction volume with other related companies under normal
operating levels during the period.                                             

 The Company's accounts payable and accrued liabilities balance increased by RMB
64,817,290 or 115.2% to RMB 121,096,471 at September 30, 1996 as compared to RMB
56,279,181 at December 31, 1995.   Such increase was mainly due to the increase 
in purchases of raw materials and packing materials for the peak season  sales  
and production from July to September, and the increase in accrued expenses as a
result of the expansion of production and operating activities.                 

The Company's former principal  shareholder, Oriental Win, and Guangdong Blue 
Ribbon, a related party, have undertaken to provide continuing financial support
to the Company, as described below.                                             

The conversion and expansion of Zhaoqing Brewery has required substantial     
capital to finance the costs of expansion and to support substantially higher   
sales levels.  Guangdong Blue Ribbon has provided and committed to provide      
Zhaoqing Brewery a line of credit, or to otherwise arrange financing, sufficient
to finance the purchase of new machinery and equipment in connection with the   
expansion of Zhaoqing Brewery to an annual production capacity of 100,000 metric
tons of beer.                                                                   

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 For the nine months ended September 30, 1996, additions to property, plant  and
equipment in connection with the planned expansion of Zhaoqing Brewery to an    
annual production capacity of 100,000 metric tons of beer aggregated RMB        
46,122,765, and were financed by advances under the line of credit from         
Guangdong Blue Ribbon, other borrowings, and dividends from an associated       
company.  In addition, during the nine months ended September 30, 1996, other   
capital expenditures relating to the installation and final testing of machinery
and equipment and the related construction costs at Zhaoqing Brewery aggregated 
RMB 4,558,883, and various other additions to property, plant and equipment     
aggregated RMB 1,571,923.  The Company anticipates that additional capital      
expenditures in connection with the continuing expansion of Zhaoqing Brewery    
during the remainder of 1996 will be minimal.                                   

During the nine months ended September 30, 1996, Zhaoqing Brewery acquired    
undeveloped land near the existing plant site with a total area of 51,034 square
meters for future expansion purposes.  The total capital expenditures incurred  
in this regard during the nine months ended September 30, 1996 were RMB         
17,858,652, which included the acquisition cost of the land and related site    
preparation costs.  The Company anticipates that additional capital expenditures
in connection with the development of the land during the remainder of 1996 will
amount to approximately RMB 3,000,000.                                          

During the nine months ended September 30, 1996, the Company increased its    
short-term bank borrowings by RMB 13,500,000, resulting in net short-term bank  
borrowings outstanding at September 30, 1996 of RMB 46,074,400.                 

During the nine months ended September 30, 1996, High Worth JV received a     
dividend from Noble Brewery of RMB 39,797,878, as compared to RMB 28,644,569    
during the nine months ended September 30, 1995.  Such dividend was used to     
fund, in part, additions to property, plant and equipment.                      

Oriental Win and Guangdong Blue Ribbon are providing continuing financial     
support to the Company.   The existing loan payable to Oriental Win was incurred
in connection with the acquisition of High Worth JV by Holdings and totaled RMB 
73,794,948  at September 30, 1996, equivalent to approximately USD 8,931,000.   
The loan is denominated in United States Dollar, is unsecured, interest free and
is not due and payable unless alternate long-term debt or equity funds are      
available to the Company.                                                       

The Company anticipates that its operating cash flow, combined with cash on   
hand, bank lines of credit and other external credit sources, and the line of   
credit and other credit facilities provided by affiliates or related parties,   
are adequate to satisfy the Company's working capital requirements for the      
fiscal year ending December 31, 1996.  In order to finance the continuing       
capital requirements of the Company subsequent to the completion of the         
Zhaoqing Brewery expansion, the Company has begun negotiations to arrange for   
long term bank or lease financing.  In addition, the accelerated development or 
acquisition of additional brewing facilities may require the use of long term   
borrowing or equity financing by the Company.                                   

Inflation and Currency Matters - In recent years, the Chinese economy has     
experienced periods of rapid economic growth as well as high rates of inflation,
which in turn has resulted in the periodic adoption by the Chinese government of
various corrective measures designed to regulate growth and contain inflation.  
Since 1993, the Chinese government has implemented an economic program designed 
to control inflation, which has resulted in the tightening of working capital   
available to Chinese business enterprises.   The success of the Company depends 
in substantial part on the continued growth and development of the Chinese      
economy.                                                                        

 Foreign operations are subject to certain risks inherent in conducting business
abroad, including price and currency exchange controls, and fluctuations in the 
relative value of currencies.  Changes in the relative value of currencies occur
periodically and may, in certain instances, materially affect the Company's     
results of operations.                                                          

Zhaoqing Brewery and Noble Brewery conduct virtually all of their business in 
China and, accordingly, the sale of their products are settled primarily in RMB.
As a result, devaluation of the RMB against the USD would adversely affect their
financial performance when measured in USD, and could have material adverse     
effects upon the results of operations and financial position of the Company.   
In addition, a significant portion of revenues will need to be converted into   
USD to meet foreign currency obligations. Although prior to 1994 the RMB        
experienced significant devaluation against the USD, the RMB has remained fairly
stable from 1994 to present.  The unified                                       

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exchange rate was US$1.00 to RMB8.65 at December 31, 1993, RMB8.45 at December  
31, 1994, RMB8.32 at December 31, 1995, and RMB 8.26 at September 30, 1996.     

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PART II.  OTHER INFORMATION 
--------------------------- 

ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                        

(a)  Exhibits  -                                                              

27  Financial  Data  Schedule  (electronic filing only)             

(b)  Reports on Form 8-K   -                                                  

Three Months Ended September 30, 1996 :      None.                  

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SIGNATURES
----------

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

     CBR BREWING COMPANY, INC.
     -------------------------
(Registrant)        

Date: November 11, 1996        By:     /S/   JOHN Z. LI                         
                   -------------------------------
    John Z. Li
                President and Director
                   (Duly authorized officer)

Date: November 11, 1996        By:     /S/   GARY C. K. LUI                     
                   -------------------------------
         Gary  C. K. Lui
                 Chief Financial Officer
                   (Chief Financial Officer)

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	10/8/93	7
	12/31/93	20
	7/2/94	7
	10/31/94	7	12
	11/22/94	7
	12/16/94	7	12
	12/31/94	20
	3/15/95	7
	4/1/95	11
	9/30/95	2	19
	12/31/95	2	20	10-K405
For The Period Ended	9/30/96	1	21
	10/14/96	7		8-K
	11/11/96	22		8-K
Filed On / Filed As Of	11/14/96
	12/31/96	8	19	10-K405, NT 10-K

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Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

CBR Brewing Co Inc · 10-Q · For 9/30/96

Filed On 11/14/96 · SEC File 33-26617-A · Accession Number 898430-96-5321

Quarterly Report · Form 10-QFiling Table of Contents

10-Q · Quarterly ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Quarterly Report · Form 10-Q
Filing Table of Contents

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